• Entering Giant Overseas Markets

The dawn of Japan’s real estate internationalization was the 1970s, when some major real estate companies began to go overseas. The strong yen in the 80s boosted companies’ overseas expansion and the favorable domestic economy helped numerous major real estate companies acquire and manage real estate overseas in earnest.

Although the bubble burst suspended this momentum, since 2010 major real estate companies have once again been developing business overseas. Using development and management expertise cultivated over many years to export problem-solving city models takes the high growth rates in Asian and other countries and links it to Japanese company growth. Based on this trend, in April 2015, the Ministry of Land, Infrastructure, Transport and Tourism created a new International Affairs Division in the Land Economy and Construction and Engineering Industry Bureau of the time to support the overseas development of real estate and construction companies.

• From Western Cities to Asian Countries

Overseas business in real estate was mainly office building acquisitions in the major cities of advanced Western countries. These cities could expect global demand and had legal frameworks for real estate and rules for international transactions, and disclosed plenty of data on real estate.

From 2010, in addition to mature global cities, investment began to flow to new destinations such as China and Southeast Asian countries where the real estate market centering on urban areas backed by large populations and economic growth was rapidly swelling.

These emerging countries were not easy destinations due to “country risk” stemming from unstable political situations and legal systems and scarce disclosure of market information in addition to the immaturity of their real estate markets. However, rapid urbanization and economic growth caused office and housing demand to swell, and with progress in legal system development and information disclosure, an increasing number of real estate companies are making moves, although this trend has temporarily slowed down due to the impact of the pandemic.

In addition to developing individual office and apartment buildings in these countries, more real estate companies are using urban development expertise cultivated in Japan to build large-scale mixed-use developments together with local developers. Even in the West, recent years have seen companies not merely investing but building offices as well.

• Inbound Efforts

Direct investment in the Japanese real estate market by foreign investors and companies is gaining steam with the exception of hotels and other sections for which inbound demand from foreign visitors to Japan is a concern. As business globalizes, 2013 saw the creation of National Strategic Special Zones where a diverse menu regulatory reform seeks to provide the world’s most business-friendly environment.

After the Tourism Nation Promotion Basic Law was established in 2006, the number of foreign tourists showed a steady increase with the exception of temporary decrease from the 2008 global financial crisis and the Great East Japan Earthquake. A record number of 31.88 million tourists was achieved in 2019, but this fell to 4.12 million in 2020 when the pandemic hit, a decrease of 87.1%.

In view of the post-pandemic recovery of inbound demand, it is hoped that proactive dissemination of information on tourism in Japan as well as MICE (meetings, incentives, conferences and exhibition) business events that may potentially attract customers and promote interaction as well as create large economic ripples will see full-fledged resumption under public- private partnership.

Related section : Office Building (Urban Redevelopment)