Mitsubishi Estate Co., Japan’s biggest developer by market value, halted sales of residential units in Tokyo after finding defects and will seek compensation from the builder Kajima Corp. The shares in both companies fell.
Developers in Tokyo’s bayside neighborhoods, where apartments were built on reclaimed land, are halting sales after Japan’s earthquake turned some of the landfill into mud, shattered pipes and severed water supplies.
Construction companies posted the best risk-adjusted returns among Japanese stocks since the country was struck by a record earthquake and tsunami almost two years ago, as the government rebuilt infrastructure and a new administration seeks to stimulate economic growth.
Japan’s real estate investment trusts may stall property sales and suspend fundraising plans in the short term as the nation’s strongest earthquake , tsunami and nuclear crisis damp investor appetite for assets.
Bank of Japan Governor Masaaki Shirakawa’s decision to boost purchases of real estate funds to stimulate the economy may spur debt sales by developers that reached the highest in 2 1/2 years this month.
Japan’s housing starts rose for a ninth month in May, the longest streak since the period ended February 2011, as the government’s pledge to end 15 years of deflation fueled expectations for a recovery in property prices.