BANGKOK (ANN/THE YOMIURI SHIMBUN) – Asian countries are seeing a footprint expansion by major Japanese real estate companies due to increasing demand for premium office and residential buildings.
Emerging economies like India are experiencing a surge in corporate activity and rising income levels.
Sumitomo Realty and Development Co is engaged in three major projects in Mumbai, a key commercial hub with numerous financial institutions.
Sumitomo regards Mumbai as its “second engine” of growth after central Tokyo and plans to invest a total of JPY700 billion in the city.
In October 2023, Sumitomo acquired a roughly 80,000-square-metre plot of land in Mumbai’s new urban centre to develop a large complex of business and commercial facilities. The company also plans to construct office buildings at two other locations within the city.
“We have received inquiries from prospective tenants, including major companies in India and Western financial institutions,” said Hironori Kawahara, managing director at the company’s Indian subsidiary.
Other Japanese real estate companies are developing facilities in southern Indian cities. Mitsui Fudosan Co is constructing an office building in Bengaluru, and Mitsubishi Estate Co is involved in a project to develop a business park in Chennai.
As of the end of March, the average annual rent of an office in Mumbai was USD421 (JPY66,000) per square metre, surpassing that of Osaka at USD371, according to a survey on rents in major cities in the Asia-Pacific region conducted by Jones Lang LaSalle IP, Inc (JLL), a major company that offers real estate services.
Demand for office space is expected to increase in Indian cities, as foreign companies are increasing their presence there.
Some developers are involved in residential projects. Tokyu Corp, for instance, is developing condominiums, commercial facilities and other buildings in a new 10-square-kilometre city in Binh Duong Province in southern Vietnam.
Nomura Real Estate Development Co. is involved in 26 projects, including the construction of condominiums, mainly in Bangkok.
According to JLL, global real estate investment fell six per cent year-on-year over the January-March period in 2024. Rising interest rates, which slowed down investments in the West, were the main cause of the decline. On the other hand, real estate investment increased 13 per cent in the Asia-Pacific region over the same period.
However, rapid urbanisation has caused serious environmental problems in emerging economies.
Amid the growing global trend towards decarbonization, technologies developed by Japanese companies, such as those that cut down on the energy that buildings use, are attracting a high level of interest.
