Boston, MA -- (ReleaseWire) -- 06/09/2014 -- We believe the ongoing decline in Japan's construction growth could be a sign that the economic stimulus implemented by the government in 2013 is already starting to wear off. We have long highlighted that these stimulus measures would need to be accompanied by structural reforms in order to have positive long-term effects, but progress with these reforms remains limited. As such, it remains to be seen whether the Japanese government will be able to overcome its fiscal problems and carry out the necessary reforms that could lift long-term construction and infrastructure demand.
Key Trends And Developments
- In March 2014, Goldman Sachs announced that (Infrapppworld) the investment bank was considering an investment in one of Japan's largest airports, the New Kansai International Airport. The investment, estimated to worth up to JPY600bn, could be carried out through the bank's GS Infrastructure Partners II fund. The government-owned airport, on an artificial island in Osaka Bay, started its operations in September 1994 and currently has a debt of JPY1.2trn.
- In April 2014, Malaysia's Berjaya Land secured a USD160mn loan from RHB Bank and Mizuho Bank to fund the development of its Four Seasons Hotel in Kyoto, Japan. Under the loan agreement, Mizuho will be the end-financier of the project and will offer the loan amount, whereas RHB will act as the principal financier and will back the loan with a standby letter of credit. The loan period is five years from the first drawdown, with a two-year construction and three-year repayment period, according to Berjaya's executive director, Leong Wy Joon (The SunDaily).Berjaya also awarded a MYR358.3mn (USD110mn) contract for the construction of the hotel to Japan's Taisei Corp. The contract is for the base building, comprising fit-outs for the standard rooms. The hotel covers a built-up area of 34,725m2 and will have 123 rooms and 56 long-stay units. The hotel is expected to be officially opened in 2016.
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