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2016 Real Estate in Japan Japan in Estate Real

Creating New Value for the Economy and Society 2016 CodeCode ofof ConductConduct TheThe RealReal EstateEstate CompaniesCompanies AssociationAssociation ofof JapanJapan

-Creating New Value for the Economy and Society- Japan’s declining population, falling birthrate and aging society are all having major impacts on our economy and society. New issues such as increasing internationalization and global environmental problems also need to be addressed. In this context, Japan’s real estate industry has a social responsibility to create new value to contribute to the economy and society. It is expected to supply high-quality buildings and housing, and help make people’s daily lives-whether at home, work, or play-more comfortable and affluent. As a cornerstone of domestic demand, the industry should also help drive national economic growth. Based on this mission, members of the Real Estate Companies Association of Japan pursue their activities in accordance with the principles below.

1. Creating Attractive Cities Members will help create safe, stable, comfortable and appealing cities; renew urban areas through forming quality housing stock and advanced business infrastructure; create dynamic environments rich in amenities; and work to maintain and enhance their value from both a hard and soft perspective so that they may be passed down to the future generations as high-quality assets.

2. Customer-Focused Activities and Management The provision of “Customer First” management is best served by supporting the lifestyle pursuits of customers in meeting their ever diversifying and increasingly unique needs with an enhanced selection of products and services, and also in providing accurate information while maintaining high ethical standards and acquiring greater expertise.

3. Environmental Harmony Members will work sustainably in order to integrate economic and environmental goals and create harmony through the realization of low-carbon cities. Members will also implement business in a manner that considers global and local environments through energy conservation, waste reduction and increased recycling.

4. International Perspective In addition to opening the Japanese real estate market internationally, members will strive to make Japanese cities globally appealing through developing first-class cities and regions that will attract international talent, capital and information.

5. Rigorous Compliance Members shall conduct fair business activities based on corporate social responsibility, ensure rigorous compliance by respecting consumer protection laws, eliminate anti-social forces and strive to act in an enlightened manner with respect to human rights issues.

Please refer to the list of Member Companies: http://www.fdk.or.jp/en/member.html REAL ESTATE IN JAPAN 2016 CONTENTS 6 7 8 9 4 41 43 46 47 10 15 24 26 29 33 36 39 48 54 56

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ts Estate Transactions Estate Overview of National Strategic Special Zones ernationalization or-Sale Transactions or-Sale ransactions Addressing Population Decline and Roles the Real Est against Major Disasters Initiatives to Eliminate Organized Crime Groups and OVERVIEW OF PRESENT LAND AND HOUSING TAXATION REAL ESTATE THE ROLE OF THE REAL ESTATE INDUSTRY THE REAL ESTATE THE ROLE OF Measures Environmental the Aging of Society Other Anti-Social Forces from Real Estate Transactions and Money Laundering POLITICAL, SOCIAL AND ECONOMIC EVENTS; REAL ESTATE-RELATED POLICY CONTENTS INTRODUCTION TODAY INDUSTRY THE REAL ESTATE Development SECTORS MAJOR REAL ESTATE OF OVERVIEW Housing Urban Rede Leasing Real Real Est Int Resor F Leasing T The real estate industry plays a major role in the creation and development of living and urban environments such as housing and office buildings, which are the foundation of residents’ lives and INTRODUCTION corporate activities. It supports Japan’s economic growth through the supply of high-quality houses and condominiums, the revitalization of cities and regions, the development, management, and operation of office buildings and commercial facilities, real estate securitization, and other business.

According to the Annual Report on National Accounts, the real estate industry represents over 10% of Japan’s gross domestic product (GDP). Real Estate In addition, according to the 2014 Financial Real Estate Statistics of Corporations, the real estate industry is characterized by high productivity per capita compared to other industries, with the added value per employee being ¥18.06 million (vs. ¥7.05 million for all industries), indicating that it occupies a inin JapanJapan vital position within Japan’s economy. 20162016

Real Estate in Japan 2016 With Japan’s social structure undergoing What’s more, it is necessary to contribute to key issue. It is important to work on safe, stable sweeping changes as the nation’s falling birth- resolving issues facing Japan such as the fall- urban planning in terms of both facilities and rate, aging society, and declining population ing birthrate, aging of society, and declining services while also aiming to improve the envi- advance, in order to ensure the end of deflation working-age population through urban planning, ronmental performance of cities and housing and achieve sustained economic growth and creation of pleasant living and working environ- and contributing to sustainable, eco-friendly an affluent lifestyle, it is essential to strengthen ments for people of all kinds, and development urban planning. the international competitiveness of leading of cities where multiple generations can live in As the context in which Japan exists continues cities and drive the national economy while comfort, with the aim of achieving a society suited to undergo a major transformation, the role that also encouraging investment in housing, which to diverse lifestyles—a dynamic civil society the real estate industry is expected to play is is a pillar of domestic demand, and forming (Dynamic Engagement of All Japanese Citizens). growing ever larger. high-quality housing stock. With the aim of achieving a high standard of In order to strengthen the international compet- home living, it is necessary to promote a supply itiveness of leading cities and enable Japan’s of housing that accommodates needs which top cities, such as Tokyo, to surpass their inter- are diversifying based on demographic and life- national rivals, it is important to promote urban style changes as well as forming high-quality, renewal projects more than ever and move sustainable housing stock by replacing aging forward with appealing urban planning that will condominiums and the like. attract talent, capital, companies, and informa- In addition, initiatives relating to disaster pre- tion from around the world. vention and the environment continue to be a

Photo: SS Osaka Co., Ltd.

Real Estate in Japan 2016 THE REAL ESTATE INDUSTRY TODAY

Development Work

DEVELOPMENT The flow of the development process begins with studying and 開understanding the 発 size and form of the candidate development site, confirming related city planning, the status of infrastructure preparation and the concentration of various facilities. A business plan containing the development concept, construction plan and business income and expenditures is then proposed based on these findings. After the land is acquired, more specific construction design is carried out and following the acquisition of development and construction permits the actual construction will begin and continue until completion.

Promoting Urban Regeneration Business

Urban development of real estate is closely related to the Urban Planning Law, Urban Redevelopment Law, Land Rezoning Law, Building Standard Law and other laws related to the development, construction and design of cities. The Act on Special Measures Concerning Urban Reconstruction was enacted in 2002, creating a new framework for special urban planning cases, financial support, etc. In addition, in 2011, the government designated Urban Renaissance Urgent Redevelopment Areas and selected International Strategic Comprehensive Special Zones with the aim of enhancing cities’ international competitiveness and promoting urban renewal. Furthermore, the Act on National Strategic Special Zones was enacted in 2013, based on the objective of promoting the formation of international economic activity hubs. In 2014, six zones were designated in the first phase (Tokyo area, Kansai What is development? area, Niigata City, Yabu City in Hyogo Prefecture, Fukuoka Prefecture, and Okinawa Prefecture), while in 2015, additional Real estate development is the zones (Semboku City in Akita Prefecture, Sendai City, and Aichi Prefecture) were designated in the second phase. creation and adding of real estate value by developing and preparing Upgrading of Fund Procurement in Development the infrastructure on obtained land or constructing housing or business Traditionally, securitization tended to focus on already operat- facilities on land. ing real estate. However, securitization is now also being used in development projects (development-type securitization) to meet Earnings are realized by selling, the need to diversify capital sources and such as a means to subdividing or leasing developed real spread risk in fund procurement. estate. The use of development-type securitization enables the developer to procure funds based on a valuation primarily of the development project’s return and limits the debt-burden risk by utilizing non-recourse loans without being impacted by the developer’s own financial condition and limitations on fund raising. Recently, there have been cases of development-type securitization being utilized at urban redevelopment projects in regional cities.

Real Estate in Japan 2016 For-Sale Property Business FOR–SALE

The housing subdivision (for-sale property business) consists of TRANSACTIONS many steps including procurement of the lot, marketing to cus- 分譲 tomer needs and market conditions, product planning, construction designing, advertising and sales. In recent years, diverse unique products have been planned and sold to meet the diversification of needs related to lifestyle and housing among purchasers.

Condominium Supply Trends

Since 1981, the number of for-sale condominiums supplied to the market has exceeded the number of stand-alone houses with a proactive supply continuing in recent years centering on large metropolitan areas. Meanwhile, though the actual supply of stand-alone houses is decreasing due to the slowdown of large- scale new town developments and the like, the emergence of properties such as smart town properties with distinctive features can be seen.

Establishment of Laws for Consumer Protection

The following are some of the laws regarding the for-sale housing business. The purpose of these laws is to improve consumer protection and the quality of buildings.

[Building Lots and Buildings Transaction Business Law] A broker’s license under the Building Lots and Buildings Transaction Business Law is essential to be able to conduct for-sale housing business. In order to protect the purchaser and secure fair transactions, the law establishes regulations regarding the practices of the for-sale business that include restrictions on the timing for starting advertisements and concluding contracts, the requirement to explain material matters, the handling of deposits, etc. What is for-sale property? [Housing Quality Assurance Act] This law created a system for indicating housing performance For-sale property requires work and enhanced the defect liability system concerning new houses. involving the development and sale of [Law to Secure Execution of Defect Warranty for Specific Housing] land, stand-alone housing, This law made measures to secure resources utilizing insurance and deposits mandatory in order to ensure that parties such condominiums and other housing.. as the sellers of residences can effectively implement defect warranty.

Real Estate in Japan 2016 LEASING賃貸

Leasing Work

As for the real estate leasing business, the management and operation is at times conducted by the owner or in other cases partially or entirely entrusted to a third party. In addition to the ongoing separation of real estate ownership and management based on development of real estate securitization and the like, as operation becomes increasingly complex, there are more and more cases of tasks being outsourced to companies that perform asset management and operation on behalf of real estate investors, property management and operation on behalf of real estate owners, and so forth.

Changes in Supply of Buildings and the Sophistication of Needs

Floor space for launched office construction has been trending downwards since the bursting of the bubble. However, the needs of tenants are becoming more sophisticated. In addition to the What is leasing? focus on the latest IT equipment and energy-saving capabilities, emphasis has been placed on the earthquake resistance of Real estate leasing is the business of buildings and Business Continuity Plan measures since the Great East Japan Earthquake. obtaining rents by leasing real estate. Leasing applies to diverse properties Legal Leasing System ranging from housing to office buildings, retail properties, hotels and The relationship between the party leasing the property and the logistics facilities. renter is basically governed by the lease contract which stipulates individual items and is positioned under the Land and House Lease Law and the Civil Code. The former version of the Land and House Lease Law prohibited the leasing party from rejecting the renewal of lease contracts unless they had a valid reason. However, in 2000 the fixed tenancy leasehold system was formed based on the Special Measures Law for Promoting the Supply of Good Quality Rental Housing and it is now possible to enter into a contract that ends without renewal at the time of expiration.

Real Estate in Japan 2016 Transaction Work

Real estate transactions involve providing customers desiring to TRANSACTIONS sell real estate with appraisals that indicate the proper sales price 流通 for the concerned property and related sales activities as well as providing customers desiring to buy a property with property information that meets their requirements. Real estate transaction brokers work to ensure that the sale and purchase, etc. of real estate – such as concluding contracts and delivering properties – proceeds smoothly and appropriately.

Safe Transactions

The brokering of real estate sales, purchasing, transfer or leasing requires a license designated by the Building Lots and Buildings Transaction Business Law. This Law stipulates various matters concerning brokering to secure consumer protection and fair trade and these include the system for licensed real estate brokers, items to include in a brokering contract, compensation restrictions, and matters regarding advertisements and explanation of material matters. On the other hand, because of increasing information technology, there have been many problems involving the leaking of customer information and the buying/selling of personal information. In order to protect the privacy of Japanese citizens, the Personal Information Protection Law was implemented in April 2005. It is necessary to comply with these laws and carry out business in accordance with these guidelines when engaging in real estate transactions.

Vitalizing the Transaction Market

The total number of existing homes is higher than the total number of households and conditions are improving for further What are transactions? vitalization of the transaction market for existing housing. When the Basic Act for Housing was enacted in 2006, it was decided Real estate transactions are primarily that the focus of the Japanese housing policy would transition from quantity to quality. The Japan Revitalization Strategy formu- the selling and purchasing, transfer of lated in June 2013 also includes measures to promote the sale of land and buildings, intermediation on existing housing. leases and sales brokering of for-sale homes.

Real Estate in Japan 2016 Danchi to Condominiums The era of large supply that started in the 1950s OVERVIEW OF MAJOR lasted until the first oil shock of 1973. While the Japan Housing Corporation initially dominated the market, an increasing number of private enter- REAL ESTATE SECTORS prises such as railroad companies began to supply condominium complexes dubbed “luxury man- sions,” a distinct departure from danchi properties targeting a certain clientele. The majority of these were located in downtown areas and featured elevators as well as parking lots, administrative HOUSING offices, lobbies and restaurants on the first floor. In order to create a luxurious impression, fancy titles Following the war, there was a severe lack of housing due to were given to the properties such as “mansion,” the mass burning of cities. As a result, housing supply was “residence,” “villa,” “heights” and “heim.” deficient by 4.2 million units at the end of the war. In the mid- Beginning in the mid-1960s, major real estate com- 1950s, an explosive growth in the population concentrated panies, trading companies and others entered the in major cities began to occur alongside Japan’s rapid eco- field and expanded the condominium market from nomic growth. The ensuing increase in land demand sent a luxury product to a product targeting the general land prices soaring, making the situation for housing even public. This developed a broad demand segment more severe. The Japan Housing Corporation (presently for condominiums. The Government Housing Loan the Urban Renaissance Agency) was launched in 1955 as Corporation (presently the Japan Housing Finance the trump card for eliminating this housing problem and Agency) began financing condominiums in 1970 it began to supply “danchi” or apartment complexes en and as they became easier to purchase, condo- masse. These danchi spawned residential districts and led miniums very quickly became widely accepted. to the construction of so-called “new towns” and the devel- However, as the supply of for-sale condominiums opment of new city areas. increased, the problem of how to manage and operate the common areas of condominiums emerged. Today, the most prominent condominium complex is the In 1962, the Sectional Ownership Law was estab- “mansion” and many varieties — such as those targeting lished. The law was revised in 1983 as rights and families, single persons, DINKs and seniors — have become management-related problems had emerged that available in response to Japan’s changing society. The were not initially anticipated.The sudden massive earthquake resistance and energy saving capabilities of increase in condominiums also saw disputes over stand-alone houses have also been improved as security the right to sunlight surface among community and disaster prevention measures play a greater role in residents. The Building Standards Law was revised urban development. “Excellent communities” and “smart in 1976 with new regulations concerning sunshine cities” that are environmentally friendly and contribute to a added in line with consumer demand for further low-carbon society are also being advanced. protection. Development of Housing Areas Slow since Oil Shock

In terms of the development of housing areas, the launch of the so-called demarcation system in 1969 led many areas suitable for development to be incorporated into city coordination zones and the policy of suppressing development also became more conspicuous among local governments. In the early 1970s, many administrative regulations such as guidelines on housing lot development were issued. The increase in requirements for bearing expenses for public developments and the prolonging of projects generated a rise in the cost of development. The simultaneous boom to “remodel” Japan also caused land prices to soar and a condition developed in which land for developing housing was consistently priced high.

Real Estate in Japan 2016 OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS HOUSING 0 50 600 550 500 450 400 350 300 250 200 150 100 613.2 (year) (10,000 units) 13 14 601.2 1211 10.2 11.6 12.1 589.7 8.2 579.6 9.2 10 571.3 562.1 08 545.1 ucture, Transport and Tourism. 528.4 nforced concrete, steel-framed reinforced concrete and 505.7 prices, the resulting locational return to central central to locational return the resulting prices, condomini- of popularity revived the and Tokyo, tax preferential rates, interest low ums due to houses, of residential purchasers for breaks - such as the subse factors due to However, etc. in prices and the impact of the quent increase by the subprime loan crisis triggered financial 167,000 units in 2008. to fell supply problem, 100,000 was supply the 2013, through 2010 In is the nationwide stock Meanwhile, units. 6 million units (end of approximately already 1.06 million of which approximately 2014), A major issue old. than 30 years more units are or maintain industry to how is estate real the for can be so that they these appropriately update housing stock. as high-quality or improved kept do these older condominiums have Not only but in many resistance, earthquake inferior is upgrading cases earthquake-resistance - infra because the buildings also have difficult no elevators have they (e.g., problems structure is difficult). the piping system or renovating them. rebuild is no solution other than to There is being made progress not much However, Reasons aging condominiums. in rebuilding forming a consensus and in include difficulties costs. deciding who will bear the rebuilding the Ministry of Land, former, the to With regard 485.0 465.7 447.1 427.2 406.3 386.0 11 368.7 351.9 333.6 315.5 Real Estate in Japan 2016 295.7 gures for new units supplied, etc. fi 277.2 Old Condominiums being Rebuilt as Increases Stock condominiums of new of the supply An analysis (based on completions) reveals years in recent (at the 200,000 continued supply that massive from area metropolitan Tokyo the in level) unit the post-bubble decline in 2007 due to 1995 to with the Lions Square Elza Tower 55 (55 55 (55 Tower Elza with the Lions Square and Daikyo) Saitama; City, Kawaguchi floors; Ward, Chuo (54 floors; Tower the Century Park in Even 1999. Mitsui Fudosan) in March Tokyo; con- build ultra-skyscraper is to the trend Kansai a 50-floor Osaka, Tower dominiums such as City condominium that opened in December by developed City, Osaka Ward, Chuo in 2003 has There Realty & Development. Sumitomo since. ever supply been substantial of has been a conspicuous trend there Lately reflected Tokyo of the center to back moving condo- boom of ultra-skyscraper in the recent companies selling off from miniums emerging to means a as housing corporate and factories the redevelopment businesses, their restructure and other factors. of stations in front of areas in have 23 wards Tokyo’s of many However, abso- on restrictions established years recent height. lute 263.6 252.0 234.7 216.1 89 199.7 12.3 14.8 16.4 18.6 17.3 11.7 13.6 19.0 20.0 18.2 18.4 16.9 17.3 20.3 20.9 19.9 18.6 19.3 20.5 22.7 16.7 17.0 184.9 10.7 172.7 162.0 151.2 Number of new units supplied (annual, left scale) units supplied (annual, Number of new right scale) units (year-end, Cumulative Condominiums as described here are buildings at least three stories in height, sold after subdivision, jointly built, steel-rei Condominiums as described here are buildings at least three steel structured housing. Cumulative units are estimated based on the cumulative Number of new units supplied is derived from construction start statistics, etc. and based on completion. Number of new units supplied is derived from construction start 140.0 3. 2. “Zenkoku no Bunjo Manshon Sutokku Kosu (Number of For-sale Condominiums in Stock Nationwide)” by the Ministry of Land, Infrastr “Zenkoku no Bunjo Manshon Sutokku Kosu (Number of For-sale 83 84 85 86 87 88 90 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 09 10.2 11.3 11.2 10.8 (10,000 units) 128.7 0 5 10 15 20 Notes: 1.

