• Bloomberg


More Japanese property companies may file for bankruptcy in 2012 as banks become more selective to improve their balance sheets as the outlook in the United States and Europe deteriorates, Tokyo Shoko Research Ltd. said.

About 500 real estate companies may go under next year, up from about 450 this year, according to estimates by Nobuo Tomoda, executive director at Tokyo Shoko. A total of 441 went bankrupt in 2010.

Japanese banks may seek to improve their balance sheets by cutting back on riskier loans amid concern that the outlook for the U.S. economy will worsen and the European debt crisis may drag on, prompting them to limit the number of property companies they lend to, Tomoda said.

Suncity Co., a condominium developer with ¥25 billion in debts, filed for bankruptcy protection Sept. 26 after it failed to get extensions on loans, according to a statement.

“We have entered a period with the highest probability of bankruptcies,” Tomoda said. “We are likely to see some real estate companies go bust all together.”

The nation’s top seven developers had a 51 percent share of the apartment market in Tokyo as of 2010, an increase from 30 percent three years earlier, according to a report by Masahiro Mochizuki, an analyst at Credit Suisse Group AG.

The nation’s real estate market picked up in 2007 when investment into property funds nearly doubled to ¥11 trillion, according to STB Research Institute Co. That prompted developers to buy more land, and companies including Suncity were left with more debt than they could repay after the collapse of Lehman Brothers Holdings Inc. in 2008.

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