Well, so much for that...
With the recent increase in real estate prices it is often said that blue-chip properties are too expensive to buy. Although we regularly consider property purchases, when taking part in bidding we frequently fail to reach agreement on purchase prices and are ultimately forced to give them up. In many cases purchases are real estate investment by the wealthy or part of inheritance tax strategies by individuals, which causes a gap between the wealthy and general property-buyers.
For example – although not all details may be disclosed due to confidentiality obligations – we recently considered purchasing a low-rise retail property in the Omotesando area. We offered 57 million yen per tsubo for the land and 17 million yen per tsubo for the total floor area; however, the final settlement appears to have been concluded at prices 35% higher than our bid and a little less than four times as expensive as front street land value. NOI is probably 3%. Further rent increase can be expected in this area, but this was too much for us.