The year is 2006 and finally after a 14 year recessionary period we see Japan pulling it's way out into an inflationary cycle and real estate prices moving back up. There is no doubt that in key city areas in Tokyo and Osaka we can see newly inflated prices holding and in fact continuing to rise. Back in 2004 we saw a flurry of price increases that flattened a little again into the beginning of 2005. Since about the middle of 2005 we can see the push is on again and seems to holding very well in several city centers. Notably Tokyo and Osaka downtown areas are under what can be likened to a fire sale at a major department store. Pretty much all decent real estate that hits the market is being snapped up at prices anything up to 50% greater than one year earlier. For those of involved in real estate investments here in Japan the key is to close land purchases before it makes it to the market. It goes without saying that finding decent land before it makes it into a rel estate agents window is always one of the main challenges for all real estate investors however here in japan this task is becoming even more important if we are to avoid seeing our targeted yields being met. We do not believe it is time to start dropping yield expectations in consideration for possible capital gains. Perhaps this day may come in the near future for all investors in Japan however not just yet.

On the subject of downtown land and rising prices I am always led to think of demolition costs. There just isn't that much open land in downtown areas and we are almost always faced with taking down something.  In Tokyo and Osaka I have noticed an enormous amount of smaller buildings being torn down to make way for either very big new projects of 40 floors or higher or the very cost effective 13 floor buildings we see spreading across both cities. So much of this work has taken place I am having trouble even spotting a small parcel of land that lends itself to easy demolition. There are still many, many old buildings that could come down however they are quite high and height increases demolition costs. So just when we are thin king of ways we can save on demolition costs we find the buildings offering good returns require hefty demolition costs. It seems others were also observing this situation. A Japanese firm, Kobelco has this week come out with a portable demolition machine that could be considered a monster or an angel. It can simply reach up  65 meters and directly tear down a building. Prior to this beast's arrival the highest we could directly get up off the ground and still keep our feet on the ground  was about 25 meters. Anything higher than 25 meters and we would have to consider raising machinery up to the top of the building and systematically eating our way down. Of course this explains why so many 20 story buildings have till date been passed over by real estate investors looking for land to build new projects. Not anymore, from now on we can simply ask this machine to stand out front of a 21 floor building and take it down to clean land. This new machine will allow those who can access it's use to hold yields on inner city high rise requiring demolition. Well done Kobelco. Read more here.