Source: Number of For-sale Condominiums in Stock Nationwide in Condominiums of For-sale Number Condominiums Taller Grow of condominiums also correlates The history the Following of building higher. with the history Mansion Park Tsunamachi Mita completion of Mitsui Fudosan) Tokyo; Ward, Minato (19 floors; a string of high-rise condominiums in 1971, House (21 floors; Yono including released were Sumitomo Prefecture; Saitama City, Saitama City Bell Park in 1977; Realty & Development) Mitsui City; Osaka Ward, Miyakojima (36 floors; and 1987; in Estate) Real Kanebo Fudosan and Miyakojima City (41 floors; River Sakuranomiya Investment Matsushita City; Osaka Ward, and Real Estate Kintetsu and Development, Condominiums in 1992. Corporation) Obayashi in 1998 also emerged 50 stories exceeding As a result of these developments, it became of these developments, As a result profitability. to secure for developers very difficult of hous- area supply the peaking in 1972, After the given slide to continued ing development the 1973 oil from resulting economic downturn supply years In recent factors. other and shock about to has dropped developers private from small-scale on centering 20% of the peak level, in city and redevelopments developments of development than large-scale rather areas housing areas. CASE STUDY HOUSING

CASEBRILLIA STUDY TOWERS MEGURO

Property Overview Tokyo Tatemono has developed Brillia Towers supplying high-quality residences. Its design takes Meguro, located a mere 1-2-minute walk from into account the bustling Meguro-dori Street and Condominium portion name: Meguro Station on the JR Yamanote Line, station-front location. Specifically this includes Brillia Towers Meguro through its acquisition of the residential portion developing commercial facilities to be connected North Residence, of the Meguro Station Front District Category 1 and continuous, and establishing a “Culture Brillia Towers Meguro Redevelopment Project. Based on the concept of a Plaza” to compose an energetic landscape. Tokyo South Residence “city that grows together with the woods” (creating Tatemono also plans to form a greenery-filled, a forest), it will offer a living environment replete concept-based “Forest Plaza” for the residence Location: 3-chome Kamiosaki, with nature. Brillia Towers Meguro comprises two towers and a favorable urban environment as well Shinagawa Ward, tower condominiums, the North Residence and as scenery that takes into account neighboring res- Tokyo South Residence, with a total of 940 units (661 idential areas. offered for sale), and the redevelopment site will also contain an office and commercial tower. One challenge during this redevelopment was 2 Site area: approx. 17,000m reaching agreement among the many related Selected as a project participant in July 2007, Tokyo rights-holders. The plethora of parties involved, No. of floors: Tatemono has seen the project through the city plan- including members of participating associations North Residence: B2/40F ning decision (2010), formation of the Meguro Ekimae with different purposes and different contractors South Residence: B2/38F District Urban Redevelopment Association (2012) for different sections of the construction site, meant and approval of the rights exchange plan (2013). that coordinating even one issue required significant time and effort. Furthermore, the complicated No. of units: 940 units The aims of this redevelopment are to use the land management regulations and divisions made North Residence: 524 units in a sophisticated manner befitting its station-front drawing up the management regulations another South Residence: 416 units location and upgrade its urban capacities by devel- time-consuming endeavor. oping public facilities that contribute to improving Total project cost: the district’s convenience, disaster-resilience On the other hand, the sale of the residences approx. ¥80.8 billion and safety, creating a dynamic environment by drew much attention and units sold out a mere enhancing commercial and business functions and four months after becoming available. Reasons for the amount of attention included the proxim- ity to Meguro Station on the JR Yamanote Line, enabling use of four train lines, the natural living Multiple names are planned environment with the Institute of Nature Study and for different parts of the Meguro River within walking distance and the ele- redevelopment area. vation of approximately 27-29m. District name: Meguro Hanabusayama Tokyo Tatemono intends to continue to offer urban development that contributes to the future and res- Office building name: idences that provide long-term security. Undecided

Commercial portion name: Undecided

Rental apartment portion name: Undecided

Condominium portion name: As above

As indicated above, “Brillia Towers Meguro” will be the name of the condominium portion.

12 Real Estate in Japan 2016 HOUSING HOUSING CASE STUDY

CASE STUDY CASE STUDY TOMIHISA CROSS

Property Overview Tomihisa Cross is a redevelopment project in More specifically, on its large, approximately Shinjuku’s Nishi-Tomihisa district carried out by 2.5-hectare site, the project includes a 55-floor, Project name: Tomihisa Cross Nomura Real Estate Development and other partic- 1,093-unit, 180m-tall tower condominium – (Nishi-Tomihisa District Category 1 ipating association members. Despite its downtown the tallest inside the Yamanote Line – as well as Urban Redevelopment Project) location in Shinjuku, the site is an expansive 2.5 rental apartments and detached houses called hectares with a large-scale mixed-use development “pent-terraces.” Nomura has also included shops, combining residential, childcare, medical, retail, a certified early childhood education/care center Location: Tomihisacho, dining and business facilities. and emergency supply storage, and taken advan- Shinjuku Ward, Tokyo tage of cutting-edge technology and insight from Tomihisa Cross is Japan’s first resident-led redevel- both hard and soft perspectives to implement opment project. The Tomihisa district, located in Construction site area: disaster prevention measures. In addition, with approx. 2.5 ha Shinjuku Ward, Tokyo, experienced a chaotic rush the “Comfort of 1,000” common space and ser- of land transactions during the land speculation vices based on around 100,000 collected opinions, 2 accompanying the surge in land prices that began in it has implemented ideas to improve comfort and Building area: 16,247m the 1990s but, apart from a few empty plots, largely ease of living at every turn, making it an attrac- fell into decay. In 2001, a study group was formed tive place for anyone, regardless of generation, to Total floor area: 138,946m2 around local residents that wished to keep living live. Furthermore, Nomura piloted reconstructing in the same area, and finally over 20 years later in detached house-style residences with individual Main uses: 2012, redevelopment work began in earnest, reach- lanes and gardens atop an artificial platform in ing completion in the fall of 2015. order that, after completion of the development, Residential (1,230 units), business/commercial facilities, This project is an industrial-governmental-academ- the original residents might continue to live in etc. ic-private partnership utilizing not only the expertise much the same way as before. of the local residents but universities and compa- Nomura Real Estate Development will continue to nies. It uses the land in a sophisticated manner, develop cities for the future based on the things that furnishing a favorable residential environment full communities and individuals hold dear, working of greenery and sensitive to the environment with with people to cultivate abundance and create new the aim of building a community in which multiple value for society. generations interact. The goal of this development is to create a safe and secure district that is barrier-free and pedestrian-friendly.

13 Real Estate in Japan 2016

Over 40 years old 40 years Over = built in or 1995 before 2,960,000 units 2-year inspection 1-year inspection 189 145 151 (2035) Delivery (owner) Twenty years after years Twenty Delivery 6-month inspection after 6-month inspection after completion of construction completion of construction Delivery Over 40 years old 40 years Over = built in or 1985 before 1,510,000 units completion completion Construction Construction Issuing of certificate Issuing of certificate of inspectionof inspection completion Construction 51 145 100 (2025) etc. Ten years after years Ten Inspection by government, In response to this diversification of needs, con- this diversificationneeds, of to In response being are size ranges dominiums in various such offered options are supplied and various facilities as condominiums with commercial large- sites, on large-scale being developed scale condominiums equipped with communal and guest rooms, such as party rooms facilities con- on energy that focus condominiums green and harmony, servation and environmental with in collaboration condominiums developed designers or other industries. famous measures prevention disaster regarding Efforts ground of long-term such as the deployment isolated and seismically motion countermeasures securing of high-rise condominiums, for structures setting up warehouses supply, power emergency have etc. of a disaster, in the event with stockpiles concern since the Great also become of greater of 2011. East Japan Earthquake Owner inspection opening opening start start Contract Inside viewing Delivery Model room Model room Sales Sales Sales start 81 13 13 122 (2020) completion completion Construction Construction Five years after years Five launch Building Building acquisition acquisition Construction Confirmation Confirmation Over 40 years old 40 years Over = built in or 1973 before 320,000 units Construction start Construction launch 14 Building 50 application 100 Confirmation 1 1 (2015) present Over 30 years old and less than 40 years old old 40 years 40 years old and less than old and less than 30 years 30 years Over Over old old 50 years 50 years old and less than old and less than 40 years 40 years Over Over old old 50 years 50 years Over Over Over 30 years old 30 years Over = built in or 1985 before 1,510,000 units (Selection of management company) Condominiums” (materials of lecture presented on October 1, 2015) Condominiums” (materials of lecture Finalization of product content Ministry of Land, Infrastructure, Transport and Tourism, “Current State of Issues and Policies Surrounding Transport and Tourism, “Current State of Issues and Policies Ministry of Land, Infrastructure, Real Estate in Japan 2016 (10,000 units) 0 Source: Source: 50 350 300 250 200 150 100 500 450 400 Number of Condominiums over 30, 40 or 50 Years Old or 50 Years over 30, 40 of Condominiums Number Diversifying Household Supply Diversifying of a serious decline in the birth- With the advent the segment of society, super-aging and the rate of the population buying condominiums has segment family the traditional from expanded individuals singles and retired include DINKs, to - stand from change their residences seeking to locations alone houses in the suburbs to - changes in life and These trends downtown. diversifying the needs for are styles and tastes kinds of various The need for condominiums. such as serviced hous- senior accommodation, is also becoming people, elderly ing for apparent. integrated design programs and the like. With a and the like. design programs integrated of an earth- in the event disasters prevent to view would programs these new lives), save (i.e., quake cases of condomini- the most urgent be applied to and it deficiency,” resistance “structure ums with for will be encouraged that rebuilding is expected earth- condominiums with outdated deteriorating resistance. quake Explanation and negotiations Advance discussions Land selection for sales center and model room Delivery Hanging of signage Sales method and price discussion contract Acquisition Land sales consultation consultation Advance study & Advance study & Planning design Basic design Basic design Implementation design & assessment & assessment Product planning (1) Product planning (2) Property research Property research Property Business income & expendituresBusiness income & expenditures Information acquisitionInformation acquisition information (1) Sales center model room Land Sales Design Planning (2) Sales (management) Permits (OK) Neighborhood Construction Flow Chart of Condominium Business Infrastructure, Transport and Tourism - Transport formu and Tourism Infrastructure, of Reconstruction Act on Facilitation the lated which has made it possible of Condominiums, with rebuilding with condominium proceed to that at least four-fifths provided a majority vote, in favor. are on the resolution of those voting were they since law the in changes on Based condomini- aging many however, constructed, non-conforming “existing become ums have size current to do not conform that buildings” - diffi more it even makes which requirements, them. rebuild a consensus to form cult to condominium unit the latter, to With regard the costs required afford owners cannot usually buildings and the costs existing down tear to condominiums. construct new to required to been rebuilt have Most condominiums that the method of constructing adopted have date one by condominium than the existing a larger the and bearing areas making use of unused - devel selling the additional portion to costs by be cannot approach this but operslike, the and area. with no extra condominiums used for aging con- renewing option for as a new Therefore, System Selling Lot a Condominium dominiums, selling in December 2014 for implemented was the condominium it from removing land by off and it is expected based on an 80% majority vote, cases of sold lots and more will be more that there and other purposes, facilities retail being used for - national tech Moreover, condominiums. not just for relaxing for been produced nical guidelines have which may cases, in special regulations volume condominiums thatbe used when reconstructing earthquake as insufficiently been recognized have their management will and going forward resistant, authorities’ special administrative to be entrusted

OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS HOUSING REAL ESTATEREAL JAPAN IN 2016

From Post–War Recovery to Building Boom OVERVIEW OF MAJOR REAL After the war, major cities eagerly readjusted their zonings to promote recovery from the disasters of ESTATE SECTORS the war, thanks to which streets in urban downtown areas were developed to a certain extent. However, the construction of buildings by private companies in the late 1940s and early 1950s was still in its infancy due to a conspicuous lack of funds and materials. URBAN REDEVELOPMENT In the early 1950s, some of the buildings whose construction had begun during the war but had (URBAN RENEWAL) been suspended or that had been started after the war were completed, but it was in the late 1950s The objective of urban redevelopment projects is to renew that the first building boom occurred, against the urban functions, promote advanced use of land, improve backdrop of the post-Korean War Jinmu Economy. disaster prevention properties and the urban environment, Although banks’ assessment of the real estate MAJOR REAL ESTATE REAL MAJOR SECTORS OVERVIEW OF create public space and activate the local economy. It is industry was poor, and the procurement of funds the integrated and comprehensive arrangement of build- remained difficult, the building business took off as ings, retail properties and other urban facilities along with the system of Construction Cooperation Funds— streets, plazas and other urban infrastructure by rationally via which funds for construction were obtained using land and rebuilding aged buildings. from companies that planned to enter buildings as tenants once they were completed—became Spurred by the creation of the special urban block system commonplace. in 1961, the easing of absolute fixed height limits between Throughout the late 1950s and early 1960s, a 1965 and 1975, and so forth, private companies also began number of Mitsubishi Estate buildings were com- undertaking ambitious redevelopment projects. pleted as well as a series of company buildings for In recent years, Urban Regeneration measures have been financial institutions and newspapers located on hammered out by the government to heighten the appeal national land they had been granted, forming most of the Tokyo business district covering Yurakucho, of cities and their international competitiveness, such as Marunouchi, and Otemachi. activities relating to Special Districts for Urban Regeneration and National Strategic Special Zones, and the urban devel- In the late 1960s and early 1970s, there was a opment projects of the private sector are receiving proac- dramatic relaxing of regulations limiting building

heights thanks to the creation of the Special Urban REDEVELOPMENT URBAN tive support. Block Area System1 in 1961 and the introduction of FAR Regulations2 in 1963, leading to a wave of large-scale developments. Simultaneously designated as the first special urban block in 1964, Tokyo’s Tokiwabashi Redevelopment (Nippon Building, etc.) and Kasumigaseki Building were completed one after another in 1968. At the time, they were respectively the largest building and first skyscraper in the East. Also in 1968, the preparation of infrastructure on the former site of Tokyo’s Yodobashi Water Purification Plant was completed, the land was sold to the private sector, and construction of Shinjuku’s new downtown area of (

skyscrapers began. URBAN RENEWAL

Private Companies Take Active Role in Redevelopment

The history of redevelopment in Japan is primarily the history of local governments aiming to renew low quality city streets formed with little or no order and to recover from the destruction of earthquakes, wars and fires. Although private companies played a certain role in building and ) supplying buildings and stores in the mid-1950s,

Real Estate in Japan 2016 Primary Systems for Promoting Urban Redevelopment

Grant and Subsidy System Public Financing Urban Planning and Building system Regulation Promotion Measures • City lot redevelopment project • Urban district redevelopment project, • Consecutiv e building design system etc. financing system • Specific blocks • Superior building improvement project • Compr ehensive development design of • Urban district redevelopment, etc. • Sophisticat ed use districts apartment areas • Residential district improvement project financing (Development Bank of Japan) • Rede velopment, etc. promotion districts • Comprehensive Special Zones system • Public facility improvement promotion • Loaning of public funds (Organization project related to city redevelopment • National Strategic Special Zones special for Promoting Urban Development) • F AR appropriate distribution district plans case system • City regeneration lot adjustment project Special Tax Measures • F AR district plans by usage • General town creation support project • Urban district redevelopment project • Pr omoted FAR district plans • City energization regeneration base improvement project • Specific private redevelopment project • Town environment promotion district plans • Town creation grant system • Special model refinancing • Approved city regeneration projects • Compr ehensive development design

History of Building Vacancy and Floor Area (Stock)

Office floor area (national, left scale) 90,000(ha) 15 (%) 86,730 87,115 87,646 Office floor area (Tokyo area, left scale) 85,227 85,233 86.023 86,144 81,442 82,557 80,000 80,277 Office vacancy (national, right scale) 78,150 79,158 13.07 76,434 77,303 12.60 74,815 Office vacancy (Tokyo area, right scale) 73,363 71,614 11.78 70,000 69,509 11.00 10.72 64,341 10.53 62,375 60,000 59,670 9.50 9.60 10 56,637 8.91 9.01 8.64 8.67 7.98 50,000 8.09 48,456 8.08 7.81 8.12 7.69 8.69 8.84 7.36 7.34 6.42 7.95 6.91 6.84 7.68 40,000 6.14 6.10 37,037 5.47 5.67 6.57 6.33 5.17 30,000 5.04 5 29,130 5.52 4.22 4.72 21,123 20,000 4.11 3.77 4.03 3.17 2.89 13,444 2.65 10,000

0.48 5,895 7,900 10,118 15,961 17,051 17,985 18,632 19,711 20,236 20,640 20,962 21,389 21,578 21,893 22,296 22,649 22.994 23,385 23,922 24,201 24,443 24,619 24,799 24,936 25,117 0 0.39 0 1975 8580 90 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 (year) Source: Miki Shoji Co., Ltd., “Office Data,” Summary of Investigation on Fixed Asset Price, etc. Issued by the Ministry of Internal Affairs and Communications. Notes: 1. Figures as of December each year. National averages calculated by the editors. 2. (1) Stock is the total floor area of wooden house offices and banks and non-wooden house offices, stores, department stores and banks. However, stores are also included in wooden houses from 1997. (2) The stock is as of January 1 of each year. (3) Tokyo area as pertains to stock: Tokyo, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture.

they were rarely proactively involved in broader Era of Planar Redevelopment years. In addition, Hibiya City was completed in redevelopment projects. 1981 on two special urban blocks that were the Upon entering the mid-1970s following the oil former site of NHK. This project is well known as Between the early and mid-1960s, various shocks, there was a slowdown in the concen- a project in which air rights3 were sold within systems were established for securing a good tration of industries and people in major cities, the special urban blocks. city environment and attracting superior archi- and the building boom also calmed down. On tecture and developments. These included the other hand, high quality developments From Development Boom to Sudden creating the system of special urban blocks, worthy of being called “town creation” proj- Building Slump transferring regulations with absolute fixed ects began to be conducted utilizing a new height limits to regulations based on FARs, and business system. One project representative Between the late 1980s and the early 1990s the establishment of the New City Planning of this is the Ark Hills project in Minato Ward, there was an unprecedented development Law and City Redevelopment Law. Private com- Tokyo, that was completed in 1986. This was boom backed by the spread of information panies took advantage of the opportunities the first city redevelopment project primarily technology and the emergence of Tokyo as an presented by these developments to embark conducted by a private developer based on the international finance center. The announce- on large redevelopment projects requiring the City Redevelopment Law established in 1969. ments of very strong demand forecasts made coordination of multiple landholders’ rights The developer diligently obtained the under- into the mid-1980s by the National Land and the preparation of public infrastructure. standing of multiple land rights owners and Agency (today’s Ministry of Land, Infrastructure, completed the new town after a period of 17 Transport and Tourism) and by multiple think

Real Estate in Japan 2016 OVERVIEW OF ( ) REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS URBAN REDEVELOPMENT URBAN RENEWAL Settlement , tax measures and measures tax , 5 Urban Renaissance Agency, Urban Renaissance Housing Supply Corporation, etc. Corporation, Housing Supply construction completion Minister of Land, Infrastructure, Infrastructure, of Land, Minister Public announcement of public facility Transport and Tourism or governor approval of approval or governor Tourism and Transport implementation regulations and business plan regulations implementation In its broadest meaning, these projects include projects these meaning, broadest its In It is the of buildings. the simple rebuilding meth- that use projects used for term general projects. ods other than urban redevelopment - city plan apply comprehensively These projects such as special urban blocks and ning systems including the com- special building regulations design system prehensive subsidy measures. - behind the execu is no legal force Since there of the approval requires it tion of the project, but at the same time all the land right owners, such as the strict requirements no are there - percent be at least a certain to there need for age of old buildings within the district. the from redevelopment the need for Furthermore, as a result grew prevention perspective of disaster Awaji Hanshin of the Great of the occurrence included measures The resulting Earthquake. the promotion of the law concerning enforcement within infrastructures district prevention disaster of These in 1997. city areas concentrated heavily - redevel promote effectively sought to measures as risky recognized that were areas opment in city prevention. disaster to with regard Execution of construction Execution (Category 2 Urban District Redevelopment Project) 2 Urban District Redevelopment (Category Preparation of managed disposal plan of managed Preparation Application for transfer request and lease request request transfer Application for Acquisition, etc. of land (1) Payment of compensation or of of land (1) Payment etc. Acquisition, Approval by Minister or governor of managed disposal plan of or governor Minister by Approval (2) Acquisition of right to be transferred building facility portion building facility be transferred Acquisition of right to (2) Registration of building facility portion, etc. portion, of building facility Registration construction completion Decide city plan for project Decide city plan for approval of business plan approval Public announcement of building [Local public body] [Local Minister of Land, Infrastructure, Infrastructure, of Land, Minister Transport and Tourism or governor or governor Tourism and Transport 17 company Selection of sophisticated use district, etc. use district, Selection of sophisticated Real Estate in Japan 2016 Redevelopment and these projects are executed as city plan- executed are and these projects 4 Governor approval for approval Governor project implementation project ning projects. Urban redevelopment projects are projects Urban redevelopment ning projects. of laws and with the enforcement implemented capabili- prevention the disaster improve seek to city functions and renew ties of buildings in cities, - the enforce Due to land use. sophisticated achieve thisfor strict requirements are there of laws, ment a including maintaining type of redevelopment buildings within the of old or wooden ratio certain a stronghas project of this type Since district. set tax various characteristic, public (government) in place for are and support systems incentives these projects. the uni- is generally redevelopment Voluntary conversion of land use fication of divided lots, areas redevelop to etc.) sites, factory (former including the construction of public facilities. Legal Redevelopment and Voluntary Voluntary and Legal Redevelopment Redevelopment types of city redevelopment two are There and voluntary legal redevelopment projects: redevelopment. - urban redevel are projects Legal redevelopment based on the City Redevelopment opment projects Law Association implementation - use devel association launch ‑ Governor approval for approval Governor Registration of facility structure of facility Registration Execution of construction Execution Payment of compensation Payment Registration of right conversion Registration Preparation of right conversion plan of right conversion Preparation Conversion of rights on right conversion date of rights on right conversion Conversion Public announcement of construction completion Registration of start to right conversion procedure conversion right to of start Registration Approval of right conversion plan by Minister or governor Minister plan by of right conversion Approval including application indicating no desire for right conversion for no desire including application indicating (Category 1 Urban District Redevelopment Project) 1 Urban District Redevelopment (Category redevelopment promotion district promotion redevelopment Decide city plan for urban district Decide city plan for Individual Settlement Governor approval for approval Governor implementation project implementation project Flow of an Urban District Redevelopment Project District Redevelopment an Urban Flow of opments in Japan. However, with the headlong with the headlong However, opments in Japan. in the (starting the Heisei recession rush into high unprecedentedly 1980s) emerged late in rents decreases remarkable vacancy rates, in the transformations and other 180-degree some projects This forced building market. to subcenter waterfront Tokyo such as the revisions. significant undergo tanks led to a building construction rush that a building construction rush that led to tanks of estimated worth years’ that ten so great was three was built in only space demand floor involved Companies not traditionally years. the building busi- entered in development the soaring land prices ness and triggered On the as the bubble. that became known period many during this ten-year other hand, over that had been conducted mega projects period such as the development a prolonged in major cities began to areas of waterfront of these include Makuhari in Examples appear. Yokohama, 21 in Mirai Minato Chiba Prefecture, Yokohama (OBP) and Park Business Osaka drew projects All of these (YBP). Business Park multi as unprecedented attention History of Supply Volume of Major Office Buildings in 23 Wards of Tokyo)

240 (10,000m²)

Supply quantity (planned) 210 216 Supply quantity (actual)

180 183 183 175

150 154

120 131 125 118 119 121 117 119 111 107 90 100 99 92 91 86 85 87 74 77 60 72 65 63 58

30 36

0 1989 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 (year) Source: Mori Building, Market Trends Survey for Large-Scale Office Buildings in Tokyo’s 23 Wards (published October 2015). Notes: 1. Study covers new major office buildings with total office floor areas of at least 10,000m² in the 23 wards of Tokyo. 2. Supply indicates the net supply of office floor area in major office buildings excluding that for non-office uses such as stores, residences and hotels.

