Mitsubishi Estate to accelerate Marunouchi development

Tokyo

MITSUBISHI Estate Co, Japan's biggest developer, announced plans to redevelop part of Marunouchi in central Tokyo, the country's most expensive business district.

The area of at least 11,240 sqm consists of three office buildings, the company said in a statement on Thursday. It will sell the property rights to one of the buildings, the former Mizuho Bank head office, to Mizuho Financial Group Inc for 159 billion yen (S$1.8 billion) and book 36.5 billion yen as a one-time gain. Mitsubishi Estate will use the proceeds for further development work in the area.

Mitsubishi Estate, the biggest landlord in Marunouchi, is accelerating the development of the area as the Japanese real estate market has picked up in the two years since Prime Minister Shinzo Abe took office in 2012.

Real estate prices in Tokyo have risen about 20 per cent from two years ago, according to an estimate by Deutsche Asset & Wealth Management.

GIC, Singapore's sovereign wealth fund, paid US$1.7 billion for a building in the business district, next to the Tokyo Station, in October.

The three Marunouchi buildings - Ginko Kaikan, the Tokyo Ginko Kyokai building and the former Mizuho Bank head office - will be demolished by March 2017, according to the statement.

The land will be jointly developed by Mitsubishi Estate, the Japanese Bankers Association and Mizuho, it added.

The average assumed achievable rent for Marunouchi, home to global financial companies such as JPMorgan Chase & Co, UBS AG and Citigroup Inc, is about 30 per cent higher than in Tokyo as a whole, according to CBRE Group Inc.

Mitsubishi Estate left its net income forecast unchanged at 60 billion yen for the year ending March 2015. BLOOMBERG