Japan’s Property Business Frontiers: Declining Birthrate and Aging Population
- Following the global financial crisis, the annual housing starts, which were over one million before, have remained around 800k since 2009. Considering the shrinking housing demand and increasing number of vacant houses based on the declining birthrate and aging population, it is unlikely that the volume will return to one million. Further, making decisions to rebuild old condominiums has become increasingly difficult due to many aged unit owners.
- The Tokyo office worker head-count is predicted to begin declining in 2015. The shrinking of the domestic office demand may accelerate if Tokyo’s competitiveness to invite global companies weakens among large Asian cities. Recently office buildings are required to meet a variety of tenant requirements as operational assets, thus making planning and management capabilities of developers and building owners more important.
- Retailers are sensitive to the economic cycle and quick to respond to market changes. We cannot, however, ignore the long-term negative impact of the declining birthrate and aging population on retail sales. Competition in the domestic retail market is extremely intense and needs more expertise in choosing locations, planning venues, leasing tenants, and operating shops.
- The hotel sector can expect inbound demand and will consequently be impacted less by the declining domestic birthrate and aging population than other property sectors. Even domestic demand may grow with an increasing number of senior tourists, while a larger number of foreign visitors are counted on supported by the government policy that aims for a “tourism-oriented nation.”
- Strong demands shifting from old simple storages to new large systematic logistics facilities have been observed in the logistics sector, lifting the sector as one of the property business frontiers.
- Asian markets and domestic elderly nursing housing are also property business frontiers. Other than these, through the reconstructing of existing businesses, several business frontiers can be identified in the domestic property industry, integrated housing service, CRE strategy advisory, new business incubation, energy saving management, and property investment management.