In Japan, giant real estate transactions are emerging

TOKYO - The largest world insurance company, American International Group (AIG), is negotiating the purchase of properties in the center of Japan's capital, Tokyo, valued at approximately $3.5 billion (nearly 90 billion CZK) from the development company Mori Trust. According to the research firm Dealogic, the purchase of these properties would be the largest real estate transaction in the world since 1995.
Mori stated that the negotiations include the 19-story Marunouchi Trust Tower North building and the adjacent land, where a 37-story building is expected to be completed in March 2008. The transaction would highlight the improving prospects of the Japanese real estate market, which has struggled with declining prices for more than a decade.
Land prices for commercial and residential purposes in Tokyo recorded their first increase in 15 years in the 12 months leading up to July. After a long time, investment yields from Japanese commercial properties have also risen. This development, along with the recovery of the Japanese economy, has attracted interest from foreign investors who are purchasing office buildings, hotels, and resorts through private equity funds.
A source from AIG confirmed the negotiations for the purchase of Tokyo properties but declined to provide details. AIG has already invested more than 500 billion yen (over 100 billion CZK) in real estate in Japan, reported the Reuters agency.
News of the negotiations led to a sharp increase in the stock prices of Japanese real estate companies. "Real estate stocks are likely to attract more buyers as investors now prefer domestic-focused companies over technology firms," stated manager Shinji Igarashi from the brokerage firm Chuo Securities.