Construction scandal in Tokyo hits property sales

The scandal involving data manipulation pertaining to the construction sector is impacting the sales of apartments in Tokyo negatively. As a result, only fewer apartments are put up for sale in the city as the ongoing probe on some projects is threatening the housing prices.

The postponement of some major apartments has become a major hurdle for the ongoing apartment price rally in Tokyo. The investigation is in progress on 546 projects.

Tokyo property market has been registering price rise on apartments since 2011 and the latest scandal has become a cause of concern for the realty market. The number of apartments put up for sale in Tokyo fell by 6.5 percent in October when compared with the previous corresponding month following the postponement of 10 properties.

According to a research by Real Estate Economic Research Institute, the scandal may hurt the home price rally in the Tokyo's residential market and its surrounding areas. The 10 major property developers have postponed selling activity beyond November is indicating the emerging bleak situation in the apartment market.

It was uncovered that data on foundation piles was falsified at an apartment that tilted Yokohama near Tokyo and led to further investigation into other projects as well. The ongoing investigation further discovered that in 266 cases, the data was rigged by workers at Asahi Kasei Corp, which is a sub-contractor for the Yokohama development.

The probe is going on for 546 projects. The average unit price dropped to Yen 53.6 million ($434,000) in October from Yen 59.5million in July, the highest level since 2000 year.

Tokyo-based piles manufacturer Asia Pile Holdings Corp said it noticed some data manipulation.

Construction analysts said that the several layers of the sub-contractor system make Tokyo's construction very complex and creating problems for consumers as safety aspect at major properties has become a question.

Responding to the data manipulation and flaws in sub-contractors' execution of the project, Sumitomo Mitsui Construction has decided to have its own engineers at the project site during installation of foundation piles in subsequent projects.

Sumitomo Mitsui Construction has subcontracted a phase of the project to Asahi Kasei Construction Materials. Sumitomo Mitsui couldn't find out bogus meter readings. Subsequently it was found that some piles were short of the bearing stratum (layer strength to support the foundation).

Considering the latest happenings in the construction sector, home buyers are in the wait and watch mode. Now, consumers are worrying about the safety issues in the apartments. Analysts observe that developers need to be more careful in projects implementation.