Real estate loans extended by banks are surging in Japan on the back of strong demand for redevelopment projects in Tokyo areas and asset management needs of individuals, sources have said.
The amount of newly extended loans by Japanese banks in fiscal 2014 grew close to the level marked in the heyday of the country's asset-inflated bubble in fiscal 1989.
The Financial Services Agency is boosting its surveillance of regional and shinkin banks for any signs that their operations may be negatively affected by the huge real estate loans, industry sources said.
In fiscal 2014, which ended in March, commercial banks extended ¥10.15 trillion in loans for real estate investment, topping ¥10 trillion for the first time in seven years, according to a Bank of Japan survey.
New real estate loans by shinkin banks stood at ¥2.1 trillion, exceeding ¥2 trillion for the first time ever, the survey also showed.
The lending spree at major banks has been driven by demand from big companies for investment in redevelopment projects in Tokyo areas and from real estate investment trust fund managers.
Regional and shinkin banks are enjoying sharp growth in real estate loans to small businesses, including firms set up by individuals for asset management.
The growth at the smaller lenders also reflects an inheritance tax increase in January, which has spurred wealthy individuals to buy properties with borrowed money to reduce inheritance tax payments.
source by the-japan-news