Promoting Residences in City Centers prices in city centers made it possible to supply Implementation of Urban Regeneration housing downtown, the government has estab- Measures and Progress of Development One of the housing policies of recent years lished various measures to promote the supply Projects involves promoting residences in city centers. of good apartments and condominiums in down- The concentration of work functions in city Redevelopment projects have a very high ripple town areas through the efficient and sophisticated centers has caused a conspicuous outflow of effect on the economy and greatly contribute use of land. the residential population from city centers, a to economic recovery through an expansion of phenomenon notably accelerated by the con- The primary measures include the creation of domestic demand. The proactive promotion of struction rush of office buildings, especially a district program for heightening the appeal urban redevelopment projects by private com- 6 during the period of soaring land prices. For of town areas in 1995 , creation of areas per- panies as measures to invigorate the country’s 7 example, the nighttime population of the three mitted to have tower residences , a system for economy, which was mired in a continuing 8 central wards of Tokyo fell from 550,000 people comprehensive development design by lot size slump, had large expectations placed on it. and rationalization of FAR limits on condomini- in 1960 to 240,000 people in 1995, a halving of As a result, the government came up with a number ums and other apartments9 . Furthermore, the the population in just 35 years. of measures to promote redevelopment projects as Metropolitan Government of Tokyo established a This led to the problem of communities deterio- part of its economic measures from 1997 through headquarters for promoting residences in down- rating in city centers, the integration and closure 1998. These initiatives aimed at improving the town Tokyo as a means to reliably implement of public elementary and junior high schools due business environment included the development these measures. In addition, a drastic revision of to the decrease in students and children, and to of a system for deploying the Urban Development the Building Standards Law was passed in 1998 slumping performance among local stores in Corporation (presently the Urban Renaissance and the Consecutive Building Design System10 these areas. In addition, many of those working Agency) and Organization for Promoting Urban was created. This system was established from in city centers resided in suburbs spread over a Development and the establishment of mea- the perspective of promoting efficient land use broad area extending into surrounding prefectures sures to support the rapid implementation of while securing desirable city environments and and were forced to endure long commutes. Thus, redevelopment projects, such as the creation of arranged for the unified application of regulations it became difficult for these people to have a lei- a redevelopment project approval system and a on FARs and building height restrictions by rec- surely, satisfying lifestyle. specified project participant system. ognizing a group of sites (even including existing The promotion of residence in city centers not only structures) as a single lot. In 2001, the Urban Renaissance Headquarters leads to a regeneration of communities in the city was established in the Cabinet with then Prime Spurred by the various deregulation measures but also relieves those working in city centers from Minister Junichiro Koizumi as its head. With the and the fall in land prices, the nighttime popula- prolonged commutes, enabling them to use that objective of promoting the fluidization of land tion of the three central wards has continued to time for activities that provide them with personal by developing the required urban renaissance recover, reaching 370,000 people by 2010. fulfillment. In part because the collapse of land base and revitalizing cities, thereby leading to

Real Estate in Japan 2016 OVERVIEW OF ( ) REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS URBAN REDEVELOPMENT URBAN RENEWAL - AR Limits for AR Limits for ehensive Development Design System Design System Development ehensive Rationalization of F Compr Size Lot by Apartments Condominiums and Other A comprehensive development design system in design system development A comprehensive the becomes greater in FAR which the increase with the developer This provides the lot size. larger the increasing by combining lots for an incentive created with the size and was in accordance FAR the construction of promoting of with the objective city improving to that contribute good structures environments. 9. hall- removing by FAR the usable This heightened of condominiums common areas and stair ways FAR the calculations for and other apartments from use FAR possible to it became As a result, limits. included are etc. about 1.2 times than if hallways, (Article 52-5 of the Building area in the floor Law). Standards Design System Building Consecutive 10. the rule of one to admits exceptions This system con- When buildings are one lot. building for design based on a rational to according structed on remaining building existing the of premise the lots, comprised of several land site an integrated - applied that rec are exceptions special measure on the same buildings as existing ognize several rec- agency government when the specified site of each ognizes that the location and structures or prevention fire no safety, building presents FAR and build- Specifically, problem. sanitation applied with the multiple are ratios ing coverage and sunlight as a single unit, buildings recognized - and neighboring lot setback restric restrictions each building in that district are to tions related - pro to expected is system This individually. judged FARs unused enabling by use sophisticated mote of be used and overcoming of neighboring lots to widths when the neigh- using road restrictions FAR a wide road. boring lot borders 8. 8. development areas,” and a Comprehensive a Comprehensive and areas,” development via the set up was system Special Zone Act. Zone Special Comprehensive Special National Strategic the Furthermore, on based 2013, in enacted Act was Zones the development of promoting the objective The hubs. activity economic international of Kansai area, six zones (Tokyo year, following Prefecture, City in Hyogo Yabu City, Niigata area, Prefecture) and Okinawa Prefecture, Fukuoka In 2015, determined. and zone policies were nine to expanded of zones was the number (Semboku zones with the addition of three Sendai City in Miyagi Prefecture, Akita City in and work Aichi Prefecture) and Prefecture, each zone. plans for on approving progressed based on special measures area, Tokyo In the under are efforts Act, Planning City the under international aimed at enhancing the city’s way 22 urban such as plans for competitiveness, projects. revitalization - - 19 ehensive Development Design System Development ehensive Real Estate in Japan 2016 yscraper Residence Promotion District Residence Promotion yscraper own Environment Promotion District Plan Promotion Environment own Sk Compr T - pro as districts for districts designated Community This skyscrapers. moting the building of residential Category districts, 1 residential Category is set for districts, quasi-residential districts, 2 residential districts and quasi-indus- neighboring commercial trial districts. A system in which approval by the specific admin- by in which approval A system a secured which has a lot area agency for istrative a building of empty land for or more ratio certain on a special exception size recognizes of a certain or 1 Category dedicated a in height absolute the district residential low-rise 2 exclusively Category (Article 59-2 of or setback restrictions FAR or for Law). the Building Standards 6. height, building the area city existing an in When as a uni- designated are and form arrangement district with the in accordance district plan fied are and necessary regulations characteristics - restric then the application of FAR implemented, based on the width tions and setback restrictions This was excluded. are the front to of the road through the city environment promote to created and healthy rational, individual building activity, envi- of a good formation and use of land efficient (Article 12-5 of the City Planning Law). ronment 7. Because of economic globalization, the globalization, Because of economic of cities has industrial global competitiveness In order focus. become a national development cities major world with effectively compete to Asian and other London York, such as New it has been remarkable, progress whose cities, look ahead and cities Japan’s necessaryis for - interna attract will that districts appealing build and information. capital, tional talent, Urban Act for the Special Measures In 2011, designating revised, partially Renaissance was global compet- strengthening where regions as effective be particularly would itiveness emergency redevelopment “specific urban International Competitiveness of Cities Competitiveness International tial revision in 2014, the range of areas deemed areas of range the 2014, in revision tial as of expanded; districts city regeneration urgent about 8,372 of 63 districts with a total 2015, July had been designated. hectares In addition, following complete revision of basic revision complete following In addition, 2011 and further policies in par city regeneration chaser of the reserved floor. Category 2 involves involves 2 Category floor. reserved the of chaser the rights holders in the paying compensation to the rights for the entire district and purchasing The implementing party is a land and building. Agency local public body or Urban Renaissance the land. can also expropriate and they 5. floor and site rights (reserved floor) and applying floor) and applying rights (reserved and site floor partic- The developer costs. project those funds to implementer as an individual in the project ipates of the agent or as association, of the or member or the scheduled pur an individual implementer Redevelopment Law (Categories 1 and 2) and 1 (Categories Law Redevelopment City [Endnotes] Area Special Urban Block 1. preserving city plans for in Districts designated Within these superior city spaces. and forming FARs, concerning regulations blocks, designated and height restrictions ratio, building coverage under the Building Standards sunlight regulations height not applied and unique FARs, Law are desig- locations are plane and wall restrictions said blocks (Article 8 of the City Planning for nated Law). Article 60 of the Building Standards Law and Regulations FAR 2. area building floor of the total the ratio to refers FAR the use to according that is designated lot area to abso- were there of FAR, introduction Prior to zone. in residential of 20 meters height restrictions lute of Creation areas. other in meters 31 and areas - build enabled the construction of tall this system Law). ings (Article 52 of the Building Standards Air Rights 3. (air right) the land space above use Right to (1) from FARs transferred receive and (2) Right to right). development neighboring lots (transferable surface sectional as same the is former The Both can be in the Civil Code. rights designated of the a sale and an example through transferred the Nippon for FAR The excess City. is Hibiya latter the Hibiya to transferred Building was Center Press Building and other spaces. Kokusai 4. the revitalization of Japan, the Headquarters the Japan, of the revitalization root-and-branch with conducting a tasked was the through In 2002, systems. of various review Special the Urban Renaissance of establishment districts city regeneration urgent Law, Measures districts important critical and These are began. as bases government the central by designated should be city lots that for city regeneration for sale of land for the way This paved developed. and after the JNR Settlement Corporation by in Shiodome, redevelopments large-scale that, been have and elsewhere Roppongi, Shinagawa, of large number and an enormous undertaken, been supplied. buildings have office built have in these areas of the buildings Many not just office that are developments multi-use functions such asbuildings but also include in 2007 and onwards, Even and theaters. hotels of the seen the completion have the areas Akasaka Midtown, Tokyo Shinmaru Building, Mitsubishi Building, Marunouchi Park Sacas, more. and many Ichigokan In Category 1, landowners(individual in the district 1, In Category - all landown and an association of implementers) are there when ersformed be can association (an landowners or leaseholders)at least five along with the local public body become the implement- transferring involves The basic structure ing party. is the project the rights of landowners before and area floor building’s the new to implemented construction after in the site common interest then disposing of remaining (rights conversion), Major Private City Redevelopment Projects

Development Construction Name Address Area (ha) Completed Main Developer, Participating Companies, etc. Primary Facilities Previous Use Remarks Kasumigaseki Building Chiyoda Ward 1.6 Apr. 1968 Mitsui Fudosan Office, retail Auditorium Specified district Sunshine City Toshima Ward 6.1 May 1978 New City Development Center Office, hotel, exhibit hall Jail Specified district Akasaka and Roppongi Ark Minato Ward 5.6 Mar. 1986 Partnership, Mori Building Office, hotel, TV studio, housing Housing, retail, church, etc. Category 1 urban district redevelopment project Hills Osaka City, (former) Housing and Urban Development, Matsushita Investment Osaka Business Park Osaka City 26.0 Mar. 1990* Office, hotel, retail, multi-purpose hall Warehouse (former army depot) Land zoning adjustment project and Development, Tokio Marine & Fire Insurance, etc. Shinjuku Fuku-toshin Construction Corporation, Sumitomo Realty & Shinjuku Fukutoshin Shinjuku Ward 56.0 Jun. 1990* Development, Tokyo Tatemono, Nomura Real Estate Development, Mitsui Office, retail, hotel Water purification center Specified district Fudosan, Keio Teito Electric Railway, etc. Yokohama Business Park Yokohama City 13.2 Mar. 1991 Nomura Real Estate Development Office, R&D facility, retail Glass factory Emergency city base development promotion project Tennozu Isle Shinagawa Ward 20.0 Jun. 1992* Voluntary Council of Landowners, Mitsubishi Corporation, Ube Industries, etc. Office, hotel, retail, housing Warehouse, housing District plan Shin Umeda City Osaka City 4.2 Mar. 1993 Sekisui House, AOKI Construction, Toshiba, etc. Office, hotel, retail, aerial park Automobile plant, warehouse Comprehensive development design system Okawabata River City 21 Chuo Ward 17.0 May 1993* Tokyo, (former) Housing and Urban Development, Mitsui Fudosan Housing, retail Shipyard Specified housing land improvement project Yokohama Landmark Tower Yokohama City 3.8 Jun. 1993 Mitsubishi Estate Office, hotel, retail Shipyard Urban Renaissance Urgent Redevelopment Area Setagaya Business Square Setagaya Ward 2.1 Nov. 1993 Tokyu Land and Tokyu Corporation Office, retail Train depot District plan St. Luke’s International Hospital, Seiwa Real Estate, Tokyu Land, Towa Real St. Luke’s International Chuo Ward 3.9 May 1994* Estate Development, Nippon Life Insurance, Matsushita Investment and Hospital, housing, office Hospital Specified district Hospital Redevelopment Development, Mitsui Fudosan Shibuya and Meguro Yebisu Garden Place 8.3 Oct. 1994 Sapporo Breweries Office, retail, hotel, housing, hall, museum Brewery Specified housing land improvement project Wards Canal City Hakata Fukuoka City 4.2 Apr. 1996 Fukuoka Jisho, Organization for Promoting Urban Development Retail, hotel, cultural facility, amusement facility Plant Category 1 urban district redevelopment project Shinagawa Inter City Minato Ward 4.0 Dec. 1998 Kowa Real Estate, Sumitomo Life Insurance, Obayashi Corporation Office, retail, multi-purpose hall Railyard Redevelopment district plan Gate City Osaki Shinagawa Ward 5.9 Feb. 1999 Partnership, TEPCO, Osaki Land and Building, Mitsui Fudosan, Fuji Life, etc. Office, retail, housing, cleaning center, plant Plant, apartment, etc. Category 1 urban district redevelopment project Nippon Life Insurance, NTT Urban Development, Odakyu Department Store, Tokyo Opera City Shinjuku Ward 4.4 Mar. 1999 Theater, office, retail Industry test yard Specified district Keio Corporation, etc. Harumi Island Triton Square Chuo Ward 14.2 Sept. 2001 (Former) Urban Development Corporation, Sumitomo Corporation Office, retail, housing, hall Housing, warehouse, logistics center District plan, Category 1 urban redevelopment project Izumi Garden Minato Ward 3.2 Jul. 2002 Partnership, Sumitomo Realty & Development, Mori Building Office, retail, hotel, housing, museum, etc. Auditorium, housing Category 1 urban district redevelopment project Marunouchi Building Chiyoda Ward 1.0 Sept. 2002 Mitsubishi Estate Office, retail Office, retail Specified district Dentsu, Nippon Television Network Corporation, Matsushita Electric Works, Shiodome Sio-Site Minato Ward 30.7 Jan. 2003* Office, housing, hotel, retail, broadcasting center, etc. Station, cargo station Land zoning adjustment project etc. Mitsubishi Corporation, Mitsubishi Heavy Industries, Mitsubishi Motors, Daito Minato and Shinagawa Grand Commons 5.3 Mar. 2003 Trust Construction, Taiyo Life Insurance, Cannon Sales, Tokyo Tatemono, Office, hotel, retail, housing Office, retail, plant Land zoning adjustment project, redevelopment district plan Shinagawa Wards Kintetsu Real Estate, Nippon Tochi-Tatemono Hanbai, Total Housing Office, hotel, retail, theater, museum, broadcasting cen- Roppongi Hills Minato Ward 11.0 Apr. 2003 Partnership, Mori Building Office, retail, housing, broadcast center Category 1 urban district redevelopment project ter, housing Marunouchi oazo Chiyoda Ward 2.4 Sept. 2004 Mitsubishi Estate, Nippon Life Insurance, Marunouchi Hotel, Chuo Fudosan Office, hotel, retail Office, hotel, retail Comprehensive development design Olinas Sumida Ward 2.7 Mar. 2006 Tokyo Tatemono, Mitsui & Co., Shoei Office, retail, housing Plant Specified district Mitsui Fudosan, JA Kyosai, Meiji Yasuda Life Insurance, Sekisui House, Fukoku Tokyo Midtown Minato Ward 6.9 Jan. 2007 Office, housing, hotel, retail State-owned land (former Defense Agency) Redevelopment district plan Mutual Life Insurance, Daido Life Insurance Akasaka Sacas Minato Ward 3.3 Mar. 2008 Tokyo Broadcasting System Television, Mitsui Fudosan Office, retail, theater, broadcast center, housing, etc. Office, broadcast center, theater, etc. Redevelopment district plan JA-ZENCHU (Central Union of Agricultural Co-operatives), Nippon Keidanren Otemachi 1-chome Area Private urban redevelopment business plan, Special District for Chiyoda Ward 1.5 Apr. 2009 (Japan Business Federation), Nikkei Inc., Mitsubishi Estate, NTT Urban Office, conference hall, retail Joint public offices Redevelopment Project Redevelopment Development, Tokyo Tatemono, The Sankei Building, etc. Marunouchi Park Building, Chiyoda Ward 1.2 Apr. 2009 Mitsubishi Estate Office, retail, museum Office, retail Special district for urban redevelopment, Special FAR district Mitsubishi Ichigokan Client Council for Promotion of the Shibuya New Cultural District Development Shibuya Hikarie Shibuya Ward 0.9 Apr. 2012 Office, retail, cultural facility Cultural hall Special district for urban redevelopment Project, Tokyu Corporation, Tokyo Metro, etc. Nakano Central Park Nakano Ward 16.8 May 2012 Tokyo Tatemono, Kajima Corporation, Shouei, Nippon Tochi-Tatemono, etc. Office, housing, retail National Police Academy Private urban redevelopment business plan Ark Hills Sengokuyama Mori Minato Ward 2.0 Aug. 2012 Mori Building Office, retail, housing Forestry agency staff quarters Category 1 urban district redevelopment project Tower Urban Renaissance Agency, Mitsubishi Estate, NTT Urban Development, Tokyo Otemachi Financial City Chiyoda Ward 1.4 Oct. 2012 Office, retail, medical institution, etc. Building, auditorium Category 1 urban district redevelopment project Tatemono, The Sankei Building Mitsubishi Estate, NTT Urban Development, Obayashi Corporation, ORIX Real Grand Front Osaka Osaka City 3.8 Mar. 2013 Office, retail, knowledge capital, housing, etc. Station Special district for urban development Estate, Kanden Fudosan, Nippon Steel City Produce, etc. Abeno Harukas Osaka City 2.8 Mar. 2014 Kintetsu Corporation Department store, office, hotel Department store Special district for urban development Otemachi, Marunouchi, and Yurakucho District Plan, Tokyo Urban Otemachi Tower Chiyoda Ward 1.1 Apr. 2014 Tokyo Tatemono Office, hotel, retail Bank, office, etc. Planning Special District for Urban Renaissance Loop Line No. 2 Shimbashi/Toranomon Redevelopment Project Toranomon Hills Minato Ward 1.7 May 2014 Mori Building Office, housing, hotel, retail, conference, etc. Low-rise housing, etc. Building III Iidabashi Grand Bloom Chiyoda Ward 2.5 Jun. 2014 Mitsui Fudosan, Maeda Corporation, Kajima Corporation Office, retail facility, housing, church Hospital Redevelopment Promotion Area Nihonbashi/Muromachi East Mitsui Fudosan, Chiba Bank, Sobu, Wakamoto, Isetan Mitsukoshi, Kiya Chuo Ward 1.0 Oct. 2014 Office, retail, apartment housing, other Office, etc. Special district for urban development District Development Project Building, Furukawa, Ninben, others Futako Tamagawa rise Setagaya Ward 3.1 Apr. 2015 Tokyu Corporation, Tokyu Land Corporation Office, retail, housing, other Amusement park, etc. Redevelopment Promotion Area Tokyo Nihombashi Tower Chuo Ward 0.8 Oct. 2015 Sumitomo Realty & Development Office, retail, multi-purpose hall, other Office, etc. Special district for urban development

Note: Construction Completed indicates the month and year of the completion of entire project or the grand opening. However, those marked with an asterisk (*) indicate the month and year of completion of the main structure.

