The Real Estate Companies Association of Japan

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REAL ESTATE in Japan

RESORTS/HOTELS, COMMERCIAL FACILITIES AND LOGISTICS FACILITIES

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Resorts/Hotels

  • Resort and Hotel Development

From the beginning of the 1960s, tour destinations across Japan began to be developed as Japanese citizens started to have more leisure time. From the mid-1970s, the resort development boom re-emerged and large multi-use resorts including ski slopes, golf courses, marinas and large-scale hotels were born on large development lots from a few hundred to 1,000 ha. The Act on Development of Comprehensive Resort Areas (the Resort Law) was then established in 1987, accelerating these developments.

The bursting of the bubble changed the situation. Many large resort facilities that had been developed under the application of the Resort Law filed for bankruptcy as the number of customers and revenue/expenditure plans fell short of forecasts. In many cases, leading real estate companies and others took over the operations. Recently there have been new developments of revitalization such as restoring past resort lots in addition to developing new resorts around hotels.

  • City Hotel Development

Supply of city hotels located mainly in major cities began to expand with the 1964 Tokyo Olympics. This was to handle the demand for accommodation from overseas teams and press corps. Many of the hotels built during this period are still considered leading Japanese facilities. After that, demand for accommodation came from businesspeople coming to Japan for meetings during the remarkable economic growth of the high-growth period, resulting in the development of business-oriented city hotels.

  • Growing Inbound Demand and Hotel Supply

A look at the current situation of hotels shows that foreign tourists account for a large portion of demand. Enhanced measures such as overseas promotions to attract foreign tourists had been incorporated into the Tourism Nation Promotion Basic Law established in 2006 and the Tourism Nation Promotion Basic Plan established in 2007 (revised in 2017).

In addition to the 2020 Tokyo Olympic and Paralympic Games, the 2025 World Expo is scheduled to be held in Osaka, so the number of foreign visitors is expected to continue to rise.

In order to meet the vigorous inbound demand, new hotel development is active in all regions. Existing hotels are also being renovated and supply models are diversifying, for example with the conversion of office buildings and commercial facilities into hotels.

In the hotel business, the number of large-scale mixed-use developments that incorporate hotels has been increasing since the late 1970s. The most frequently seen business models are the management contract (MC) system, whereby the hotel owner outsources management to a subsidiary or the like with management expertise, and the franchise contract (FC) system, whereby brand license and management expertise are received from a leading international hotel or the like.

Furthermore, while there had been few genuine luxury hotels in Japan targeting affluent customers, in recent years, real estate companies have been seeking to attract luxury resort hotels, primarily from overseas. Foreign brand hotels are opening one after the other.

Related section: Internationalization

Commercial Facilities

  • Abolition of Large-Scale Retail Store Law Increases Major Facilities

The high-growth period and beyond saw the development of suburban roadside commercial facilities in line with motorization, but this development only accelerated in the 2000s. The abolition of the Large Scale Retail Store Law in 2000 made large-scale commercial facility development possible, and large-scale shopping centers called shopping malls have sprung up one after another in suburban and rural areas. Nationwide, large-scale and diverse commercial facilities such as shopping malls incorporating outlet malls, sports facilities and daycare facilities are being developed.

As competition intensifies, maintaining and increasing the competitiveness of these facilities requires tenant leasing, operation/management and renovation as necessary.

While difficult to secure large lots downtown, there are many examples of large buildings being redeveloped to include shops and restaurants or small buildings developed specifically for retail. Open plazas to promote interaction and hold community events are also becoming more common.

Logistics Facilities

  • Greater Need with EC Market Growth

Looking at logistics facilities, which have largely replaced conventional warehouses, the expanding EC (e-commerce) market is making logistics a more crucial part of social infrastructure, Japan’s logistics market is growing rapidly due to the flourishing 3PL* business and the functions required of facilities are changing. In light of this, real estate companies are entering the logistics facility business as a new pillar of operations.

There are mainly two types of logistics facilities that real estate companies develop, namely the multi-tenant type which leases to multiple companies and the build-to-suit type which is developed for and leased to a particular company. With changes in consumers’ purchasing styles, large, advanced, multifunctional facilities are on the rise, such as facilities that can process a large number of packages in a short amount of time or those that offer storage or distribution processing. Designs that account for future implementation of new ICT and robots are also emerging.

In addition, more logistics facilities are adopting quake-absorbing structures, installing emergency generators and other BCP measures and using LED lighting and solar panels in the facilities in consideration for the environment. Of the many different measures, others include establishing resting facilities, cafeterias, nurseries, etc. for the employees of tenant companies.

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