The Real Estate Companies Association of Japan

PUBLICATION

REAL ESTATE in Japan

ENVIRONMENT/ENERGY, DISASTER PREPAREDNESS AND AREA MANAGEMENT

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Environment/Energy

  • Environmental Policy Trends

Environmental issues are a serious problem that affects all of international society. In recognition of this, the United Nations established the U.N. Framework Convention on Climate Change (COP), which is held annually. Under this convention, countries submit nationally determined contributions. With regard to targets for the real estate industry, the nationally determined contribution proposed by Japan calls for an approximately 40% reduction in greenhouse gas emissions by 2030 in both the business and household sectors, using 2013 as a baseline.

A domestic initiative inspired by this, the Act for the Improvement of Energy Saving Performance of Buildings (Building Energy Conservation Act), which is a regulatory measure for homes and other buildings, was enacted in April 2016 and compliance with energy conservation standards became mandatory for large-scale buildings (2000 m² or more) in April 2017, while compliance with these standards will gradually be made mandatory for medium-scale buildings (300-2,000 m²) as well through 2020.

  • Real Estate Industry Issues and Voluntary Action Plan Formulation

When it comes to the impact of the real estate industry on the environment, reducing energy consumption and reducing CO2 emissions at the same time have become pressing issues. Other important issues in the development and management of real estate include alleviating the heat island effect accompanying urbanization, reducing business-related waste emissions and final disposal amounts, and preserving biodiversity.

RECAJ formulated a Voluntary Action Plan on the Environment for the Real Estate Industry in 1997 with respect to energy consumption and other matters. In March 2013, it formulated the Real Estate Industry Environment Implementation Plan, which included setting medium- to long-term environmental targets, and surveys member companies every year.

  • Sustainable Urban Development

Cutting-edge initiatives toward sustainable urban development are taking off in the real estate industry. State-of-the-art buildings and housing such as Zero Energy Buildings (ZEBs), Zero Energy Houses (ZEHs)* and certified low-carbon houses* are coming on to the market.

Over the past few years, new concepts seeking a lower environmental load and sustainability in investment and development, like ESG investment (investment focused on companies considerate of the environment, society and corporate governance) and the Sustainable Development Goals (SDGs), have emerged.

With regards to systems for evaluating and certifying the environmental performance of housing and buildings, besides national systems such as the housing performance indication system or BELS, there are also systems run by private-sector organizations and the like, including CASBEE and LEED. Real estate companies are expected to not only actively use such systems but also pass on information to tenants and housing buyers.

Flow of Real Estate Brokerage Work
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Disaster Preparedness

  • Improving Disaster Preparedness Capabilities of Cities (Hard and Soft Measures)

Efforts to improve the disaster preparedness capabilities and business continuity of major cities is extremely important in maintaining Japanese society and economic functions, and the real estate industry has worked to do this with its urban renewal and development. Responding to the risk of a disaster such as an earthquake directly below Tokyo or in the Nankai Trough, which would cause immense damage, is a pressing issue; therefore, the danger of heavily concentrated city areas must be eliminated as quickly as possible.

Tokyo’s disaster risk is also a weakness from the standpoint of enhancing its international competitiveness. The public and private sectors must work together to enhance disaster preparedness functions, ensure business continuity and pursue urban development that is resilient enough to disasters that a certain level of economic activity can continue even if a disaster does occur, all so that overseas companies will feel secure in expanding to Tokyo.

To that end, by promoting quick, consistent urban renewal, the industry must work to develop high-spec buildings with BCP functions such as vibration-controlling/seismically-isolated structures and emergency power generation equipment, and the ability to serve as regional disaster shelters, taking in nearby stranded commuters. In conjunction with these hard aspects, efforts to enhance soft aspects such as forming a cooperative disaster-mitigating structure are no less essential.

Area Management

  • What is Area Management?

Urban development until now has focused on hard aspects like infrastructure development, but a growing priority is “area management” focusing on private sector-led promotion of resident-company interaction, events to create community dynamism, and other “soft” aspects in defined areas. Many times, the private sector, which is key, acts as an area management organization.

Examples include arts events using public roads, holiday cafés, and various other initiatives to enhance community energy, which can be expected to increase population inflow, stimulate commerce through customer attraction and solidify regional branding. In the event that a disaster occurs, these also make it easier for residents and employees to work together.

The Ministry of Land, Infrastructure, Transport and Tourism is supporting this trend in ways such as formulating an Area Management Promotion Manual in 2008.

  • Efforts to Secure Financial Resources

One issue when promoting area management activities is the area management organization’s financial resources. Relying on the involved companies, individuals and organizations to pay for it themselves casts doubt on activity continuity. It is especially necessary to solve the freerider problem in which some people benefit from the area management activities without bearing the necessary costs, and one proposed solution gaining traction is Business Improvement Districts (BIDs). Real estate owners within a designated area provide the funding, which is distributed to the groups conducting area management activities, and several examples can already be seen in Europe and the U.S. Modelled on these systems, the Japanese government introduced an Area Management Expense System* in the revised Regional Revitalization Act enacted June 2018. The Ministry of Land, Infrastructure, Transport and Tourism also formulated guidelines on frameworks to secure financial resources for private-sector urban development activities last August.

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