Real Estate in Japan 2016 OVERVIEW OF ( ) REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS URBAN REDEVELOPMENT URBAN RENEWAL Remarks Category 1 urban district redevelopment project redevelopment district urban Category 1 Special District urbanPrivate redevelopment for business plan, Redevelopment district Special FAR urbanSpecial redevelopment, district for urbanSpecial redevelopment district for urbanPrivate redevelopment business plan project redevelopment district urban Category 1 project redevelopment district urban Category 1 urbanSpecial development district for urbanSpecial development district for Otemachi, Marunouchi, and Yurakucho District Plan, Tokyo Urban Special District Urban Renaissance for Planning Loop Line No. 2 Shimbashi/Toranomon Redevelopment Project Building III Area Promotion Redevelopment urbanSpecial development district for Area Promotion Redevelopment urbanSpecial development district for Emergency city base development promotion project promotion development city base Emergency District plan system design development Comprehensive projectimprovement Specified land housing Area Redevelopment Urgent Renaissance Urban District plan Specifieddistrict projectimprovement Specified land housing project redevelopment district urban Category 1 plan district Redevelopment project redevelopment district urban Category 1 Specifieddistrict CategoryDistrict plan, urban redevelopment project 1 project redevelopment district urban Category 1 Specifieddistrict project adjustment zoning Land plan district redevelopment project, adjustment zoning Land design development Comprehensive Specifieddistrict Specifieddistrict Specifieddistrict project redevelopment district urban Category 1 project adjustment zoning Land Specifieddistrict 21 Previous Use Real Estate in Japan 2016 Forestry staff agency quarters auditoriumBuilding, Station Department store Bank, office, etc. Low-rise housing, etc. Hospital Office, etc. park, etc. Amusement Office, etc. Office, retail, housing, broadcast center housing, Office,retail, Agency) Defense State-owned (former land plan district Redevelopment offices public Joint Office, retail Cultural hall AcademyNational Police Brewery Plant Railyard apartment, etc. Plant, Industry test yard center logistics warehouse, Housing, housing Auditorium, Office, retail cargo station Station, Office,plant retail, Office, retail hotel, Plant Glass factory housing Warehouse, warehouse plant, Automobile Shipyard Shipyard depot Train Hospital Auditorium Jail church, etc. Housing, retail, depot) army (former Warehouse center purification Water - Primary Facilities Office, retail, apartment housing, other apartment housing, Office,retail, other housing, Office,retail, other hall, multi-purpose Office,retail, Office, housing, hotel, retail, conference, etc. Office, retail, housing, hotel, Office, retail facility, housing, church Office, retail, Office,knowledge etc. retail, housing, capital, hotel office, Department store, Office, retail hotel, Office, retail, Office,housing retail, Office, retail, medical institution, etc. Office, retail, cultural facility Office, retail housing, ter, housing ter, Office, retail conference hall, Office,museum retail, Office, retail housing, hotel, etc. housing, broadcast center, theater, Office,retail, etc. theater, broadcast Office, center, plan district Redevelopment Office, hotel, retail, theater, museum, broadcasting broadcasting cen museum, theater, retail, Office, hotel, Office, retail hotel, Office,housing retail, Office, housing, hotel, retail, broadcasting center, etc. housing Office, retail, hotel, Office, retail, Office, housing, hall retail, Office, retail, hotel, housing, museum, etc. Office, retail Office, retail, housing, cleaning center, plant Office, housing, cleaning center, retail, retail office, Theater, Office, retail, hotel, housing, hall, museum Retail, hotel, cultural facility, amusement facility Office, retail, multi-purpose hall Office, retail office housing, Hospital, Office, hotel, retail, aerial park Housing, retail Office, retail hotel, Office,R&D facility, retail housing Office, retail, hotel, Office, hotel, retail, multi-purpose hall Office,hotel retail, Office, retail Office, hotel, exhibit hall Office, hotel, TV studio, housing Main Developer, ParticipatingMain Developer, Companies, etc. Tokyu Corporation, Tokyu Land Corporation Land Tokyu Corporation, Tokyu Osaka City, (former) Housing and Urban Development, Matsushita Investment Investment Matsushita Development, Urban and Housing (former) City, Osaka and Development, Tokio Marine & Fire Insurance, etc. Shinjuku Fuku-toshin Construction Corporation, Sumitomo Realty & Development, Tokyo Tatemono, Nomura Real Estate Development, Mitsui Fudosan, Keio Teito Electric Railway, etc. Corporation Tokyu and Land Tokyu Development Urban Promoting for Organization Jisho, Fukuoka Nippon Life Insurance, NTT Urban Development, Odakyu Department Store, etc. Corporation, Keio Building Mori Development, & Realty Sumitomo Partnership, Mitsui Fudosan, Chiba Bank, Sobu, Wakamoto, Isetan Mitsukoshi, Kiya others Ninben, Furukawa, Building, Realty DevelopmentSumitomo & Client Council for Promotion of the Shibuya New Cultural District Development Project, Tokyu Corporation, Tokyo Metro, etc. etc. Tochi-Tatemono, Nippon Shouei, Corporation, Kajima Tatemono, Tokyo Mori Building Mitsubishi Estate, NTT Urban Development, Obayashi Corporation, ORIX Real etc. City Produce, Steel Nippon Fudosan, Kanden Estate, Tatemono Tokyo Mori Building Corporation Kajima Corporation, Maeda Fudosan, Mitsui Mitsubishi Estate Urban Renaissance Agency, MitsubishiEstate, NTT Urban Development, Tokyo Building Sankei The Tatemono, Corporation Kintetsu Partnership, Mori Building Mori Partnership, Mitsubishi Estate Breweries Sapporo Mitsui Fudosan, JA Kyosai, Meiji Yasuda Life Insurance, Sekisui House, Fukoku Insurance Life Daido Insurance, Life Mutual New City Development Center City Development New Development Estate Real Nomura Landowners, Corporation, Mitsubishi Council of Industries, etc. Ube Voluntary Sekisui House, AOKI Construction, Toshiba, etc. Tokyo, (former) Housing and Urban Development, Mitsui Fudosan InternationalSt. Luke’s Hospital, Seiwa Real Estate, Tokyu Land, Real Towa Insurance, Development, NipponEstate Life Matsushita Investment and Fudosan Mitsui Development, Partnership, TEPCO, Osaki Land and Building, Mitsui Fudosan, Fuji Life, etc. Corporation Sumitomo Corporation, Development Urban (Former) Mitsubishi Estate Works, Electric Matsushita Network Corporation, Television Nippon Dentsu, etc. Mitsubishi Corporation, Mitsubishi Heavy Industries, Mitsubishi Motors, Daito Trust Construction, Taiyo Life Insurance, Cannon Sales, Tokyo Tatemono, Kintetsu Real Estate, Nippon Tochi-Tatemono Hanbai, Housing Total Partnership, Mori Building Fudosan Chuo Marunouchi Insurance, Hotel, Life Nippon Estate, Mitsubishi Tokyo Tatemono, Mitsui Shoei & Co., Fudosan Mitsui Television, System Broadcasting Tokyo JA-ZENCHU (Central Union of Agricultural Co-operatives), Nippon Keidanren (Japan Business Federation), Nikkei Inc., Mitsubishi Estate, NTT Urban Development, Tokyo Tatemono, The Sankei Building, etc. Apr. 2015 Apr. 2012 Apr. 2014 Jul. 2002 Jul. Apr. 1996 Apr. 1968Apr. Fudosan Mitsui Oct. 2014 Oct. 2015 Oct. 2012 Oct. 1994 May 1978 May 2012 May 2014 Apr. 2009 Apr. 2003 Apr. 2009 Jun. 2014 Mar. 2013 Mar. 2014 Feb. 1999 Feb. Mar. 1991 Jun. 1993 Mar. 1993 Aug. 2012 Mar. 1986 Mar. Nov. 1993 Mar. 1999 Mar. Jan. 2007 Dec. 1998 Kowa Real Estate, Sumitomo Life Insurance, Obayashi Corporation Mar. 2003 Mar. 2006 Mar. 2008 May 1994* May 1993* Sept. 2001 Jun. 1992* Sept. 2002 Jun. 1990* Jun. Sept. 2004 Mar. 1990* Mar. Jan. 2003* Completed Construction Construction 1.1 1.7 2.1 6.1 3.1 1.5 1.4 1.6 1.0 1.0 1.2 5.9 6.9 0.9 3.9 2.7 2.5 2.4 2.0 2.8 4.4 5.6 4.0 5.3 0.8 8.3 3.3 3.8 3.8 4.2 4.2 3.2 17.0 11.0 16.8 14.2 13.2 26.0 30.7 20.0 56.0 Area (ha) Development Development Address Chuo Ward Chuo Setagaya Ward Ward Chuo Chiyoda Ward Ward Shibuya Ward Nakano Ward Minato Chiyoda Ward City Osaka City Osaka Chiyoda Ward Ward Minato Chiyoda Ward Chiyoda Ward Ward Toshima Ward Minato City Osaka Ward Shinjuku City Yokohama Shinagawa Ward City Osaka Ward Chuo Ward Chuo Meguro and Shibuya Wards City Fukuoka Shinagawa Ward Ward Shinjuku Ward Chuo Ward Minato Chiyoda Ward Ward Minato and Minato Shinagawa Wards Ward Minato Chiyoda Ward Ward Sumida Ward Minato Ward Minato Chiyoda Ward Name Construction Completed indicates the month and year of the completion of entire project or the grand opening. opening. or the grand project of the completion of entire the month and year indicates Construction Completed of completion of the main structure. the month and year (*) indicate with an asterisk those marked However, Nihonbashi/Muromachi East Nihonbashi/Muromachi East District Development Project rise Tamagawa Futako Tower Nihombashi Tokyo Marunouchi Park Building, Marunouchi Building, Park Ichigokan Mitsubishi Hikarie Shibuya Nakano Central Park Ark Hills Sengokuyama Mori Tower City Financial Otemachi Osaka Front Grand Harukas Abeno Otemachi Tower Hills Toranomon Bloom Grand Iidabashi Kasumigaseki Building Kasumigaseki CitySunshine Ark Roppongi and Akasaka Hills Osaka Business Park Shinjuku Fukutoshin Yokohama Business Park Isle Tennozu Shin Umeda City Okawabata River City 21 Tower Landmark Yokohama City Yokohama Setagaya Business Square International Setagaya Ward Luke’s St. Redevelopment Hospital Garden Place Yebisu City Hakata Canal City Inter Shinagawa City Osaki Gate Tokyo Opera City Ward Minato Square Triton Island Harumi Garden Izumi Marunouchi Building Shiodome Sio-Site Commons Grand Shinagawa Hills Roppongi Marunouchi oazo Olinas Tokyo Midtown Akasaka Sacas Otemachi 1-chome Area Project Redevelopment Note: Note: Major Private City Redevelopment Projects Redevelopment Private City Major CASE STUDY URBAN REDEVELOPMENT (URBAN RENEWAL)

CASEROPPONGI STUDY 3-CHOME EAST PROJECT (SUMITOMO FUDOSAN ROPPONGI GRAND TOWER)

Property Overview Concept and Characteristics building will also be able to be used as a temporary shelter during disasters and stimulate the area with District name: Roppongi 3-chome Sumitomo Realty & Development and the Roppongi a number of plazas. east district 3-chome east district urban redevelopment association are undertaking a large-scale mixed-use An office tower utilizing base-isolating Location: development in Roppongi, where numerous global construction, enhancing BCP measures and Within 3-chome Roppongi, firms are based, consisting of an approximately boasting state-of-the-art specs Minato Ward, 230m-tall office building called Sumitomo Fudosan Tokyo Roppongi Grand Tower (43 floors), a residential Sumitomo Fudosan Roppongi Grand Tower utilizes building (27 floors) and a commercial building (3 base-isolating and vibration-controlling construc- floors) with total floor area exceeding 210,000m² tion that reduces shaking from earthquakes. It also Construction site area: on a broad construction site of 2.7 hectares directly enhances BCP measures, a large concern of com- approx. 2.7 ha above Roppongi-itchome subway station (the entire panies. The building has been favorably rated by block, including the infrastructure development, is tenant firms for its high degree of safety in times of Site area: 19,220m² scheduled to be completed in 2018). emergency, being equipped with two types of power South section: 17,371m² lines that can receive power even if it is cut off from This project establishes a diverse array of functions the main line due to an accident or otherwise as well North section: 1,831m² and uses suited to its station-front location while as emergency generators that can use both medium achieving townscape continuity and harmony pressure gas and heavy oil (72 hours-worth) as fuel, Total floor area: 210,500m² with Izumi Garden Tower (completed in 2002), making it possible to supply power to the common South section: 207,750m² an approximately 3.2-hectare large-scale redevel- areas and rental spaces during blackouts. opment Sumitomo Realty & Development was (office building/residential building) involved in that is adjacent to and cross-cuts the Urban development that makes a local North section: 2,750m² station. Each block’s facility uses complement the contribution (commercial building) other, allowing the area’s workers, residents and visitors to use the entire 6-hectare mega-block as one The redevelopment will maximize the area’s con- Uses: Offices, apartments, stores, as well as further integrating the district in terms of venience and disaster resistance by installing a parking, etc. area management and disaster prevention activities. new entrance directly connecting the building and Roppong-itchome Station gates and developing Its nucleus, Sumitomo Fudosan Roppongi Grand the underground walkway connecting the sta- Completion: 2016 Tower, will have the city’s largest standard floor tion and Roppongi-dori Street. It will also create area with over 3,300 m² of pillar-free space, active spaces – an approximately 750m² plaza in enabling efficient layouts and boasting state-of-the- front of the subway station and an approximately art specs with enhanced earthquake resistance and 530m² plaza connected to the subway – as well as other BCP measures for disasters. Furthermore, in retail shops. It will further improve the area’s con- terms of making a local contribution, it will maxi- venience and dynamism while promoting disaster mize the area’s convenience and disaster resistance resistance by including an approximately 1,400m² – in addition to installing a new direct station gate greenery-filled plaza that can serve as a place of entrance, developing the underground walkway relaxation and refreshment in ordinary times and connecting Roppongi-dori Street and the station as an evacuation site during disasters, temporary and expanding the width of surrounding roads, the emergency toilet space and emergency wells.

Background

Sumitomo Realty & Development, one of the land- right holders and a member of the redevelopment association (made up of around 150 land right-holders), is carrying out this new block development project to stimulate the area and contribute to the renewal of the city. Even after the project is completed, Sumitomo Realty & Development will engage in urban development aimed at stimulating the district through area management in partnership with local residents.

22 Real Estate in Japan 2016 URBAN REDEVELOPMENT (URBAN RENEWAL) URBAN REDEVELOPMENT (URBAN RENEWAL) CASE STUDY

CASE STUDY CASE STUDYOTEMACHI FINANCIAL CITY GRAND CUBE

Property Overview Mitsubishi Estate developed Otemachi Financial Achieving advanced disaster resistance includes City Grand Cube (completed April 1, 2016) introducing independent power and plumbing sys- Name: Otemachi Financial City in the Otemachi District 3 Category 1 Urban tems that can continue to supply power and water Grand Cube Redevelopment Project (Otemachi Sequential during disaster-related blackouts. Envisioning link- Urban Renewal Project Phase 3). ing it with the international medical service center developed in the second phase, Mitsubishi Estate is Location: 1-9-2 Otemachi, This project, as part of the Otemachi Sequential also ensuring space for emergency care and shelter Chiyoda Ward, Tokyo Urban Renewal Project, followed on from the first- for those unable to return home. phase project on the site of the former Otemachi Scale: B4/31F Joint Government Building Nos. 1 and 2 and the To establish a favorable urban infrastructure and second-phase project on the site of the first-phase environment, along with developing the roads to land right-holders’ buildings. Of the second-phase ensure that, above or below ground, pedestrians Total floor area: land right-holders’ buildings, this third phase have easy access to the building, Mitsubishi is also approx. 193,600m2 was on the site of the Koko Building, Shin-Koko including a bicycle parking lot with around 700 Building, Development Bank of Japan headquar- spaces, as the number of cyclists has been on the Main uses: Offices, ters building and others. rise in recent years. In addition, through a variety of stores, parking, environmentally-friendly initiatives, the building’s local heating/cooling facilities, The main goals of the project are to develop busi- environmental performance will be equivalent to etc. ness support functions that help boost international CASBEE Class S or Green Building Platinum-level (accommodation facility competitiveness, achieve advanced disaster resis- certification. tance and establish a favorable urban infrastructure in separate building) and environment. Mitsubishi Estate will continue to help Otemachi boost its international competitiveness and move Completion: April 1, 2016 As part of developing business support functions into the future through development. that help boost international competitiveness, the building includes a support facility for foreign companies called the “Global Business Hub Tokyo,” a one-stop shop for attracting and supporting overseas companies in developing their business. It will help foreign firms create business by expanding in Japan and collaborating with domestic companies. On the same site it is also developing an accommodation facility called Hoshinoya Tokyo, which will offer world-class accommodation services to foreign business visitors. It is scheduled to begin operation on July 20, 2016, and will share the charm of Japanese culture with foreign visitors.

23 Real Estate in Japan 2016 OVERVIEW OF NATIONAL STRATEGIC SPECIAL ZONES

About National Strategic Special Zones Among these, eight projects involving private-sector companies had been National Strategic Special Zones are a system whose purpose is to enhance approved by September 2015. In the Hibiya district, based on special mea- Japan’s industrial competitiveness, form global economic activity hubs, and sures under the Special Measures Act for Urban Renaissance relating to vitalize various regions by focusing on promoting socio-economic structural approval of private-sector urban renewal project plans, efforts are underway change through bold regulatory and institutional reforms. in collaboration with Hibiya Park and others to develop a base for enhancing the area’s capacity to collaborate with businesses in order to nurture venture Enacted in 2013, the National Strategic Special Zones Act is positioned as a companies and promote arts and culture. In addition, in the Takeshiba district, central pillar of the strategic growth that is the “third arrow” of Abenomics. It based on special measures under the City Planning Law, efforts are underway opens up a way through Japan’s “bedrock regulations” by providing regulatory involving integrated development of a private-sector facility equipped with easing and tax-related privileges exclusively in the international strategic special training facilities focused on the content industry and the Tokyo Metropolitan zones specified by the government, which will in turn lead to economic growth. Industrial Trade Center along with development of a living environment suit- In the National Strategic Special Zones, special regulatory measures are per- able to non-Japanese workers, including serviced apartments and the like. mitted in nine fields (urban renewal/urban planning, education, recruitment, In the Yaesu district, two skyscraper buildings are being constructed and medicine, agriculture, etc.), and in May 2015, six zones were designated in the work is progressing on the development of international medical facilities for first phase: the Tokyo area (Tokyo Prefecture, Kanagawa Prefecture, Narita City non-Japanese users, a large-scale bus terminal, and an international con- in Chiba Prefecture), the Kansai area (Osaka Prefecture, Hyogo Prefecture, and vention center. Kyoto Prefecture), Niigata City in Niigata Prefecture, Yabu City in Hyogo Prefecture, Fukuoka City in Fukuoka Prefecture, and Okinawa Prefecture. What’s more, on National Strategic Special Zones Approved to Date August 28, 2015, additional zones (Semboku City in Akita Prefecture, Sendai City in Miyagi Prefecture, and Aichi Prefecture) were designated in the second phase, bringing the total to nine zones nationwide (as of January 2016).

Turning the Tokyo Area into a Global Business Hub Semboku City, Akita Prefecture As part of the Strategic Zones, policies relating to the real estate industry and Niigata City, Niigata Prefecture urban renewal/urban planning include an initiative in the Kansai area to create Kansai area Sendai City, an urban environment and recruitment environment that will attract ambitious Osaka Prefecture, Hyogo Prefecture, and Miyagi Prefecture talent and an initiative in Fukuoka City to promote innovation and create new Kyoto Prefecture business by attracting MICE events. Yabu City, Hyogo Prefecture Tokyo area Tokyo Prefecture, In the Tokyo area in particular, with the 2020 Tokyo Olympics and Paralympics Fukuoka City, Kanagawa Prefecture, and Narita City in Chiba Prefecture in mind, the objective is to form a global business hub that will attract capital, Fukuoka Prefecture talent, and companies from around the world by developing the world’s most business-friendly environment and create new, internationally competitive business via companies and innovation in fields such as drug development. Within Aichi Prefecture Okinawa Prefecture Tokyo prefecture, there are plans to undertake 22 projects in the fields of urban renewal/urban planning.

