The state of the the cycle of real estate and stock in the Japanese market

Real estate companies continue to perform well this quarter

With the 2017 February and March period interim results announced, there are only a few more days left of 2016. Naturally, real estate company profits will be greatly affected by the real estate market this period. If the market is favourable, then one can obviously expect to see healthy profits, with the inverse also being true.

The interim earnings announcement for September to November for "real estate registered companies had a market cap of over 10 billion yen, consisting of the individual settlements from 38 companies (Market cap set as of December 2nd). We looked into figures such as sales and profits increase, as well as company projections vs progress, and so on. Famous companies such as Mitsui Fudosan and Mitsubishi estate are obviously included, but so are independent companies like Hold Crest and Hoosiers, and even emerging developers are included.

One thing that stands out, is the good results. The average rise in sales for all companies using the interim period as a basis, is 19.7% compared to the same period last year. Approximately 69% of companies increased their revenue companies to the previous term. Taking this as the yearly base, only two of the 28 companies were expecting a drop, with the expected growth at 17.3% (average for all companies). The sales progress rate compared to the full year forecast is an average of just under the 50% mark at 46.2%, but considering this was 47.3 for the 2016 March period, it could be said to be essentially the same as last year's standard.

On the other hand, the interim base profit growth rate is 23.2% on average. Again, this is an increase in profits for just over 60% of the companies compared to the same period last year. With yearly forecasts as a base, 6 of the 38 companies expected a drop. The average expected growth rate was 12.8%. The progress rate is 49.8% of the yearly forecast, which is slightly slower than the 52.3% of the same period last year, but again this could be said to be almost the same.

In the "Company Quarterly Report", which analyses and collects the accounts of all Japanese listed companies, exactly half of the 38 companies talked about here expect to attain their highest ever profits. Further, another 4 expect to hit levels near their previous records for profit, making it likely that up to 23 are likely to achieve this goal.

Real estate companies predict performance by considering various factors such as purchasing costs, sales situations, stock, policy (tax increases or decreases), and exchange rate trends. Already, interest in the stock market has shifted to the next term (March 2018), but judging from this time's summary, it seems that the real estate market can maintain its favourable situation at least until March of next year.