ORIX CORP TO BUY UNDERPRICED URBAN PROPERTY IN JAPAN

TOKYO, Jun 30, 2008 (AsiaPulse via COMTEX) -- IX | Quote | Chart | News | PowerRating -- The Orix Corp. (TSE:8591) group will invest a total of Y300 billion ($US2.82 billion) this year in office buildings and condominiums in Tokyo, Osaka and Nagoya, in the belief that such properties are now extremely undervalued, company sources told The Nikkei Saturday.

The planned investment is a sharp increase from the 100 billion yen on average that the group has spent annually on real estate over the past few years.

Before the subprime meltdown started last summer, Japanese property prices had been on the rise on the back of active buying by foreign investment banks and funds. But since around May this year, the market has been flooded with properties put on sale by overseas and domestic real estate funds and developers needing cash amid the fallout from the subprime crisis.

"The prices of some buildings have plunged nearly 30% from a year ago," an executive of a major realty company said.

The major leasing firm will concentrate its investment in office buildings, rental condominiums and hotels in the country's three busiest cities, and has already set up a special section with 30 staffers at subsidiary Orix Real Estate Corp. to select potential investment targets, the sources said.

The company expects to purchase properties costing from 3 billion yen to 20 billion yen each, using its own money to fund the entire investment of 300 billion yen.

Orix plans to hold the real estate it acquires for the long term, in principle, to earn rental and operating income.

The company believes it will be able to reap healthy proceeds from holdings in major urban areas, where demand for office buildings and condominiums is brisk.

(Nikkei)

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