Tokyo Area Policies

Basic Project-Related Items Target Districts Objective Policy Issues (Special Projects Expected to be Implemented and Related Regulatory Reforms)

Tokyo Prefecture, With the 2020 Tokyo Olympics and (1) Promoting the influx of global companies, Kanagawa Prefecture, Paralympics in mind, the objective is talent, capital, etc. • Development of buildings contributing to formation of global business hub (floor area ratio) Narita City to form a global business hub that (2) Ensuring workforce diversity, including • Creating dynamic neighborhoods in the city (area management) (Chiba Prefecture) will attract capital, talent, and com- promotion of employment opportunities • Supplying accommodations adapted to needs of foreign residents (Inns and Hotels Act) panies from around the world by for women. developing the world’s most busi- (3) Promoting innovation (start-ups, etc.) and • Developing employment conditions for global companies, etc. (employment conditions) ness-friendly environment and cre- forming a hub for drug development, etc. • Revising residence qualifications to encourage influx of diverse foreign workers ate new, internationally competitive (4) Developing a living environment that sup- business via start-ups and innova- ports the business community, including • Provision of health care to foreigners (foreign physicians) tion in fields such as drug develop- foreign residents. • Creation of industries related to preventive health care and cutting-edge medicine ment. (5) Enhancing Tokyo’s international-caliber (hospital beds, foreign physicians, special medical care coverage) urban/transportation capacities in view of • Cultivation of international health care professionals (review of medical schools, hospital beds, foreign physicians, fixed-term employment) the Olympics and Paralympics. • Comprehensive post-convention activities in conjunction with MICE events (traditional Japanese houses, etc.) • Streamlining and expediting incorporation procedures (making documents available in English, setting up centralized contact points, etc.)

Source: Prime Minister’s Office website.

Real Estate in Japan 2016 REAL ESTATE IN JAPAN 2016 OVERVIEW OF NATIONAL STRATEGIC SPECIAL ZONES 14 17 3 1

2 15

3 Tokyo Sta. Tokyo 22 4 18 2 12 1 11 19 16 Airport Haneda Other special measures Tamachi Sta. Tamachi Tokyo Business Establishment Center Tokyo Employment Consultation Center Hamamatsucho Sta.

4 Palace Imperial 8 20 D 5 6 7 10 9 Osaki Sta. (provisional name) Shinagawa Sta. 3 New Toranomon Sta. New Toranomon 13 4 1

Kamata Sta. Shinjuku Sta. Shinjuku Shibuya Sta. 21 25 2 Special measures relating to foreign physicians Real Estate in Japan 2016 Keio University Hospital Juntendo University Hospital St. Luke’s International Hospital St. Luke’s MediLocus 5 C 1 2 3 4 Jiyugaoka Sta. Enabling provision of medical treatment to not just Japanese nationals but also foreigners in general er’s Office website, Tokyo Metropolitan Government website. (as of February 5, 2016) 5, (as of February website. Government Metropolitan Tokyo website, Office er’s Special measures under Road Act Special measures under Road relating to area management Special measures under City under City Special measures Planning Act, etc. Prime Minist

etc. Marunouchi Naka-dori Street, Miyuki-dori Street, Toranomon/Azabudai Toranomon 1-chome Toranomon 1- and 2-chome Toranomon 4-chome Toranomon Yaesu 1-chome 6 Yaesu 2-chome 1 Yaesu 2-chome center Yaesu Atago Nihonbashi Kabutocho/Kayabacho 1-chome Takeshiba Yurakucho Station area Yurakucho Streets around Shinjuku Fukutoshin Streets around Osaki Station Streets around Kamata Station Streets around Jiyugaoka Station

Shinagawa Station area Station (provisional name) Toranomon New

Shibaura 1-chome Mita 3- and 4-chome Nishi-Shinjuku 2-chome Airport site Former Haneda Otemachi (Joban Bridge) Hibiya Otemachi 1-chome Roppongi 5-chome Rinkai Fukutoshin/Ariake B 4 5 1 2 3 7 8 9 4 5 6 2 3 1 A 10 Holding events that leverage road spaces to create more dynamic neighborhoods Development related to new station and Shinagawa between Tamachi Stations Related to development of New Related to development Station (provisional name) Toranomon Related to development of bus terminal Related to development Station in front of Tokyo Development of global business of global business Development with enhancing hub combined hub function transportation 11 21 19 15 16 13 18 12 17 14 20 22 Source: Development of diverse business exchange hubs for international etc. finance, content industry, Development of hub with enhanced MICE capacities to encourage business exchange and attract foreign companies Development of Global Business Hub Based on National Strategic Special Zones (Tokyo Prefecture) History of Office Buildings OVERVIEW OF MAJOR REAL The history of office buildings in Japan began with the Mitsubishi Ichigokan completed in 1894. This ESTATE SECTORS was followed by the building of red brick Western style buildings at both ends of Babasakimon Road and thus the creation of the first Western style business avenue. In 1914, the Mitsubishi Nijyuichigokan, full of modern facilities, was completed, marking the beginning of the dedicated LEASING building leasing business. The Marunouchi Building was completed in 1923 and the importance of the The leasing of land and houses has a long history in Japan earthquake and fire resistant architecture sym- and the operation and management of leased housing is bolized by the Marunouchi Building began to be the root of the real estate business in Japan. It has been recognized after the Great Kanto Earthquake. reported that influential individuals, facilitators, or intermedi- Although many rental buildings burned and were aries called by a variety of names formed this trade in the lost during the awful events of World War II (1941- Edo era. From around the middle of the Meiji era the trade 1945), the full-fledged construction of rental began to be recognized as a business not just for individu- buildings took off with the recovery beginning in als but on a corporate scale. In 1921, with the establishment 1950 after derequisition of the buildings remain- of the Land Lease Law and Building Lease Law, a system of ing from the war and revision of the Rent Control Lease Contracts was established that guaranteed equality Act. This was supported by the booming building between the owner and renter. demand resulting from the high growth period beginning in 1955 and the rental building market has developed remarkably as a result of responding to this demand.

Overcoming Post-Bubble Market Decline and the “2003 Problem”

After the collapse of the bubble economy, the leasing office building market faced severe conditions for a long time due to lowered rents stemming from economic stagnation and an increasing rate of vacancy. However, vacancy in five wards in central Tokyo recovered from the 7-8% level in 1993–1994 to 3-4% in 2000–2001. Among others, an improvement tendency was found in newly built and large-scale buildings that satisfied the so-called conditions of ‘close, new and large’ to meet the needs of IT-related companies and foreign-affiliated financial institutions to expand rented areas and to move into high specification buildings. After that, the vacancy rate of the five wards in central Tokyo increased to 7-8% in 2002-2003 again due to the bursting of the information technology bubble and the 2003 problem (large supply of office buildings). In tandem with business recovery in major companies, however, vacancy improved to around 3% in 2006-2007 and rents were raised in central Tokyo. However, a global recession triggered by the subprime loan problem in the U.S. has also had a severe impact on Japan’s real economy from autumn 2008 and the vacancy rate in office buildings increased to 6-8% in 2009. In 2010 to 2012, the figure was around 9%, but it has since recovered, reaching the 4% level in 2015.

Real Estate in Japan 2016 OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS LEASING 8 6 4 2 0 -2 16 14 12 10 (year) Year-on-year rate of increase (%) Year-on-year rate In recent years, many retail and distributionand retail many years, recent In facilities have been developed and have also become a target for real estate investors. As for retail facilities, with the abolition of the LargeScale Retail Store Law in 2000, large- after one up sprung have centers shopping scale another in suburban areas. Maintaining these requires a high degreefacilities’ competitiveness of specialization in areas such as development, - ren and operation/management, leasing, tenant ovation, and major real estate companies are moving in to address these needs. As for distribution facilities, foreign-based companies have been developing large-scale, state-of-the-art facilities since 2002, with domestic real estate companies following suit beginning around 2005, which has increased supply. Demand for distribution facilities is increasing year by year in tandem with the growth of the online retail market due to the spread of the Internet. Following the 2008 global financial crisis, development halted temporarily, Earthquake,Japan East Great the since but major real estate companies have moved back into this area and supply is recovering. Moreover, with the opening of the Ken-O Expressway, there is growing expectation of and has which route, the along expansion in interest led to a succession of new distribution and retail facilities opening. Growing Needs of Retail and Needs of Retail Growing Distribution Facilities values of existing stock and conversions that form new markets are becoming important, and more active efforts are being devoted to these kinds of initiatives. 27 Real Estate in Japan 2016 Polarization in Rental Housing Markets in Rental Polarization is shifting from housing market The rental public hous- by housing provided public rental housing rental quality good to corporations ing the In particular, sector. the private by provided entrenched has housing market luxury rental Tokyo. in central market itself as a strong the rental however, perspective, long-term a From There of concerns. a number is facing market for demand of shrinkage the over concerns are - popula worker in decrease a by triggered offices housing rental in demand for tion and decrease etc. being born, children fewer even itself due to of houses in Japan number the total Moreover, of number surpasses the present already in the vacancy rate households but an increase - prop of new provision the successive caused by concern. erties has become a growing housing along with rental and While offices facilities with the latest properties competitive not are that buildings older popular, prove vacancy greater from suffering are competitive in also evident periods and this polarization, conspicuous. has become other markets, market rental the in players forward, Going to the to flexibly adapt must develop an ability market and discern the supply-demand balance by accurately watching the market to monitor changes in the business environment such as the falling birthrate, aging society, and declining working population and create products adapted to the diversification of needs among companies and general consumers. In addition, adaptive measures such as remodeling and renovations that raise market competitiveness as a means to raise the asset - - - [Area] wards 18 peripheral Wards Shinjuku and Shibuya wards 3 central eceived, which eceived, [Increase Rate] [Increase wards 18 peripheral Wards wards 5 central wards 3 central 1985 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Tokyo Land 2014 (Land Data). 0 60,000 50,000 40,000 30,000 20,000 10,000 90,000 80,000 70,000 Floor space (thousand m²) Floor space (thousand Source: History of Office Floor Space in the Wards of Tokyo in the Wards Floor Space of Office History eal estate based on a commission received. eal estate agement and maintenance of real estate and other estate of real agement and maintenance assets based on a commission r and the selection of tenants. estate of real itability Asset management represents the formation, man the formation, Asset management represents means controlling risks and returns. In addition to risks and returns. means controlling diversification of of assets, of the value appraisal as targets and investment portfolios investment alsoperiods are of investment the setting as well For a lot of ground. These businesses cover required. real incorporates that management asset example, saleand selection the in only not involved is estate but also in other operations estate real of investment the prof determine to including the setting of rent The business content can be roughly divided can be roughly The business content - The first includes the cre categories. two into setting of rent ation of a management plan, and completion of of tenants solicitation levels, second is the maintenance The contracts. rental as management as well facilities estate of real It of the budget and balance of payments. to be of utmost importance to is considered to both businesses mentioned above integrate real estate. realized through optimize profits The support for the supply of these high quality the supply The support for appetite investment is the voracious properties property Therefore, J-REITs. especially among funds, recentlymanagement and asset management have on buildings and centering become entrenched, manage Property funds. by owned housing rental - boasts an increas housing market The rental on centering of high quality stock ing number the strong and enjoys areas major metropolitan support of users. and managesment is a business which maintains r Spread of Asset Management and of Spread Management Property CASE STUDY LEASING

CASETOKYU STUDY PLAZA GINZA

Property Overview Tokyu Land Corporation completed a redevelop- developed a large-scale commercial facility with two ment in Ginza 5-chome, Chuo-ku, called “Tokyu floors below ground and 11 above on a rare entire- Property name: Plaza Ginza” in October 2015. It acquired the block site approximately 115m x 33m in size facing Tokyu Plaza Ginza site in 2007 and began construction in September Sukiyabashi Crossing, an intersection of diverse 2013. The project brings together two contending cultures and values. The building’s symbolic design Location: 5-2-1 Ginza, aspects: the hustle and bustle of the city and the makes the traditional Japanese craft of Edo Kiriko Chuo Ward, Tokyo character of Ginza. its motif, avoiding the massive faceless walls of many large-scale facilities and achieving a non-op- Site area: 3,766.73m2 As Ginza’s western gateway as well as a focal point of pressive design befitting Ginza. With public spaces the Ginza, Hibiya and Yurakucho areas, priority was inside the building and on its roof for relaxation as placed on the necessity for this development proj- well as activity, Tokyu Land Corporation’s aim is Total floor area: ect to be a landmark with information functions. for it to be a new Tokyo landmark as well as a base approx. 50,000m2 Tokyu Land Corporation put time and energy into for transmitting information and culture from both communicating with people in the area, participat- Japan and overseas. The first floor of Tokyu Ginza Construction: Steel frame, ing in local activities and learning much, seeking Plaza will have an information center called G Info, partially RC, SRC to deepen mutual understanding to aid in realizing operated by the Ginza Council, offering informa- this priority. In developing the area, it engaged in tion to help visitors from inside and outside Japan frequent meetings and coordinating not only with to better enjoy Ginza. Uses: Stores (B2/11F), parking the government but surrounding land right-holders, local development associations and others. Tokyu Land Corporation has designated this development the flagship of the Tokyu Plaza series of Wanting to carry on Ginza’s charm – the coexis- urban commercial facilities and a model for future tence of tradition and innovation – Tokyu Land commercial facility development. It will operate this Corporation called the concept “Creative Japan state-of-the-art, highly-communicative facility in a – The world becomes exciting from here” and manner that introduces visitors to new lifestyles.

28 Real Estate in Japan 2016 LEASING REAL ESTATEREAL JAPAN IN 2016

CASE STUDY Modernization of Real Estate OVERVIEW OF MAJOR REAL Transactions The real estate transaction business is the mod- ESTATE SECTORS ern‑day equivalent to what a broker in the old days used to do. Brokering is a key original element of the real estate industry along with “management agents” who are involved in the management of leased land and housing. The license system for these brokers was established in 1952 with REAL ESTATE TRANSACTIONS the establishment of the Building Lots and Buildings Transaction Business Law. The number The real estate transaction (brokering) business involves of companies rose dramatically through the early the brokering of land and buildings through buying, sell- 1970s with the concentration of industry and the ing and leasing. The capital requirement is small and there population in major cities and growth in housing are strong local characteristics and elements. As a result, demand. There are a number of factors behind this, this field used to be dominated by small local players until including: (1) increase in housing stock including major real estate firms entered in the mid-1960s. There are owner occupied homes used for a long period, ESTATE REAL MAJOR SECTORS OVERVIEW OF roughly 122,000 companies with licenses based on the (2) steep increase in the supply of condominiums from the early 1970s and (3) reinforcement of the Building Lots and Buildings Transaction Business Law, but attitude that a person seeks to change residences most of these are small and medium-sized companies spe- in line with life stages. This was right around when cialized in brokering. Most of their work involves acting as major companies began entering the industry. intermediaries for the buying and selling of existing homes Along with modernizing the real estate transaction

and renting of apartments and other housing. However, business, this served to bring the business under large brokers are also involved in brokering the sale of large the eye of society, including the coordination of buildings and acting as sales agents for new stand-alone roles and responsibilities among major as well as housing and condominium projects built by developers. small and medium-sized players.

Establishment of the Real Estate Modernization Center Foundation

In 1978, a study group formed by the Ministry of Construction (presently the Ministry of Land, Infrastructure, Transport and Tourism) and

private companies issued a report entitled, ESTATEREAL TRANSACTIONS “Report on Promoting Modernization of Real Estate Transactions.” The report proposed several measures including introducing a joint processing system for property information, securing accuracy, establishing a broker contract system, establishing appropriate price appraisals and improving the quality of companies and employees. The Ministry of Construction revised the Building Lots and Buildings Transaction Business Law in 1980 in accordance with this and not only established a general and exclusive broker contract system, but it also formed the Real Estate Transaction Modernization Center Foundation to provide instruction in modernizing the industry.

Legal System for Broker Contracting System

Real estate transaction intermediation, or brokering, involves a party taking a position between the two parties to the sale or lease transaction and acting to bring the contract to conclusion. The broker contract sought to clarify a situation apt to cause trouble due to the contractual relationship being traditionally unclear. The 1980 revision to the law

Real Estate in Japan 2016 Flow of Real Estate Brokerage Work

Property REINS Settle remaining funds Apply Conclude study registration for removal of mortgage Apply intermediary Sale and price Search and for payment of remaining debt contract Conﬁrm price, Explain Conclude purchase agreement appraisal discover buyers and removal of mortgage Receive delivery important (send/receive deposit) Deliver properties period and items brokerage Conﬁrm price Conclude Search and (Receive brokerage commission) other terms Apply Settle remaining funds fee and other intermediary discover Purchase for loan Establish mortgage desired contract properties conditions Apply for registration

sought to overcome this situation by requiring History of Building Lot and Building Transaction Firms documentation for certain items concerning the 150,000 (ﬁrms) contents of the broker contract and to clarify the 142,008 141,816 Individual 138,816 contract relationship. In addition, with regard to （26.5）（24.3）（22.0） 131,251 130,647 129,991 Company 126,676 127,702 126,582 125,855 （19.7）（18.9） 123,922 122,685 the exclusive broker contract in which the con- 120,000 （18.1）（） 122,510 122,127 （） 17.7 （17.4）（16.9） 30.8 （16.3）（15.8）（15.3）（14.8） tracting party cannot ask multiple companies 107,331

（41.1）（）（78.0）（81.1）（） to act as its broker or agent, the law called （73.5） 75.7 （80.3） 81.9 （82.3）（82.6）（83.1）（83.7）（84.2）（84.7）（85.2） for parties to register as much information as 90,000 88,122 （46.1） possible on the purchases in an information （69.2） network organization consisting of eight bodies 63,814 60,000 （63.5） in the real estate industry, including RECA and （57.9） to disclose information so that conclusion of （53.9） a contract could be promoted. Eight industry 30,000 bodies, including the Real Estate Companies （36.5） Association of Japan, support this information 0 network organization. As a result, there are now 1970 75 80 85 90 95 2000 05 06 07 08 0910 11 12 13 14 over 100 certified information network organi- (ﬁscal year) zations nationwide working to move the real Source: Website of the Ministry of Land, Infrastructure, Transport and Tourism. Notes: 1. Figures represent those as of the end of each fiscal year. estate transaction system one step closer to 2. The figures in the parentheses indicate the breakdown (unit: %). the sharing of information and networking of companies. However, the initial objectives have not been adequately attained because of the Furthermore, the Building Lots and Buildings average building age was 20.54 years. For negativity shown in exchanging information Transaction Business Law was revised in April condominiums, there were 33,265 units con- between the organizations and also many 1997 so that it became necessary for exclusive tracted, the average contract price was ¥27.89 cases where this is impossible due to dif- broker contracts to be registered with certified million (average unit price per m²: 434,100 ferences in the systems. information network organizations in addition yen; average area: 64 m²), and the average to the dedicated exclusive broker contracts. It building age was 19.7 years. Development of REINS and is clearly regulated that a certified information Looking at changes in recent years, the Reorganization of the Organizations network organization must be a public interest number of contracted units has increased for corporation and the new information network For this reason, in 1986, the Ministry of both stand-alone houses and condominiums, organizations eventually were reorganized from Construction (presently the Ministry of Land, reflecting the increase in stock. The average price 37 certified information network organizations Infrastructure, Transport and Tourism) established of stand-alone houses decreased until 2003, nationwide to four organizations in four districts. the Real Estate Information Network System reflecting a decline in land prices, increased (REINS) with the Real Estate Transaction In 1998, as shown in the graph on the next page, in 2006 and 2007, dropped again, and has Modernization Center Foundation (now known new registrations at certified information network remained stable since 2009. Average con- as the Real Estate Transaction Promotion Center) organizations exceeded 600,000, and this figure dominium prices, on the other hand, increased to foster cooperation between information continued to rise significantly from 2003 to 2008, to ¥25.45 million in 2007 from their low point network organizations. On the other hand, with doubling to around 1.24 million. It rose further in 2001 and have remained stable since then. the implementation of dedicated exclusive between 2011 and 2014, with around 1.59 Reflecting the increase in high-quality stock, broker contracts from 1990, transactions based million new contract registrations at certified the average building age increased by around on these contracts required the broker to register information network organizations in 2014, of 6 years for stand-alone houses and around 4 with an information network organization des- which around 158,000 ended up being signed. years for condominiums during the 18-year ignated by the then Minister of Construction. period from 1996 to 2014. In correlation with this, it became necessary to Status of Transaction Market for Existing prepare an information system and to organize Houses in the Tokyo Metropolitan Area Establishment and Development of Internet Utilization and integrate the information network orga- As shown in the graph on page 27, in fiscal nizations. Using REINS, information network 2014, there were 11,125 stand-alone houses Trends to use the internet in the real estate organizations integrated by supply/demand contracted, the average contract price was transaction sector have taken root due to the region were newly designated by the Ministry of ¥29.58 million (average land area: 149 m²; permeation and spread of such technology Construction and assumed the responsibilities of average building area: 106 m²), and the within society. the “certified information network organizations.”

