Latest Latent Defects Insurance news: Japan Launches Construction Probe Over Tilting Tower
Mitsui Fudosan, Japan’s biggest property developer, is hurrying to calm angry residents while Yokohama authorities investigate whether a now-tilting tower violates the building standards laws.
Kiyotaka Fujibayashi, chief executive of the developer’s residential subsidiary, is reported to have told the owners of the affected apartments that different remedial options are being considered. They include detailed repairs, rebuilding everything, or buying the residents out for more than they paid for their homes.
Lawyer Shuzo Taniai, whose practice includes housing defects litigation, said that if the compromised building were a single housing unit, negotiations could only be between the contractor and the property’s owner, but an apartment complex makes a solution more difficult to agree on.
The 11-storey building is part of a condominium complex completed in 2007, with 705 apartments sold by Mitsui Fudosan Residential Co.
Residents are, predictably, irate.
“I am so angered,” one stated.
The uproar instigated a massive sell-off in shares of Sumitomo Mitsui Construction, which oversaw the construction of the tower, and Asahi Kasei, which completed the piling work through its Construction Materials subsidiary. The incident has also aroused concerns that building regulations are being regularly ignored, which is highly dangerous in an earthquake-prone country.
These worries, intensified by several construction fiascos in Tokyo and other cities over the past year and a half, have increased public outcry against the nuclear industry as well as official plans to reactive reactors that have been dormant since the Fukushima meltdown in 2012.
Asahi Kasei stated that it would closely examine 3,000 other buildings throughout Japan, all of which the company has data on. The results will be made available shortly, but will initially refrain from identifying problematic structures to avoid damaging their asset value.
Asahi Kasei Construction Materials representatives apologised for losing the confidence of its many customers.
Nomura Securities analyst Shigeki Okazaki warned that there would be a negative impact on the earnings of Asahi Kasei Construction Materials due to breach of contract damages and potential restrictions on its ability to bid for future contracts.