TOKYO Feb 5 Mitsubishi Estate Co Ltd,
Japan's largest property developer by market value, is seeking
damages from contractor Kajima Corp after discovering
construction flaws that may force it to tear down a nearly
completed condominium in central Tokyo.
Mitsubishi Estate said it would seek to cancel contracts for
the sale of the building's 86 units due to flaws in its drainage
pipe structure. The condominiums each fetched up to 350 million
yen ($3.45 million) and were to be handed over to buyers on
The developer said the problem would delay the delivery of
the units by at least a year and that it might end up having to
tear down the structure. The problem comes at a time that a
pickup in construction in Japan is heightening a labour
shortage, which is creating headaches for contractors.
Kajima Corp acknowledged responsibility for inadequate
execution of the project in a statement emailed to Reuters on
Wednesday. "We will act based on discussions with the client,"
Mitsubishi Estate discovered in December that drainage pipe
openings were not properly aligned in the concrete floors of the
seven-storey Parkhouse Gran Minami Aoyama, in central Tokyo's
exclusive Aoyama district.
Mitsubishi Estate did not say how much compensation it would
seek from Kajima. Keisuke Tamaki, Mitsubishi Estate general
manager for investor relations, said strong sales of other
condominiums would offset the hit from the contract
cancellations, which would not affect its earnings for the year
Business has increased for Japan's construction companies
with the stimulus from Prime Minister Shinzo Abe's reflationary
economic policies as well as reconstruction from the major
earthquake and tsunami three years ago.
They are also expected to benefit from a building boom ahead
of the 2020 Tokyo Olympics, although worries have emerged that
the labour shortage could make it harder for contractors to meet
project deadlines and specifications.
($1 = 101.3950 Japanese yen)
(Reporting by Junko Fujita; Editing by Edmund Klamann and Jane