Real Estate in Japan 2016 OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS REAL ESTATE TRANSACTIONS 79,207 157,733 520,491 441,631 548,789 1,590,118 68,862 162,848 455,652 395,503 488,837 1,415,071 (ﬁscal year) 75,701 406,192 430,512 484,257 150,540 1,396,662 77,478 396,452 420,830 475,403 136,110 1,370,163 76,063 345,127 346,871 445,743 130,354 1,213,804 77,684 325,595 288,500 453,145 123,823 1,144,924 features and quality on REINS, which is input and quality on REINS, features using check boxes. and advertising property Besides using it for the use of IT for systems, provision information is also under tasks subsequent contract-related handling of Non-face-to-face consideration. documents Matters Explanation of Important based on in 2014, reviewed using IT was and Regulatory Action Plan for the Intensive Expand Utilization of IT to Institutional Reform Headquarters in IT Strategic the by (approved to expected but while it was December 2013), reducing terms of in a beneficial impact have concerns were there time costs and the like, consumers due to in problems about an increase properly, the explanation understand to failing and transactions rental to restricted so it was With use of companies. between transactions - pre as a or the like video calling technology was it evaluate to project pilot a requisite, no problems, are and if there in 2015, started sale to With regard introduced. it will be fully based on individuals, involving transactions will be consideration results, the evaluation or a pilot project either conducting to given consideration In addition, it. introducing fully to possible legally it making to given be should documents via electronic issue contract-related reduce to since this may be expected means, and issuing in producing the costs involved 81,352 114,895 305,881 384,036 465,792 1,237,061 73,914 114,440 280,197 366,462 391,585 1,112,158 Properties for sale that are registered with designated transaction organizations) transaction designated with registered are that sale for Properties ( 56,874 898,232 231,531 308,131 301,696 115,413 47,152 108,642 855,192 218,395 300,335 289,310 31 40,609 759,464 198,326 257,686 262,843 103,317 35,504 100,586 188,064 685,887 232,651 229,668 Real Estate in Japan 2016 93,661 33,291 638,619 174,626 217,796 212,906 this system makes it possible for housing it possible for makes this system - effi to construction companies and the like via the collect necessaryciently information information, such as property REINS system, infrastructure maps, hazard legal restrictions, the location of conditions, development provide and etc., area, the in facilities public accessible format. consumers in a readily it to that environment an develop to is aim The peace of mind when feel consumersallows to selecting a property. the improving with the aim of more, What’s estate real vitalizing REINS, of functionality and enhancing and protecting transactions, was consideration in 2015, profits, consumers’ and it function, management a status to given of 2016. it at the start introduce decided to was a mandatory is now status The transaction via exclusive offered properties for input item listing. right-to-sell agencyexclusive or listing categories: with one of three It is indicated in writing,” received offer “Purchase sale,” “For the seller,” by market off taken “Temporarily or check online directly able to and sellers are in REINS. been listed have their properties how com- with the aim of providing Along with this, consumers as well to information prehensive housing that has as distinguishing existing it is now maintained, and is well good features on housing list optional information possible to 88,124 30,562 167,439 623,943 220,564 205,378

88,590 30,696 169,314 610,399 210,921 199,468 83,509 31,578 614,245 221,585 189,162 171,920 79,591 31,295 607,185 231,728 176,497 167,665 Condominiums housing Stand-alone Land Other contractsReported 78,097 30,413 587,844 167,354 232,334 157,743 his is a compilation of registration and contract information of designated transaction organizations. organizations. transaction designated of information contract and registration of compilation a is his intermediaries. general of registrations duplicated includes his 83,588 29,505 1996 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 559,856 162,276 217,275 150,800 T T

. 0 U 2 otes: 1. otes: 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 N Source: Source: Foundation). Incorporated Interest (Public Center Modernization Transaction Estate Real the report by Organizations Transaction Designated of Status tilization 1,600,000 (units) 1,500,000 1,400,000 1,300,000 1,200,000 1,100,000 1,000,000 Market Trends for Existing Housing As well as information provided by real estate estate real by provided as information As well information various online, companies working the leverage that Internet the on exist sites of the characteristics and distinctive strengths - such as industry orga bodies behind them, Japan website the Real Estate like nization sites that or listings sites 2003, launched in October services. advertising estate real provide the Ministry of Land, Since the spring of 2006, has also Tourism and Transport Infrastructure, prices on transaction information provided This system. land information a general through service price information is based on transaction - land trans parties to by provided voluntarily help general actions and is supposed to transaction estate consumers real understand REINS contract As an example, prices. market first was online in the published information public can now spring of 2007 and the general online. estate on real access information easily further toward as part of a move Moreover, existing promote to IT use in order developing the 2014, in the spring of home transactions, and Transport Infrastructure, Ministry of Land, for system its basic vision of a prepared Tourism required collecting and managing information across spread transactions estate real for estate real locations (comprehensive various it it began operating and in 2015, database), Using Yokohama. on a trial basis in the City of 8 8 18 16 14 12 10 18 16 14 12 10 20 20 (years) (years) 4,000 4,000 3,500 3,000 2,500 2,000 1,500 1,000 4,500 4,000 3,500 3,000 2,500 2,000 5,000 5,000 (10,000 yen) (10,000 yen) 2014 19.66 2,789 33,265 2,958 20.54 2014 11,125 (ﬁscal year) (ﬁscal year) Housing relating to real estate appraisal prices appraisal estate real to Housing relating these guidelines. reflect to formulated were on tables round in 2013 and 2014, Moreover, held were housing market the existing vitalizing in real involved players for a venue provide to cometo practice financial and transaction estate views. exchange and frankly and freely together based on an amendment of the Meanwhile, Business Transaction and Buildings Building Lots “building lot the term April 2015, in Act in 2014, changed to was chief” and building transaction of the In view specialist.” transaction estate “real in ensuring should have they responsibility greater and buildings and of building lots transactions safe - smooth trans in facilitating role their increased stipulations new three homes, actions of existing transaction estate real to added pertaining were business rules for general These cover specialists. and honestly, act fairly (obligation to transactions - in trans businesses involved to relationship and conduct, of discreditable prohibition actions), and skills. knowledge and improving maintaining Number of contracted properties Number of contracted price Average contracted Building age Number of contracted properties Average contracted price Building age 32 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Based on “Trends in the Tokyo Metropolitan Area’s Real Estate Transaction Market (Fiscal 2014)” by the Real Based on “Trends in the Tokyo Metropolitan Area’s Real Estate Foundation). Estate Information Network for East Japan (Public Interest Incorporated Based on “Trends in the Tokyo Metropolitan Area’s Real Estate Transaction Market (Fiscal 2014)” by the Real Area’s Real Estate Transaction Market (Fiscal 2014)” Based on “Trends in the Tokyo Metropolitan Japan (Public Interest Incorporated Foundation). Estate Information Network for East The Tokyo metropolitan area is Tokyo, Kanagawa, Saitama and Chiba prefectures. The Tokyo metropolitan area is Tokyo, Kanagawa, Saitama and The Tokyo metropolitan area is Tokyo, Kanagawa, Saitama and Chiba prefectures. The Tokyo metropolitan area is Real Estate in Japan 2016 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0 0 Note: Note: 5,000 5,000 10,000 35,000 30,000 20,000 15,000 40,000 (cases) Source: Source: 25,000 15,000 (cases) 10,000 Number of Contracted Existing Condominiums in the Tokyo Metropolitan Area, in the Tokyo Metropolitan Area, Number of Contracted Existing Condominiums Average Contracted Price and Building Age Number of Contracted Stand-Alone Houses in the Tokyo Metropolitan Area, Area, Tokyo Metropolitan in the Houses Stand-Alone of Contracted Number Age Price and Building Average Contracted Thirdly, it is necessary to revise assessment revise necessaryis it to Thirdly, of value the market which evaluate practices, on the homes as zero stand-alone existing 20 or 25 years about after market transaction that and ensure time, over depreciation to due proper in the quality of housing due to increases will be recognized management and renovations and appropriately of residences in the asset value prices and collateral in transaction reflected In March financial institutions. by evaluation building improving to guidelines relating 2014, homes were stand-alone existing assessments for that assessment of value covering formulated; on the essential function of housing asfocuses using thevalue) (use live to people for place a and improvements these presented method, cost conducted assessments are to how refinements the use value that captures based on an approach the conditions of the individual home to according 2015, In July accordingly. and adjusts depreciation Assessment Standards Housing the Stand-Alone of Note Points and the revised was Manual Assessment of Existing Stand-Alone Concerning - - - or deficit e widespread. Initiatives are being undertaken are Initiatives e widespread. erioration, thermal environment) and evaluating thermal environment) erioration, insurance, and the provision of a broad lineup of of a broad and the provision insurance, products. deficit insurance renovations promote it is necessary to Secondly, initiatives Various housing transactions. to related such as support for underway in this regard, are of business partnership committees the efforts services, of related provision aimed at the one-stop housing renovation for system a registration on breaks application of tax associations, trade in cases gift tax from mortgages or exemptions enhance earth- to is conducted work where existing home, acquiring an after quake-proofing the housing to relating measures and special tax real and license tax, business (registration resale acquisition tax). estate and formulating indication criteria, development ofdevelopment indication criteria, and formulating of inspecting the compliance status guidelines for withverification of certificate a without buildings veri Act using designated the Building Standards such as evaluating and formulating long-life quality long-life and formulating such as evaluating extensionsto relating housing certification criteria adding homes, of existing alterations and structural housing per the existing for items evaluation new prevent to (measures system indication formance det of inspectionformulation the fication organizations, guidelines and use of inspections f With regard to the vitalization of the transaction the vitalization to With regard plenty for need a is there homes, existing for market consumers who to provided be to information of of about the quality and features concerned are as home such processes homes and for existing war and inspections and home deficit insurance ranties for the purpose of avoiding risk to become risk to the purpose of avoiding for ranties mor In 2011, a new Basic Program for Housing for Basic Program a new In 2011, Housingfor Act the Basic (National Plan) based on which included the Cabinet, by approved was that facilitates a market actions such as developing homes. existing involving transactions Infrastructure, Transport, The Ministry of Land, the put together Tourism and Transport, of Existing Renovation Plan for Comprehensive Estate Real the of Proposal and Homes in 2012 Forum Vitalization Market Transaction Committee and the Report of the Research and Transaction Existing Home on Promoting being are initiatives In addition, Use in 2013. market: the transaction vitalize to undertaken Strategy the Japan Revitalization example, for to in June 2013 includes measures formulated homes. existing involving transactions promote Vitalization of the Transaction Market Market Transaction of the Vitalization Homes Existing for hard copies and, as long as the consumer as the consumer as long and, copies hard in no significant issues are there it, consents to protection. of consumer terms

OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS REAL ESTATE TRANSACTIONS REAL ESTATEREAL JAPAN IN 2016

Real Estate Securitization OVERVIEW OF MAJOR REAL (1) Real Estate Investment Trusts Investment trusts are a financial vehicle in which ESTATE SECTORS funds are gathered from many investors and managed by investment professionals and earnings are distributed to investors. Traditionally, the primary vehicle managed in this structure was limited to investment securities.

REAL ESTATE SECURITIZATION However, based on a partial amendment of the Act on Investment Trusts and Investment Corporations The history of real estate securitization is quite long and in 2000, real estate was recognized as an invest- goes back to the mortgage securities system founded in ment vehicle for trusts, and in September 2001, 1931. Beginning around 1985, real estate small lot products the first two real estate investment trusts (J-REITs) began being sold primarily by real estate firms. In recent were listed on the Tokyo Stock Exchange. As this years, real estate securitization activities have taken off with

shows, it is possible for J-REITs to raise funds from ESTATE REAL MAJOR SECTORS OVERVIEW OF the opportunities presented by the 1994 establishment of investors by means of listing, which is the biggest the Real Estate Syndication Act and the 1998 establishment difference between them and other securitization of the Law on Securitization of Specified Assets by Special methods. Purpose Companies (former SPC Law). The J-REIT market continued to grow steadily, Moreover, the revision to the Investment Trusts and Investment but buffeted by the global financial crisis caused Corporations Law in 2000 made real estate a possible man- by the collapse of Lehman Brothers and so on in agement asset of investment trusts and this led to the launch October 2008, the market was sluggish for a time, of Japanese Real Estate Investment Trusts (J-REITs). The revi- with some J-REIT investment corporations going sion of the former SPC Law into the Law on the Securitization bankrupt for the first time ever. After that, however, of Assets (SPC Law) also led to an increase in securitization J-REIT prices recovered, thanks to the stabilization cases because it simplified the procedures for asset mone- of financial markets, system reforms to enable tization type real estate securitization. mergers, the Bank of Japan’s creation of an asset The progress of real estate securitization expanded invest- purchase program in 2010 that acquired J-REITs, ment opportunities by diversifying investment methods and substantial monetary easing measures imple- for real estate investors, and a new opportunity formed mented by Bank of Japan Governor Kuroda, who for real estate companies as their business expanded was appointed in 2013. ESTATEREAL SECURITIZATION from management and operation of real estate to the fee What’s more, investment targets have expanded, business market where they could collect other forms of and in November 2014, a specialized health care compensation. facility fund focusing on investment in seniors’ residences and hospitals was listed. By the end

History of Real Estate Securitization

1,800 (cases) 8,500 (billion yen) 1,700 1,642 8,884 8,000 1,582 1,600 1,523 7,500 Assets (billion yen) 1,500 7,000 Cases 1,400 6,500 6,930 8,273 1,300 6,000 1232 1,200 5,500 1,119 1,100 5,000 991 5,513 1,000 4,500 900 4,000 3,984 4,394 800 3,500 685 700 3,000 2,838 576 600 3,345 2,500 620 518 500 2,778 2,000 2,541 5,335 400 1,798 2,341 456 2,195 1,500 1,867 269 300 1,167 343 1,000 161 275 200 500 316 74 100 26 0 62 9 0 1997 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 (ﬁscal year) Source: Real Property Securitization in Japan issued by the Ministry of Land, Infrastructure, Transport and Tourism. Note: Real estate investment corporations are recognized as single investment corporations.

Real Estate in Japan 2016 Real Estate Investment Trust (Company Type) Structure

Accounting auditor Accounting auditor

Sale of investment units Audit Sale of investment units Audit Outsourcing of clerical affairs Payment of funds Investment corporation Investor Investment corporation Outsourcing of clerical affairs General clerical affairs company Investor Payment of funds (fund) General clerical affairs company (fund) Outsourcing of asset custodianship Outsourcing of asset custodianship General meeting of Asset custodian Issuing securities and paying dividends General meeting of Asset custodian Issuing securities and paying dividends investors Outsourcing of asset management Investor investors Outsourcing of asset management Asset management company Investor Asset management company Management Board of ofﬁcers Management Board of ofﬁcers Lease Contract Purchase of investment corporation bonds Lease Contract Investor Purchase of investment corporation bonds Real estate Investor Interest payments and redemption Real estate Interest payments and redemption Lease Lease

Tokumei Kumiai Structure Using Real Estate Syndication

[Tokumei Kumiai] Acquisition [Tokumei Kumiai] Acquisition Real estate Real estate Investment Investment Real estate syndicate Real estate syndicate Lease TK agreement Lease Tenants (real estateTK syndication agreement contract) Tenants Investor (real estate syndication contract) Business entity Investor (Ownership,Business management entity Distribution of losses and proﬁts (Ownership, management Bulk sales Distribution of losses and proﬁts and business decisions) Bulk sales Real estate market and business decisions) Real estate market

of 2015, the J-REIT market consisted of 52 The following illustrates the actual flow of funds conduct activities in accordance with the details investment corporations, including three funds and the relationship with real estate: indicated in the plan. If the plan changes, the specializing in health care facilities, with a total approval of concerned parties such as investors 1) SPC issues preferred equity securities and market value that had increased to more than is required. Thus, securitization based on the specific bonds to procure funds from the ¥10 trillion. Another example of the diversifi- SPC Law is often employed in cases where the market for purchasing real estate; cation of investment targets was the launch in target property has been specified. 2015 of the infrastructure fund market, which 2) A real estate company or other original real (3) Real Estate Syndication uses the same structure as J-REITs and focuses estate owner (originator) sells the real estate primarily on investments in renewable energy to an SPC at market price; Real estate syndication is when multiple investors jointly invest in real estate to own and and the like, including solar power plants. 3) The SPC receives rent from the tenants as the manage the real estate and obtain earnings new owner of the real estate; and (2) Asset Monetization Securitization from it. In the past, there were cases in the The Law on Securitization of Qualified Assets 4) The SPC pays agreed interest to the investors real estate syndication business that resulted by Special Purpose Companies (SPC Law) was that bought the specific bonds and pays any in harm to investors, so in April 1995, the implemented in September 1998. Since then, remaining profit to the investors in preferred Real Estate Specified Joint Enterprise Act was many companies have appeared that have equity securities in the form of dividends. enacted with the primary aim of protecting investors. tackled real estate securitization using SPCs, Furthermore, a portion of the SPC Law was centering on apartments for foreigners, major revised in May 2000. As a result of the revision, Under this method of investment, in order to shopping centers, etc. There are great expec- the assets subject to monetization by the SPC protect investors, licensed companies that tations for real estate securitization as a new were expanded from designated monetary meet the criteria with respect to capital and form of business for the real estate industry debts, real estate and their beneficiary inter- personnel qualifications may raise funds from associated with the structural transformation of ests in trust to general property rights, and investors. However, investors will also be influ- the national economy. In this case, real estate restrictions concerning the establishment and enced by any business other than securitization securitization based on the SPC Law is one of operation of SPCs were simplified and rational- conducted by the company. As such, the dif- the methods for direct procurement of capital ized. Therefore, steps were taken to improve the ficulty of procuring funds from professional from the market by issuing investment securi- convenience of the system. As for securitiza- investors such as institutional investors that ties backed by real estate or assets consisting tion based on the SPC Law, it is necessary to fear bankruptcies of businesses is pointed out of real estate or real estate‑backed debt (hous- submit an asset monetization plan indicating as a disadvantage of the current system. ing loans, etc.). the method of securitization and so forth and to

Real Estate in Japan 2016 OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS REAL ESTATE SECURITIZATION Code (GK/TK schemes). Due to the existence existence the Due to (GK/TK schemes). Code - it is possi methods, securitization of various development estate real for example, for ble, by their buyers; just diversifynot to companies they securitization themselves, embarking on through their profits stabilize to can also seek management and conducting after-sales since securi- However, securitization operation. investors, from funds tization is based on raising laws such as the by is impacted its operation In the Act. Exchange Financial Instruments and or management in particular, case of J-REITs insider to subject be may companies brokerage with be taken must so care regulations, trading management. information to regard 35 Real Estate in Japan 2016 properties sequentially. According to the to According sequentially. properties and Transport Infrastructure, Ministry of Land, tril- about ¥5 will lead to this revision Tourism, 10 years in the coming investment lion of new tril- ¥8 of effect ripple a have also should and of about and employment lion on production 440,000 persons. on the Real (4) Impact of Securitization Business Estate securitization, estate real Besides the above - is establish employed another method that is of purpose the for solely company limited a ing and using silent partnership estate real owning the Commercial by designated agreements establish nursing facilities and acquire acquire and nursing facilities establish In order to resolve this disadvantage, in 2013, in 2013, disadvantage, this resolve to In order a legal revi- SPC Law above, 2 in item similar to that SPCs that establishes enacted sion was to and entrusts operations estate real only own the since In such cases, syndicates. estate real separated, of businesses is risk of bankruptcies from of funds it is thought that procurement will become easier. investors professional the same incorporating for One reason the act is that into as in the SPC Law system in other methods of securi- difficult it is often renovation, implement anti-seismic tization to - resis earthquake greater for properties rebuild tance, The Development of Economic OVERVIEW OF MAJOR REAL Globalization In 1973, Japan switched to a floating exchange ESTATE SECTORS rate system, which triggered the development of economic globalization such as the movement of capital and labor beyond the country’s borders. Subsequently, thanks to the ongoing strength of the yen, more and more companies have ven- tured overseas and in recent years there has also INTERNATIONALIZATION been an increase in corporate overseas real estate acquisition. Although there was a temporary reduc- With regard to overseas business development in the real tion after the global financial crisis, these activities estate industry, some major Japanese real estate compa- are now growing again. nies had already begun operations in Western countries by The fact that the domestic population has passed the late 1960s. Although overseas operations were down- its peak and it is becoming hard to envision sized due to the collapse of the bubble economy, since 2010 future market expansion has been mentioned as major general real estate companies have once again a reason for Japanese companies moving ahead been developing business in various regions including Asia, with overseas development. In light of this, real North America, and Europe. The opening of new markets by estate industry companies, in addition to pursuing leveraging advances and managerial know-how cultivated development in major Western cities with large in Japan, as well as ongoing growth-oriented development, markets, have recently been developing business is steadily continuing. in Asia, where there continues to be population increase and economic growth. In recent years, inbound business development to attract international investors to the Japanese real estate market Government Initiatives and foreign tourists has also become more active. In recent years the government has taken a proactive approach to pursuing business in other, fast-growing countries (especially in Asia) that are important to Japan’s continued growth. In April 2013, the Ministry of Land, Infrastructure, Transport and Tourism created a new International Affairs Division in the Land Economy and Construction and Engineering Industry Bureau to support the overseas development of real estate and construction companies. In August of the same year, it published the Global Business Strategy for the Real Estate Market. In terms of its basic approach to overseas (outbound) development, this strategy states the need to enhance competiveness through rapidly entering emerging markets and pursuing diverse real estate business models. It also states the need for collaborative initiatives with general contractors, trading companies, etc.

