Just two years since real estate prices reversed a 15-year slide, Japan’s property market is again in the throes of a disruptive downturn.

With an exodus of foreign investors in the property market and Japanese banks cutting back drastically on lending, liquidity has dried up. Hardly a week goes by without news of the demise of another property developer or construction company, two sectors that have topped the league of bankruptcies in 2008.

Morimoto, a condominium developer, sought court protection from its creditors at the end of November with debts of Y161.5bn ($1.8bn). It followed Urban, another condominium developer, which collapsed earlier in the year with debts of Y255bn.

Analysts expect the property slide to continue for at least two years, as the Japanese economy is buffeted by the global downturn and investors from leveraged real estate funds and foreign pension funds to upstart developers, are hampered by the credit crunch.

But not everyone is bemoaning the market reversal. Investors who watched the market frenzy in the past two years with cautious concern, are now eyeing the bargains that have begun to crop up.

Financial Times