Lending strategy

  • New lending expected to increase in fiscal 2018
  • The most important factor when making a financing decision is "LTV"
  • "Offices" are the most attractive asset type for lending
  • Tokyo and the Greater Tokyo area are the most attractive areas for lending; Fukuoka ranks high for offices

Outlook

The biggest threats in the debt market were cited as "domestic and global economic shock", followed by the "rapid rise in interest rates that exceeds forecasts". Looking at lenders' comments, "domestic and global economic shock", included concerns about natural disasters and global political conditions, as well as the U.S.- China trade friction.

For the outlook for the coming year, the survey suggests that lenders see real estate sales prices rising, LTV ratios falling, and spreads increasing. Investors' appetite for real estate acquisition is likely to remain strong in light of the prolonged low interest rate policy. However, lenders remain cautious and rational, focusing on the earnings stability, location and LTV level of individual projects, while also being selective about sponsors.