Outbound Business Development

Regarding outbound business development in the real estate industry, some major Japanese real estate companies had already begun operations in Western countries by the late 1960s. After that, throughout the bubble economy era, companies gradually moved forward with building construction activities, housing development, etc. in the likes of New York and London. In recent years, besides Mitsui Fudosan and Mitsubishi Estate’s acquisition of business area office buildings in the U.K., there are companies which have opened local affiliates in the U.S. and are planning mixed-use office/commercial projects. Outbound business

Real Estate in Japan 2016 OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS INTERNATIONALIZATION Summary

Office acquisition building Office acquisition building Rental housing development housing Rental Office development building comprising development Mixed-use etc. offices, condominiums, development facility Commercial development condominium High-rise development Housing development Condominium Office redevelopment building comprising development Mixed-use offices and commercial facilities development Housing development Housing development condominium High-rise development condominium High-rise development condominium High-rise development condominium High-rise development condominium High-rise Multi-use complex comprised of offices, of comprised complex Multi-use housing, retail facilities, etc. development housing Rental development housing Rental Office development building Mixed-use development comprising development Mixed-use etc. commercial facilities, housing, development Hotel Redevelopment comprising office comprising Redevelopment shops and housing, buildings, Office acquisition building Office acquisition building Office development building Land acquisition for office for building acquisition Land development Commercial facility development facility Commercial Office acquisition building Office development building development facility Commercial Office acquisition building Commercial facility development facility Commercial Office acquisition building Office acquisition building Office development building Office acquisition building Office development building Commercial facility development facility Commercial development housing Rental

Project Operators (at time of development) Mitsubishi Estate, and others Mitsui Fudosan Mitsui Tokyo Tatemono, Shenyang Vanke Real others Development, Estate Construction Farglory Fudosan, Mitsui Ananda Residential, Fudosan Mitsui Development Mitsubishi Estate, and others AP, Hankyu Nishi-Nippon Realty, Railroad, Cong ty co phan Dau tu Nam Long Mitsui Fudosan Mitsui Fudosan Mitsui Mitsui Fudosan Mitsui Export Jinqiao Shanghai Fudosan, Mitsui Processing Zone United Development Mitsubishi Estate, and others AP, Mitsubishi Estate, and others AP, Residential, Fudosan Mitsui Fudosan, Mitsui others and Residential, Fudosan Mitsui Fudosan, Mitsui others and Residential, Fudosan Mitsui others Development, Ananda Mitsui Fudosan Residential, Eastern & Oriental Sunway (Asia), Fudosan Mitsui Mitsubishi Estate, Rockefeller Group Fudosan Mitsui Fudosan Mitsui Mitsui Fudosan Mitsui Tokyu Land Corporation, Marubeni, Marubeni, Corporation, Land Tokyu Group Wah Sun Toyota Tsusho, Toyota Home, Tokyu Land others and Group, Corporation Mitsubishi Estate, Legal & General Mitsubishi Estate Mitsubishi Estate Fudosan Mitsui Mitsui Fudosan, SKS Investments SKS Fudosan, Mitsui Mitsui Fudosan, Shanshan Group, Tah Tong Tong Tah Group, Shanshan Fudosan, Mitsui others Group, Mitsubishi Estate, CapitaLandMitsubishi Estate, Mitsubishi Estate Fudosan Mitsui Mitsubishi Estate, Rockefeller Group Mitsubishi Estate, and others Mitsubishi Estate Mitsubishi Estate, and others Mitsui Fudosan Mitsui Mitsubishi Estate, and others Mitsui Fudosan Mitsui Mitsubishi Estate, and others Mitsui Fudosan, Carlisle D. J. Development, others and 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2016 2016 2016 2016 2016 2016 2016 37 ompletion in 2014 C Acquisition Year/ Completion Year Acquisition Year/ Completion Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in Schedule to be completed in

Real Estate in Japan 2016 1.1 0.09 Acquisition in 2011 6.9 2.7 0.2 Acquisition in 2011 0.40.2 Acquisition in 2012 Completion in 2014 0.6 4.3 0.9 0.9 0.3 0.5 2.7 Completion in 2011 6.7 0.4 0.4 0.3 0.3 0.7 Completion in 2014 0.2 0.4 0.7 Completion in 2010 0.3 Acquisition in 2014 0.5 0.20.10.8 Acquisition in 2011 Acquisition in 2012 Acquisition in 2013 0.3 Acquisition in 2014 0.2 Acquisition in 2013 1.0 Acquisition in 2014 8.1 0.2 Completion in 2014 0.3 Acquisition in 2014 0.2 Completion in 2014 0.20.2 Completion in 2015 0.4 Site/ 11.6 Completion in 2011 13.0 Completion in 2012 18.0 Completion in 2015 16.0 Completion in 2014 Area (ha) Development Location Washington USA D.C., Washington USA D.C., Washington USA D.C., New York, USA England London, China Shanghai, Thailand Bangkok, Thailand Bangkok, Thailand Bangkok, Malaysia Lumpur, Kuala Shenyang, China New Taipei, Taiwan Thailand Bangkok, Thailand Bangkok, Thailand Bangkok, Thailand Bangkok, Indonesia Bekasi, Malaysia Selangor, Washington USA D.C., New York, USA England London, California, USA Zhejiang Province,Zhejiang China District, Place Raffles Singapore London, England London, England London, England London, England London, Massachusetts, USA Shenyang, China London, England London, Malaysia Lumpur, Kuala Ho Chi Minh City, Vietnam California,USA Liaoning Province, Liaoning China California,USA London, England London, California,USA London, England London, New York, USA California,USA

Project Name Prepared from press releases published by various companies from 2010 onward. “Unofficial name” = the location is used as the name since the project name has not yet been decided. Note: 1101K Street 1101K Homer Building Street 17th 1200 Flushing Commons Flushing White City Place Redevelopment Project name) (provisional name) (provisional Jinqiao Shanghai LaLaport Chula-Samyan Q Ideo Ratchada-Wongsawang aspire RHYTHM Asoke2 Mews The Shifu Dalu, Shenhe District, Shenyang City Shenyang District, Shenhe Dalu, Shifu name) (provisional project Outlet Linkou Taiwan RHYTHM Sukhumvit 36-38 Asoke Ashton Siam-Ratchathewi Q Ideo Chidlom-PetchaburiQ AXIA SOUTH CIKARANG Residences Geo 2nd and Pike Development Project name) (provisional West 525 52nd Street (provisional name) Central Saint Giles 270 Brannan Development Project (provisional name) (provisional Project Development Brannan 270 Sugii Outlet Plaza, Ningbo Capita Green 150 Leadenhall Street Leadenhall 150 6-8 Bishopsgate Square Hanover 5 1 Victoria Street 28 State28 Street Shenyang Park Outlets Park Shenyang Clive House Clive Airport, International Lumpur Kuala Park, Outlet Mitsui Sepang FLORA ANH DAO UTA Plaza Chunhe Project, Shenyang (provisional name) (provisional Shenyang Project, Chunhe 8-10 Moorgate Development Project (provisional name) (provisional Project Development Moorgate 8-10 England London, The Ice House Ice The 70 Mark Lane Development Project (provisional name) (provisional Project Development Lane Mark 70 The Outlets at Tejon Ranch 1 Angel Court 160 Madison 160 name) (provisional Project Development Indiana 650 Source: Major International Projects Announced Recent in Years (Implemented and Planned) development has also become more vigorous direct investment in domestic real estate but and forming international innovation centers in Asian countries in recent years. In China, the also the entry of foreign companies due to the in fields such as medicine in order to attract likes of Mitsui Fudosan, Mitsubishi Estate, and enhanced competitiveness of major cities, and global capital and talent. Tokyu Land Corporation are involved in office increases in tourist numbers, etc. are important Some private-sector companies are also buildings, commercial facilities, housing, and measures for Japan. moving to identify commercial opportunities mixed-use developments that combine all of There have been more active efforts aimed related to overseas tourists and the entry of for- these. In southeast Asia, which is undergo- at making Japan a tourism-based country eign companies into Japan. In state-of-the-art ing remarkable growth, Mitsubishi Estate is – for example, in 2007, the Tourism Nation downtown office buildings, not only are disaster engaged in office building developments and Promotion Basic Law was enacted, and in 2008, prevention and environmental features becom- planning housing development projects in the Japan Tourism Agency was launched. In ing more sophisticated, but multilingual clinics Singapore and Vietnam, while Mitsui Fudosan 2015, the number of foreign visitors to Japan and the like are also being provided to help is planning work on housing developments and reached a record level at over 19.7 million businesspeople of various nationalities work- commercial facilities in Malaysia. people, approaching the 2020 target of 20 mil- ing there feel more comfortable. In addition, in lion visitors set by the government. Meanwhile, commercial facilities and other locations pop- Inbound Business Development in December 2013, National Strategic Special ular with foreign visitors to Japan, efforts are IInbound business development to attract inter- Zones were created with the goal of fostering being made to meet tourist demands from a national investors to the Japanese real estate the development of international economic variety of perspectives such as providing multi- market and bring in foreign tourists has also activity hubs, and the government is making lingual services within the facilities and holding become more active in recent years. Inbound efforts to create special zones aimed at set- trade shows aimed at travel agencies from business initiatives to encourage not only ting up international business environments Asian countries.

Real Estate in Japan 2016 REAL ESTATEREAL JAPAN IN 2016

Resort Development Takes Off OVERVIEW OF MAJOR REAL From the early 1960s, the general public once again was able to afford the luxury of leisure and steps were taken to develop tourist destinations ESTATE SECTORS throughout Japan. In particular, business groups centered on mass transit companies such as Tokyu and Seibu began development of comprehensive projects that included transport, vacation homes, hotels and sightseeing at famous resort areas such as Izu, Hakone and Karuizawa. In addition, large RESORTS and small real estate companies launched businesses selling vacation homes in the respective The first resort project in Japan that was developed to resort areas starting with the Nasu area. serve as a health resort within the mountains, ocean and nature was the Shonan (Kanagawa Prefecture) area which Responding to Increasing Time Off and Diversifying Needs began full-scale development from around 1877. Shonan has since then developed as a villa area and was fol- From the mid-1970s, the people began to have lowed by Karuizawa, Nasu, Unzen and other areas primarily more time off with the spread of the five-day ESTATE REAL MAJOR SECTORS OVERVIEW OF workweek. This, combined with factors such as developed by foreigners. Upon entering the Showa era in diversifying needs and the switch to a domestic the mid-1920s, resort hotels were repeatedly developed demand-driven economy resulted in the re-emer- in national parks including Nikko and Hakone. From the gence of a resort development boom. It was mid-1970s, with the spread of the five-day workweek, the around this time that Japan witnessed numerous Japanese people had more time available for leisure and developments of large multi-use resorts with ski hills, golf courses, marinas and various lodging

construction of resort facilities boomed including the emer- facilities expanding over spaces ranging from sev- gence of large multi-use resorts with seaside marinas, ski eral hundred to over a thousand hectares. Another resorts with lodging facilities, theme parks and oceanside characteristic of this time was that participants in resorts. the resort business were not limited to transport and real estate companies but also expanded to However, the Heisei recession drastically lowered the include steel, ship and chemical manufacturers, volume of the formerly booming resort condominiums and trading companies and companies from various some facility management companies filed for bankruptcy. other industries. In correlation with the transformation of the industrial structure, theme parks and In response to these developments, recent years have seaside resorts began to be built on sites where seen the emergence of the resort regeneration business large factories had once been. Investment in over- and new efforts to rebuild the resort business including the seas resorts also took off, centering on Hawaii, RESORTS expansion of services focusing on facility management. Australia and other areas in the Pacific region. Establishment of the Resort Law and End of Boom These developments were further spurred by the establishment of the Law for Development of Comprehensive Resort Areas, the so-called “Resort Law” in 1987. This Law sought to comprehensively develop sites of tens of thousands of hectares through private-public collaborations all over the country with the aim of realizing a leisurely lifestyle for the Japanese people and promoting local areas. By the end of March 1994, 41 prefectures had established and approved basic concepts and resort development had become the centerpiece in promoting local areas. The Government Housing Loan Corporation (presently the Japan Housing Finance Agency) also began providing loans for second homes in 1987. Japan had finally entered an era where the national government was actively supporting the enhancement of the leisure time of its citizens and helping them to realize multiple residences. However, this resort boom began to taper off with the start of the Heisei recession in Japan at the

Real Estate in Japan 2016 ) Acquisition, Takeover, Takeover, Acquisition, Support Companies, etc.Support Companies, presently RHJ International RHJ presently Ripplewood Holdings ( HIS Royal Pines Royal Kamori Kanko Sogo / Seibu FudosanMitsui Prince Hotel APA Group Osaki City, City, Osaki Valley Sun Hotel Kamori Kanko Kamori Kanko Sega Sammy International Sammy Sega Shanghai Yuyuan Tourist Tourist Yuyuan Shanghai (Fosun) Mart Grove International Partners International Grove Resorts Hoshino management) (continuing - organi include steps These on memberships. tie-ups concluding corporations zations and members and soliciting for with other facilities, along prices, services at inexpensive providing manage the idle to contracting with companies signs of also growing are There facilities. resort and operate and efficiently effectively to efforts during the constructed that were utilize facilities of services. a variety through era resort of the people among need a great is There amidst nature time spend their leisure Japan to - boom of baby number is a large and there considering living in the countryers who are upon retirement. or having a second home of the an augmentation not only This requires on measures enhanced and system vacation business the resort rebuilding but also taxation, and etc.) skills, operating operations, (facility enhancing support. Primary Facilities Primary Hotel, international convention center, Ocean Ocean center, convention international Hotel, cottages, and condominiums courses, golf Dome, and tennis club Marina, hotel, condominium and Dutch Dutch and condominium hotel, Marina, streetscape Theme park, fishermen’s wharf, marina and and marina wharf, fishermen’s park, Theme condominiums Vacation lots, lodging facilities, tennis courts, tennis facilities, lodging lots, Vacation coursepottery golf and studio music studios, village Spanish Hotel, golf course, marina 2,400 vacation lots, golf course, tennis courts, ski hill and hotel course golf and hotel lots, Vacation Tennis court, jogging road, restaurant, craft hotel and pool homes, vacation rental center, 3,700 vacation lots, amusement parks, hotels courses golf and 5,200 vacation lots, hotels, golf course, tennis courts and, ski hill Hotel, golf course and ski hill Hotel, ski hill and tennis courts courts, artificial vacation pensions, homes, Tennis lake, automobile campsite, hot spring facilities and cottages Ski hill, golf course and hotel Ski hill, golf course and hotel Ski hill, hotel and pensions Golf course, ski hill, artificial lake, artificial lake, hill, ski course, Golf hotel and chapel water Marina, golf course and hotel

40 Developer/Operator (at time(at of development) Real Estate in Japan 2016 Phoenix Resort Phoenix Huis Bosch Ten (third sector) Space World (third sector) Leisure facility with a space theme Wakayama Prefecture, Ministry Wakayama of Transport, Matsushita Investment and Marina Wakayama and Development City Kintetsu Corporation (JV) Corporation Kintetsu Seiyo Kankyo Kaihatsu Recreation Yamaha Mitsui FudosanMitsui Tokyu Land Kajima Resort Kokudo Towa Real Estate Development, Towa Nasu Resort Co., Ltd. Tokyu Group, Urabandai Deco Daira sector) (third Kaihatsu Tatemono Tokyo Myoko Pine Valley Onikoube Kogen Kaihatsu sector) (third Seiyo Kankyo Kaihatsu (Sahoro Development Leisure SCM Resort, Development) Kogen Karikachi and Appi General Development Development General Appi sector) (third Sekihyo Seibaku Sekihyo Tokyu Corporation Tokyu 65 197 140 135 The Association actively conducts fact-finding fact-finding conducts actively Association The and operations development resort on studies resort and proposing researching as as well the by over taken activities were These policies. of Japan in Association Companies Real Estate 2007. of second homes the acquisition Support for financing of an expanded the form has taken such measures reduction and also tax system tax acquisition estate real the of reduction as in effect into that went tax property and real promoting Law the addition, In 1998. April Suburban Housing the Building of Superior the construction of promote passed to was in good natural housing superior standalone moun- and such as agricultural environments near cities. villages and areas tain services begun resort have On the other hand, based of formats a variety in be provided to 470 104 252 690 230 700 436 200 664 338 600 (ha) 4,780 1,000 1,000 2,500 2,200 Total Area investment investment ‑ Location Miyazaki City, PrefectureMiyazaki Kitakyushu City, PrefectureFukuoka Sasebo City, Nagasaki Prefecture Isobe Town, Town, Isobe PrefectureMie Hamajima Town, PrefectureMie Wakayama City, PrefectureWakayama Chino City, Nagano Prefecture Village, Minamimaki Nagano Prefecture Chino City, Nagano Prefecture Karuizawa Town, Nagano Prefecture Chino City, Nagano Prefecture Kitashiobara Village, Kitashiobara Village, Prefecture Fukushima Village, Tenei Prefecture Fukushima Nasu Town, Prefecture Tochigi Myoko Village, PrefectureNiigata Naruko Town, PrefectureMiyagi Shintoku Town, Hokkaido Village, Shimukappu Hokkaido Shimoji Town, Okinawa Prefecture Ashiro Village and Matsuo Village, PrefectureIwate Project Phoenix Seagaia Resort Seagaia Phoenix Space World Bosch Ten Huis Shima Spain Village Spain Shima Nemu no Sato Wakayama Marina City Tateshina Mitsui-no-mori Tateshina Uminoguchi Natural Villa Tokyu Resort-Town Tateshina Karuizawa Sengataki Certo Forest Tateshina Gran-Deco Ski Resort Hatoriko Highland Regina Forest Highland Nasu Towa Myoko Pine Valley amu Resort Tom Alpha Resort Onikoube Park Hoshino Resort TOMAMU Hoshino Sahoro Resort Sahoro Miyakojima Tokyu Resort Tokyu Miyakojima Appi Kogen Resort Kogen Appi Major Resort Projects of Japan Rebuilding the Resort Business industry estate the real Within this environment, nurture to an organization form to steps took business and launched the resort a healthy Association in 1995. Japan Resort Enterprise caused by ill-conceived budget plans and ill-conceived caused by Many customers. for prospects unfounded could they before aborted therefore plans were be carried out. beginning of 1991. In 1990 there were 16,000 were there 1990 In of 1991. beginning - but this dras units sold, condominium resort a 1993, by units 1,900 to dropped tically the number 1995, Since 88% drop. precipitous units 700 to 600 been has year per sold units of at most. Resortthe of application Law, the to due Also, developed facilities resort of the large many over for bankruptcy from filed

OVERVIEW OF REAL ESTATE IN JAPAN 2016 MAJOR REAL ESTATE SECTORS RESORTS The Role of the Real Estate Industry

Environmental Measures Until now, the nation has worked in concert to establish various measures to confront changes in the global environment that are accelerating yearly. The fact is, however, that the deterioration of the global environment is progressing at a faster pace than these measures. In the real estate industry, the effects of various environmental issues, such as global warming, are being felt across a range of economic activities, from the planning and design of houses and buildings to development, management, and disposal, and real estate associations and companies are voluntarily setting targets and eagerly pushing forward with initiatives. It is also essential to move forward with countermeasures in collaboration with the various stakeholders involved in the real estate industry. The many affected parties such as tenants, condominium owners’ associations, and general users need to work together to preserve the global environment. Furthermore, since the life cycles of houses and buildings span decades, it is necessary to form quality stock by providing buildings that have high environmental performance based on a medium- to long-term perspective. Another important topic is working to develop a market in which buildings with high environmental performance will be assessed appropriately.

