Japan’s Zephyr Co Collapses, Sparks Commercial Real Estate Fears
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The credit issues that we face in the United States are being mirrored in Japan. Zephyr Co., a midsized developer in Japan, went under yesterday. While that would not make much of a wave in the U.S., Japan’s central bank tends not to let businesses like this fail. But with the credit crunch happening world wide, the central bank is not in a position to prop everyone up.
So companies that were considered safe in Japan now have investors worried.
Japanese banks, reeling from the credit crunch, have been tightening lending to real estate companies now seen as risky as sales of apartments weaken and the outlook for the world’s second-largest economy dims.
Many developers are now looking to shore up their finances by selling vacant land and buildings, but the extra supply has depressed prices and potential buyers are finding it more difficult to secure loans.
“Even if they sell excess property, buyers would not pay much and seek a big bargain,” said Yutaka Kakizaki, a real estate sector analyst from Chibagin Asset Management, adding that this meant developers end up selling property at a loss.
“It will just be a matter of time until we see the next (corporate failure),” Kakizaki said. Forbes.com.
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Comment by Steve Simon on 22 July 2008:
I just looked at Duetche Bank’s 56 page report, the graphs depicted the deliquencies in various circumstances:
fixed loan, adjustables, prime rates, alternate rates, low credit score borrowers, etc.
The graphs show what the “Old Men Know!”
If the mortgage industry low ethic shops didn’t give loans to those who never should have gotten them we would not be in the real estate mess we are in. To be sure there were other factors contributing to our current state, energy price inflation being a significant one; but were it not for the greedy ethically challanged lending practices used by many in the loan industry the trouble would not be as bad as it is.
The mess they have created will take years to work itself out…
Steve Simon is the lead instructor of the Steve Simon School of real estate, a Florida real estate school that offers the State of Florida real estate license courses online.