Shares in Japanese real estate firms fell on Tuesday after data showed that office vacancies in central Tokyo topped six percent in July, their highest in six years, underlining a deteriorating market for office rental.
Mitsubishi Estate Co Ltd, JapanÂ's number-two property developer and a major landowner in central Tokyo, was down 4.3 percent at 935 yen at 0432 GMT, while industry leader Mitsui Fudosan Co Ltd lost 2.6 percent to 935 yen.
The shares, underperforming a 0.42 percent decline in the benchmark Nikkei average, came under pressure after a newspaper said vacancy rates at office buildings in central Tokyo business districts rose to 6.06 percent at the end of July.
The vacancy rate increased for the 10th straight month and was the highest since December 1995, according to data compiled by real estate broker Miki Shoji Co Ltd.
'The increase reflected rising cancellations of contracts by major companies that plan to move to new buildings to be launched in 2003,' Miki Shoji official Mitsutoshi Tanno told Reuters.
'Behind the continuous rise in the vacancy rate is a string of withdrawals and operational cutbacks by foreign firms after the September 11 attacks in New York and Washington D.C.,' he said.
An additional 2.18 million square metres of office space is set to come on line in 2003 as big projects in central TokyoÂ's Shimbashi and Roppongi districts are completed, leading to a further spike in vacancies, analysts say.
'The rising vacancy rates are already factored into share prices by the market... Still, we are slightly bearish on Sumitomo Realty, whose new building in RoppongiÂ's 1-chome area has a vacancy rate of over 80 percent,' said Yoshihiro Hashimoto, senior analyst at Merrill Lynch.
Shares in Sumitomo Realty & Development Co Ltd were down 2.93 percent at 662 yen.