Strong foundations

Japan’s real estate market remains resilient

MARCH 2021 Industry Perspectives / Text by Toby Waters

The impact of the Covid-19 pandemic on the real estate sector has been significant and will be lasting. With an emergence from the crisis predicted for later this year, what will 2021 — and beyond — look like for real estate businesses?

Something for everyone

Japan is a highly developed real estate market, and there are a wide range of options available for anyone who is looking to move to a new apartment or buy a home.

“Sun Realty & Insurance Corporation has specialised in serving Tokyo’s expat community for over 70 years. We offer personalised and professional housing assistance that prioritises our clients’ needs,” says Daisuke Matsuba, sales manager. “From scheduling viewings of wonderful properties to helping guests get oriented after their arrival in Japan to getting them moved into their new home, we provide a full range of services to our clients.”

Finding the right accommodation for the duration of your stay can be simple, thanks to the extensive experience of Oakwood.

“With over 50 years of hospitality expertise, Oakwood is a pioneer of serviced apartments, offering a wide portfolio of properties for casual or luxury stays,” says Christian Baudat, general manager of Oakwood Suites Yokohama and director of operations, Japan and South Korea. “Guests can select one of our high-quality apartments that caters to their own specific lifestyle needs, whether they have short or long stay requirements.”

In Hokkaido, Taiga Properties — which handles real estate sales, project management, and development consulting — sets itself apart from its peers due to its focus on international investment into Japanese properties.

“Niseko is the most international property market in Japan, and the diversified ownership of properties by high-net-worth individuals gives it remarkable resilience against market shocks, including the Covid-19 pandemic,” says Keith Rodgers, managing director.

Finding an office or an industrial space can be a daunting prospect, even more so during the age of social distancing, but help is at hand, notes Todd Olson, Cushman & Wakefield’s North Asia managing director.

“Cushman & Wakefield is a leading global real estate services firm that delivers exceptional value for occupiers and owners. We provide capital market, asset management, leasing, valuation, retail, logistics, and project and facilities management services,” he says. “In 2020, we introduced our ‘6 Feet Office’ concept to help clients provide a safe and dynamic environment for when their employees return to the office.”

Responding to a crisis

Many businesses in the real estate sector have been able to weather the storm of the Covid-19 pandemic by quickly putting innovative ideas into practice, as Midori no Ki CEO Eddie Guillemette explains.

“We are a real estate and hospitality company based in Niseko, Hokkaido. This year, we pivoted towards the domestic hospitality sector and shifted our offering towards value-orientated real estate investors looking to enter a fast-growing market,” he says. “Internally, we focused on job sharing, skills training, and implementing a new customer relationship management system.”

Sun Realty & Insurance’s Matsuba highlights the new services his firm has created to help his clients overcome the pandemic-related challenges they are facing.

“Since the start of the Covid-19 pandemic, our clients have had to move on a tighter time schedule. To help them meet their needs quickly, we now offer an exclusive relocation service package, which provides extensive assistance, including completing registration procedures, opening bank accounts, and searching for schools for children,” he says. “We are truly a one-stop-shop for customised relocation services.”

Oakwood’s Baudat notes that despite international transactions being reduced, domestic demand is strong.

“The Covid-19 pandemic has been trying for the entire world, but Oakwood’s business has been very resilient,” he says. “Though demand for our residences has been affected by the closed borders and travel restrictions, we have been able to rely on a steady number of domestic residents using our properties, so the impact of the pandemic has been less severe than it has been for typical hotel operators.”

Gavin Smith, managing director of Atlas Recruitment — which provides recruitment services for a number of sectors, including real estate — highlights the silver lining of increased remote work during the pandemic.

“Over this past year, with more people working from home than ever, I feel we have been able to have more conversations than usual,” he says. “Calls by phone or over the internet can be arranged on short notice, and there’s no need to step out of the office to meet with someone.”

Looking ahead

As the world begins to turn the corner on the pandemic, many are wondering what the future will hold for the real estate market. Olson of Cushman & Wakefield expects that some changes made over the past year are here to stay.

“We foresee that Japanese firms will further adopt remote work policies as they pursue long-term strategies for their offices. The workplace is undergoing a transformation — from a single destination to a broader ecosystem — where employees have more flexibility and can focus on productivity,” he says. “New workplace strategies, including optimising flex space and design layout, will become even more common.”

Others, including Midori no Ki’s Guillemette, expect that things will begin to return to a degree of normality in some sectors.

“We think the domestic hospitality market will regain some of its strength this summer, and — if restrictions on outbound travel and international tourism are lifted — will snap back to normal by the next ski season,” he predicts. “The value of the real estate market is likely to rise in 2022, so there could be a flurry of transactions ahead of the return of inbound tourism.”

Rodgers of Taiga Properties agrees that this is the year for recovery.

“Given the pent-up desire to travel, and the perception that Asian countries are more ‘Covid safe’, we expect the market to come roaring back. Currently, Japan residents are well positioned to visit our resort properties and view them at a leisurely pace,” he says. “Renting a beautiful chalet so you can enjoy Hokkaido’s expansive nature while teleworking makes for a nice change of pace.”

In the real estate recruitment sector, the bounce back has already begun, Atlas Recruitment’s Smith explains.

“We have seen a noticeable increase in new hirings at real estate funds since late 2020, and we expect that demand to continue,” he says. “We might also see more requests from buyout funds looking for real estate professionals to support hospitality-related portfolios. I also believe a number of new firms will choose to set up in Japan when travel returns to normal.”

Despite the shocks of the last twelve months, the foundations of Japan’s real estate market remain strong.