Impact of Changes in Economic Conditions, Interest Rates, Supply and Demand, and Tax Policy on Demand and Performance

「The Company faces the issue of declining profit margins because competition for land in prime central Tokyo locations remains intense and prices remain elevated, construction costs are rising due to higher construction-material prices and labor costs, and interest rates in financial markets are expected to rise gradually.」

「The Group's core business, real estate development and sales, is susceptible to the effects of economic conditions, interest rates, real estate demand and various tax systems, including housing taxation. If demand among purchasers changes as a result of a rapid economic downturn, a substantial rise in interest rates, falling sales prices due to deteriorating supply and demand, or changes to or abolition of housing tax rules, the Building Standards Act and other regulations, this could affect the Group's performance.」

「During the cumulative second quarter of the current fiscal year, there were no material changes in the occurrence of major risks that management recognizes as potentially having a material impact on the Group's financial position, operating results, or cash flows, among matters concerning the business and financial conditions described in the quarterly report, or in the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「During the first quarter of the current fiscal year, there were no new occurrences of the major risks that management recognises could materially affect the financial position, operating results or cash flows of the Group among the matters relating to business conditions, financial conditions and other matters described in the quarterly report, and no material changes to the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「The Group is monitoring the current global situation and trends in the Japanese economy, including the protracted conflict in Ukraine, high inflation, and interest-rate increases by central banks in various countries. It recognizes that further enhancement of corporate value and strengthening of its financial position are necessary for it to withstand major economic fluctuations in the future.」

「During the cumulative third quarter of the current fiscal year, there were no material changes in the occurrence of major risks that management recognizes as potentially having a material impact on the Group's financial position, operating results, or cash flows, among matters concerning the business and financial conditions described in the quarterly report, or in the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「During the first quarter of the current fiscal year, there were no new occurrences of the major risks that management recognises could materially affect the financial position, operating results or cash flows of the Group among the matters relating to business conditions, financial conditions and other matters described in the quarterly report, and no material changes to the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「The Group is monitoring the current global situation and trends in the Japanese economy, including the prolonged impact of the COVID-19 pandemic, instability surrounding Ukraine, rising prices, and supply chain disruptions. It recognizes that further enhancement of corporate value and strengthening of its financial position are necessary for it to withstand major economic fluctuations in the future.」

「Although the impact on financial markets and future prices of Russia's invasion of Ukraine in late February 2022 needs to be monitored, the Group believes that, because its principal operating area is central Tokyo, the situation in Ukraine is unlikely to have a material impact on the Group's performance at present.」

「During the cumulative second quarter of the current fiscal year, there were no material changes in the occurrence of major risks that management recognizes as potentially having a material impact on the Group's financial position, operating results, or cash flows, among matters concerning the business and financial conditions described in the quarterly report, or in the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「During the first quarter of the current fiscal year, there were no new occurrences of the major risks that management recognises could materially affect the financial position, operating results or cash flows of the Group among the matters relating to business conditions, financial conditions and other matters described in the quarterly report, and no material changes to the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「During the cumulative third quarter of the current fiscal year, there were no material changes in the occurrence of major risks that management recognizes as potentially having a material impact on the Group's financial position, operating results, or cash flows, among matters concerning the business and financial conditions described in the quarterly report, or in the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「During the cumulative second quarter of the current fiscal year, there were no material changes in the occurrence of major risks that management recognizes as potentially having a material impact on the financial position, operating results, or cash flows of the Group (the Company and its consolidated subsidiaries), among matters concerning the business and financial conditions described in the quarterly report, or in the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「During the cumulative first quarter of the current fiscal year, there were no material changes in the occurrence of major risks that management recognizes as potentially having a material impact on the financial position, operating results, or cash flows of the Group (the Company and its consolidated subsidiaries), among matters concerning the business and financial conditions described in the quarterly report, or in the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「During the cumulative second quarter of the current fiscal year, there were no material changes in the occurrence of major risks that management recognizes as potentially having a material impact on the financial position, operating results, or cash flows of the Group (the Company and its consolidated subsidiaries), among matters concerning the business and financial conditions described in the quarterly report, or in the "Business and Other Risks" described in the annual securities report for the previous fiscal year.」

「In addition, confusion in the financial markets and uncertainty about the outlook may result in loan arrangements failing to materialize and a decline in customers' willingness to purchase, requiring the Group to reduce selling prices or the valuations of its real estate holdings, potentially affecting its performance.」

「The Group's principal business, real estate development, is highly susceptible to economic conditions, interest rates, demand for real estate, housing tax policy and other tax policies. If demand from purchasers changes because of a rapid deterioration in economic conditions, a significant increase in interest rates, a decline in selling prices due to worsening supply-demand conditions, or changes to, or the abolition or revision of, housing tax policies or building standards laws and regulations, this could affect the Group's performance.」

「Uncertainty about the outlook remains due to geopolitical risks, including the uncertain situation surrounding North Korea, and political risks in China, where the consolidation of Xi Jinping's regime and a return to socialism have become evident, as well as concerns about President Trump's protectionist policies aimed particularly at eliminating the US trade deficit. Meanwhile, in the Tokyo metropolitan condominium market, unit sales in Tokyo's 23 wards were 11.2% higher than in the same period of the previous year, while sales in other areas were 2.8% lower. In the areas outside central Tokyo, sales were 22.4% lower, and suburban condominiums appear to have continued to struggle.」

「Meanwhile, in the Tokyo metropolitan condominium market, unit sales in Tokyo's 23 wards were 11.0% higher than in the same period of the previous year, while sales in other areas were 7.9% lower, indicating a two-tiered market. Development areas in Tokyo's 23 wards have also begun to change.」

「Meanwhile, in the Tokyo metropolitan condominium market, unit sales in Tokyo's 23 wards were 27.8% higher than in the same period of the previous year, while sales in other areas were 19.9% lower, indicating a pronounced two-tiered market. Sales of tower condominiums were also 27.8% higher than in the same period of the previous year, suggesting that the slump in sales of high-priced properties may be bottoming out.」

「In addition, confusion in the financial markets and uncertainty about the outlook may result in loan arrangements failing to materialize and a decline in customers' willingness to purchase, requiring the Group to lower selling prices and potentially affecting its performance.」

「Meanwhile, in the Tokyo metropolitan family condominium market, the inbound tourism effect has faded, sales of some high-priced properties have begun to weaken, and inventories have increased while the number of units sold has declined. The contract rate was below 70% from July 2016 through March 2017, and the deterioration in the earnings environment appears difficult to deny.」

「Meanwhile, in the Tokyo metropolitan condominium market, the inbound tourism effect has faded, sales of some high-priced properties have begun to weaken, and inventories have increased while the number of units sold has declined. The contract rate was below 70% from July through December 2016, and the decline in the average price per unit has continued, indicating a deteriorating earnings environment.」

「Meanwhile, in the Tokyo metropolitan condominium market, the positive impact of inbound tourism associated with the weaker yen has faded, sales of high-priced properties have begun to weaken, and the number of units sold has declined. The earnings environment has also been deteriorating, with the contract rate remaining below 70% for 3 consecutive months through August.」

「The Group's principal business, real estate development, is highly susceptible to economic conditions, interest rates, demand for properties, housing tax policy and other tax policies. If demand from purchasers changes because of a deterioration in the economic outlook, a significant increase in interest rates, a decline in selling prices due to worsening supply-demand conditions, or changes to, or the abolition or revision of, housing tax policies, this could affect the Group's performance.」