Efforts Related to the Global and notification system, etc.). Under the Building Other important issues in the development and Japanese Environments Energy Conservation Act, compliance with management of real estate include alleviating energy conservation standards will become the heat island effect accompanying urbaniza- Global warming due to increases in atmo- mandatory for large-scale buildings (2000 m² tion, reducing business-related waste emissions spheric greenhouse gases has caused various or more) starting in April 2017, while compli- and final disposal amounts, and preserving problems such as climate change and the ance with these standards will gradually be biodiversity. In addition to their own business accompanying impact on the ecosystem, made mandatory for non-large-scale houses activities, real estate companies need to fulfill making the reduction of greenhouse gases and buildings as well through 2020. their duties with respect to various social issues an important issue. In recognition of this, the such as environmental problems by supplying United Nations established the U.N. Framework Environment-Related Impact and high-quality, high-performance rental buildings Convention on Climate Change (COP), which is Obligations of the Real Estate Industry and condominiums.. held annually, as a venue for countries to dis- cuss global warming. Energy consumption by the private sector (the Real Estate Industry Environment business sector and household sector com- At the 21st edition of the convention, COP21, Implementation Plan bined) accounts for around one-third of Japan’s held in Paris, a consensus was adopted for 2020 overall energy consumption. Since 1973, con- RECAJ formulated a Voluntary Action Plan on onward, including implementing countermea- sumption has risen by a factor of 2.5 in the the Environment for the Real Estate Industry sures to keep temperature rises within 1.5°C or business sector and 2.0 in the household sec- in 1997 that set targets to be achieved by less, so that the level will be kept well below tor—a rate of growth that significantly exceeds 2012 with respect to energy consumption, 2°C, and for countries to revise their nationally the industrial sector (0.9 times) and transporta- waste emissions, etc., and it has subsequently determined contributions every five years. tion sector (1.8 times) over the same time. As a achieved these targets while revising the plan. With regard to targets for the real estate indus- result, when it comes to the impact of the real In March 2013, it formulated the Real Estate try, the nationally determined contribution estate industry on the environment, reducing Industry Environment Implementation Plan proposed by Japan calls for an approximately energy consumption and reducing CO2 emis- aimed at 2020, which included setting new 40% reduction in greenhouse gas emissions sions at the same time have become pressing targets based on national trends and other by 2030 in both the business and household issues. The real estate industry can make an factors. This action plan divides the real estate sectors, using 2013 as a baseline. extremely significant contribution to achieving industry into three areas: new office building A domestic initiative inspired by this, the Act for national targets relating to CO2 emission reduc- development, new condominium development, the Improvement of Energy Saving Performance tion in the medium to long term (by 2030, by and companies’ own business activities. For of Buildings (Building Energy Conservation 2050, etc.). In addition to adapting to the regu- each area, targets are set relating to energy Act), which is a regulatory measure for homes lations in the Building Energy Conservation Act consumption as well as to improving energy and other buildings, will be partially enacted in mentioned above, it is necessary to realize and autonomy, reducing waste, preserving biodiver- April 2016 (floor area ratio special measures, promote the spread of state-of-the-art housing sity, and so forth. indication system, etc.), then fully enacted in and buildings, such as Zero Energy Buildings (ZEBs) and Zero Energy Houses (ZEHs). In terms of reducing energy consumption in April 2017 (mandatory compliance system, particular, the plan sets quantitative targets

Real Estate in Japan 2016 Energy management Energy management support providersupport provider Expected effects Increased environmental Development of high-quality

value of real estate green building stock ➡ ➡ Area use Area use waste heat waste heat Outside airOutside air Natural ventilationNatural ventilation Outside air coolingOutside air cooling Nighttime outside Nighttime outside air coolingair cooling load reductionload reduction Total heat exchanger heat exchanger Total Total Cool tubeCool tube (geothermal use)(geothermal use) (well-water use)(well-water use) Inter-building flexibility Inter-building flexibility Use of incineration plant Use of incineration plant Cool roofCool roof BEMSBEMS General corporations • • Local public bodies, etc. Tenants Promotion of use A/CA/C VAV, VWV VAV, VAV, VWV VAV, Dessicant A/CDessicant A/C Radiant coolingRadiant cooling Task-ambient A/C A/C Task-ambient Task-ambient Large-temperature air supply difference Large-temperature air supply difference High-efficiencyHigh-efficiency High-efficiency heat pump heat pump High-efficiency High-efficiency boiler boiler High-efficiency High-efficiency CogenerationCogeneration pump pump High-efficiency High-efficiency High-efficiency heat source High-efficiency heat source Supply of properties Real estate high-quality 42 • Real estate industry • Construction companies, etc. Developers Green buildings Entrance/ Entrance/ exit facilities exit facilities Glass roofGlass roof Use of daylight Use of daylight Real Estate in Japan 2016 Energy-conservation adaptations, installation of solar panels, introduction of efficient air-conditioning systems, greening, etc. LED lightingLED lighting long-term capital lighting lighting Supply of stable, lightinglighting • Institutional investors • Private investors • Overseas investors, etc. Investors Organic EL lighting lighting Organic EL Organic EL • At present, environmental measures are starting to be implemented as initiatives undertaken from a corporate social responsibility (CSR) perspective. • Technological developments are being pursued (energy conservation, greening, etc.), but these are not yet valued appropriately on the market, due to how they are evaluated, the lack of information, etc. Task-ambient Task-ambient Task-ambient Market participants involved in green buildings Market participants involved in High-efficiency High-efficiency heat pump heat pump Geothermal Geothermal Wastewater heat recyclingrecycling heat heat Wastewater Wastewater Use of daylight Use of daylight Airflow Airflow windowswindows Use of solar heat Use of solar Use of solar heat Use of solar Solar power generation generation Solar powerSolar power Use of unused energyUse of unused energy eaveseaves LouverLouver Provision of Establishing requirements information to involved parties needed information Considering approach to evaluation of green buildings on the real estate market Providing appropriate River water usage River water usage Created based on the Green Building Online Portal website created based on Sustainable Open Innovation Symposium website Wall-mounted solar panels and solar panels and Wall-mounted Wall-mounted solar panels for windows solar panels for windows (see-through)(see-through) Low-E Low-E double-glazed glass windows double-glazed glass windows Reduce internal load Reduce internal load Reduction of outside air loadof outside air load Reduction Reduction Source: Source: Image of Environmental Value-Oriented Real Estate Market Image of Environmental Value-Oriented Real Image of ZEB Image

THE ROLE OF THE REAL ESTATE REAL ESTATE IN JAPAN 2016 INDUSTRY ENVIRONMENTAL MEASURES THE ROLE OF THE REAL ESTATE REAL ESTATE IN JAPAN 2016 ADDRESSING POPULATION DECLINE AND INDUSTRY THE AGING OF SOCIETY - and pro etc., buyers, condominium tenants, so that these usersvide indicators will select of envi- housing and buildings with a high level performance. ronmental buildings on green sharing information By estate in the real parties involved in this way, of a the development industry can promote of real value in which the environmental market and promote is assessed appropriately estate stock. of high-quality the formation and evaluating for systems to With regards of performance certifying the environmental hous- Japan’s besides housing and buildings, and other system indication ing performance run by also systems are there national systems, includ- like, and the organizations private-sector and the DBJ Green LEED, CASBEE, ing BELS, Building Certification system. use depends on the choice to Which system of but regardless of the individual company, use an actively it is necessary to the decision, to the suited and certification system evaluation and of the buildings it develops characteristics will be the people with whom the information tenants, to pass on information and to shared the like. and housing buyers, people to start a family and feel comfortable comfortable and feel a family start people to such as children, about having and raising com- that shortens housing near business areas times and housing that enables multiplemuting with regard Also, together. live to generations in demand is decline an absolute housing, to based on the decline in population, anticipated will there structure, changes in family and given housing planning that addresses be a need for changes in on future focusing diverse needs by household structure. the aging of society is a particularly Addressing need is a growing significant issue and there - Institute for Building Environment and Energy Conservation website Institute for Building Environment Source: CASBEE Label Image CASBEE 43 Real Estate in Japan 2016 committee was formed to develop a roadmap roadmap a develop to formed was committee general In addition to these. aimed at achieving principles such as defining what kind of build- as ZEB/ ings and houses will be considered to measures is developing this committee ZEH, the between collaboration through be tackled and private-sector industry groups, government, to incentives such as introducing companies, of ZEB/ZEHs. spread the promote considerations national of kinds these on Based industry related for important it is policies, and pursue companies to and private-sector groups ZEBs aimed at realizing cutting-edge initiatives the imple- as accelerating as well and ZEHs, proactively by of these initiatives mentation and sharing information. communicating System Use of Evaluation/Certification Active Building Market of Green and Development estate businesses in the real for In order state-of-the-art supply continuously industry to in a market develop it is necessary to buildings, users by appreciated which these buildings are this, achieve To cost-effective. suitably and are - informa share need to companies estate real of performance tion about the environmental with develop the houses and buildings they In addition to the declining population, the the declining population, In addition to The propor aging of society is accelerating. the by population represented tion of the total 25.1% in 2013 (age 65+) reached elderly 2020 in 29.1% to increase to projected is and - in major metropoli Even and 36.1% in 2040. further age in to expected society is areas, tan future. role the changes, these demographic Due to industry to beginning also is estate real the of With the aim of addressing change significantly. develop is a need to there birthrate, the falling younger it easier for that makes an environment Ministry of Land, Infrastructure, Ministry of Land, Infrastructure, Transport and Tourism website - - Source: Housing Performance Indicator Image Indicator Performance Housing

Housing Performance Evaluation and Housing Performance Evaluation Indication Association website

Source: BELS Symbol BELS Realizing and Promoting the Spread of ZEB/ZEHs in the real of cutting-edge initiatives In terms include national policy targets industry, estate public buildings new ZEBs for realize aiming to buildings in new and for 2020 by and the like ZEHs achieve 2030 and aiming to by general housing and by standard new 2020 for by a In 2015, housing in general. new 2030 for Aiming to Implement Cutting-Edge Aiming to Initiatives for the environmental specifications and per the environmental for formance of new office buildings and new buildings and new office of new formance ener condominiums (outside air performance, etc.). equipment, of performance gy-saving with the consistency ensure to in order Also, in the Building Energy standards to approach con- in future, be enacted Act to Conservation target revising to being given is now sideration and levels. indicators speci- Plan not only The Implementation also promotes targets—it quantitative fies estate real the forward, Going initiatives. various envi- addressing to contribute industryto needs carrying out the steadily issues by ronmental its progress. Plan and verifying Implementation

Going forward, a major issue for Japan’s Japan’s a major issue for Going forward, estate as its real and society as well economy popula- its declining industry will be addressing aging society. and birthrate, falling tion, - population of Japan has been decreas The total 128.05 of about peak a reaching since ing drop to it is projected By 2020, million in 2010. 124.1 mil- around to the 10 years 3% over by 17% by drop to projected is it 2040 by and lion, number The total 107.27 million. around to to of households nationwide is also expected million) 53.07 (approx. 2019 in peak a reach 50 million in 2035. below then fall Addressing Population Decline and the Aging of Society Decline and the Population Addressing CASE STUDY ENVIRONMENTAL MEASURES

CASEKASHIWA-NO-HA STUDY SMART CITY

Property Overview Mitsui Fudosan is developing Kashiwa-no-ha Smart energy-saving, CO₂-reducing, safe, secure, sustain- City to be the world’s first “smart city” model, able, consumer-led energy management, etc. Development name: emphasizing the three themes of environmental Kashiwa-no-ha Smart City symbiosis, long, healthy life and creation of new In order to realize a model of energy use that does industries. This smart city in Kashiwa-no-ha is based not rely on fossil fuels, Gate Square has introduced Target site: North Kashiwa on the concept of “problem-solving city-building” – 1) energy-saving measures such as passive design, Central District Integrated Land solving the social issues facing advanced countries use of natural light and the latest environmental Readjustment Project Area – and carries forward realization of the world’s first initiatives and 2) energy-creating measures such as smart city model. use of natural energy and unused energy. This cuts standard CO₂ emissions by roughly 43%. Project leader: Chiba Prefecture Development of Kashiwa-no-ha Smart City is (Land Readjustment Project) underway within a land readjustment district located Not content to merely reduce CO₂ at Gate Square, in northern Kashiwa City, a core city with a popu- Mitsui is introducing an independent power net- Area: approx. 272.9 ha lation of 400,000, around 25 km from downtown work and information network to establish an Tokyo. The district centers on Kashiwanoha-campus area energy management system (AEMS) and Development period: Station, which is about a 30-minute train ride from power-sharing system encompassing the surround- August 2000 – March 2023 Akihabara on the Tsukuba Express opened in 2005. ing four blocks, working toward comprehensive With surroundings that contain natural parks with energy-creating, energy-saving and energy-storing yet-undeveloped woodland, a prestigious Japanese across the entire area and achieving power-lev- Planned site uses: Residences, university and research institutions as well as a eling in addition to energy and CO₂ reduction. hotels, commercial facilities, number of industry support facilities, this unique This Kashiwa-no-ha AEMS links with the HEMS, offices, factories, and cutting-edge public-private-academic urban BEMS and central surveillance systems of each research institutions, schools, development is drawing attention both domesti- facility to make electricity, gas and water usage (as hospitals, banks, parks, cally and internationally. well as CO₂ emission) visible, collecting and analyz- etc. ing energy information from the entire area at the Mitsui Fudosan has developed commercial facil- Kashiwa-no-ha Smart Center inside Gate Square. ities and apartments mainly in the block around Kashiwanoha-campus Station since 2006 and In this way the methods of progress, plans for opened a mixed-use facility called Gate Square in facilities and other elements of the Kashiwa-no-ha the summer of 2014. This completed the first stage development differ greatly from conventional urban of development of Kashiwa-no-ha Smart City. development. The public-private-academic partnership brings a diversity of participants to the table, One of the themes of this development, envi- all seeking to create a sustainable business model ronmental symbiosis, is being achieved through and community for the future.

Real Estate in Japan 2016 THE ROLE OF THE REAL ESTATE REAL ESTATE IN JAPAN 2016 ADDRESSING POPULATION DECLINE AND INDUSTRY THE AGING OF SOCIETY (year) 7. Nuclear family household Nuclear family 7. Elderly population (2010=100) National area Tokyo area Nagoya area Osaka Regional areas 6. Other household 6. generations Household with three 5. Household with single parent 4. only and unmarried child(ren) Household with married couple 3. only and unmarried child(ren) Household with married 2. couple only Single-person household 1. 2010 15 20 25 30 35 40 45 50 (Through 2040) Average calculations from the National Institute of Population (Through 2040) Average calculations from the National Institute by Region” and Social Security Research’s “Population Projections for Japan by the (calculated in March 2013); (2045 and 2050) provisional calculations Ministry of Land, Infrastructure, Transport and Tourism Policy Bureau. the “aging The “elderly population” is the population aged 65 and over, and population aged rate” is the proportion of the total population represented by the 65 and over. ) 180 160 140 120 100 6.7 6.6 7.2 (10,000s of people) 29.7 23.2 26.5 Note: Source: Changes over Time in Elderly Population in Elderly over Time Changes 6.8 7.9 6.5 30.7 22.6 25.5 ﬁscal year Meanwhile, as the population declines, the use of public real estate is is estate the use of public real declines, as the population Meanwhile, to being given is now Consideration issue. also becoming a pressing and management costs have whose maintenance estate using public real of public services through means of PPP (provision become an issue by funds partnerships)of private-sector (application PFI and public-private - proj and management of public facilities) construction to and expertise Strategy Japan Revitalization the government’s of The 2014 revision ects. three-fold around will increase the PPP/PFI market that the size of specifies it is forward, and going 2022, 2012 to period from during the 10-year - opera estate real private-sector possessed by that the expertise expected as well. estate public real be applied to will increasingly tors ( 45 6.9 8.4 6.3 31.3 22.1 25.0 6.3 9.7 6.0 32.7 21.9 23.4 6.4 5.7 10.6 32.6 20.6 24.1 Real Estate in Japan 2016 6.0 5.3 11.5 33.6 19.7 23.9 6.1 5.2 12.5 35.5 18.4 22.6 6.1 4.8 13.1 37.0 17.2 21.8 5.5 5.0 14.2 39.3 16.0 20.0 5.7 5.1 15.3 41.4 14.4 18.2 1986 1992 1995 1998 2001 2004 2007 2010 2013 The Ministry of Health, Labour, and Welfare, “Status of Households Viewed as a Graph”. 6.2 4.2 16.9 42.7 11.8 18.2 1975 1989 0 90 80 70 60 50 40 30 20 10 (%) 100 Source: Annual Breakdown of Total Number of Households by Household Structure for housing for older people, such as the serviced such as (known housing elderly people, older for housing for providing at Aimed 2011. in firstthat Japanese) in appeared sakoju as in that, housing serviced housing is rental elderly seniors, for residences support services access to offers facilities, barrier-free having addition to institutional is providing The state as needed. and treatment such as care the end and as of of serviced housing, elderly the development support for units 191,871 had reached the supply of 2015, houses has become in vacant the increase years, in recent Furthermore, houses nation- vacant 8.2 million around already are There a social issue. that houses of vacant and if the number 2013), wide (as of the end of society con- rising as Japanese keeps not managed appropriately are a it could have decline, to age and the population continues to tinues and preparedness issues such as disaster impact on various negative on is working the state As a result, of neighborhoods. the attractiveness Houses Special Measures Vacant such as enacting the countermeasures, 2015 and making compulsory Act in February elimination of vacant expected It is therefore public safety. pose a risk to houses possible if they a combination of appropriate through will be addressed that this problem utilization. management and effective and aging of society will have birthrate, falling The declining population, urban planning in Japan has date, To a major impact on urban planning. to with cities tending of population growth, in the context been conducted and hollowing urban sprawl issues such as advancing As a result, expand. occurred. have out of city centers “compact is turning to attention issues, these As a means of addressing with the as compact as possible in accordance urban areas that keep cities” - facil retail redeveloping by cities compact of creation The size. population increasing in addition to should, in city centers and so forth housing, ities, through mobility such as the elderly with reduced people accessibility for of upgrading their workplace, closer to live that enable people to measures on burden the financial reduce help etc., network, transportation public the Moreover, costs. maintenance cutting urban infrastructure by municipalities Act in the revised Plan System Optimization with the inclusion of the Location August in Concerning Urban Reconstruction enacted on Special Measures be compact aiming to municipalities for it has become possible 2014, “housing designating By so forth. and breaks, tax subsidies, receive to cities that bring together “urban service zones” promotion and zones” promotion promote to it is possible etc., facilities, retail facilities, medical and welfare city centers. toward facilities of various the relocation ENVIRONMENTAL MEASURES ENVIRONMENTAL CASE STUDY resistant resistant ‑ ) Making sure people know to stay stay to people know (1) Making sure people prevent patient and to of with provision leaving at once (2) Cooperation from accommodation temporary people for (3) Securing stockpile facilities home returning having difﬁculty returning having difficulty disaster management measures disaster Comprehensive policy for promoting promoting policy for Comprehensive - for gov with such people dealing initiatives codifies home that returning in enforced 2012; citizens (announced in March businesses and ernment, April 2013). City of Entire Quality and Construct Networks Enhance Building 1. slight had only structures high-rise building area, metropolitan Tokyo In the their high earthquake proving the earthquake, damage from performance. However, there were some areas in which buildings tilted in which buildings tilted some areas were there However, performance. - para addition, In liquefaction. soil due to houses) stand-alone (primarily left a massive the day of the earthquake on systems transportation lyzed and subsequent return home, to it difficult of people who found number - and drain supply water confusion as elevators, led to scheduled blackouts stopped and other functions facilities production railways, age equipment, governments local and national occurrences, these on Based operating. disasters. to resilient cities that are of strong the creation promoting are 46 - under public-private sector of the private disaster disaster of cities with excellent

disaster buildings with excellent

Soft Hard

) Promotion of integral urban development that reinforces disaster prevention prevention disaster that reinforces urban development of integral (1) Promotion etc. terminals, of transport performance prevention of disaster (2) Improvement of individual buildings performance prevention of disaster (3) Improvement Note: While some initiatives are both "hard" and "soft," the above and "soft," the above both "hard" are While some initiatives Note: to or "soft" according as either "hard" been classiﬁed have their main initiatives.

Report of the Committee for the Study of the Role of Real Estate in Reinforcing Disaster Prevention Functions of Cities (Summary) Report of the Committee for the Study of the igation and that sections be set apart for private power generators, etc. in etc. generators, power private apartbe set sections and that igation for Metropolitan Tokyo The 2012). in September ratio (enforced area the floor people having difficulty for an ordinance also enacted Government ers’ livelihoods and recovery of the affected areas are top priorities to be priorities to top are areas of the affected recovery and livelihoods ers’ country. the entire by addressed - rein to the earthquake: learned from lesson was an important Moreover, As cities. and secure safe functions and create prevention disaster force amended Tourism and Transport Infrastructure, the Ministry of Land, such, Law that of Construction Standard Ordinance part of the Enforcement the non specified Major Disasters Major significant inflicted 2011, 11, on March Earthquake East Japan The Great The regions. (northern and Kanto Japan) Tohoku the to damage primarily along towns which inundated waves) caused tsunamis (tidal earthquake the loss of their houses suffered who residents area many and the coast, suffer of the Rehabilitation dwellings. in temporary live to forced were Roles the Real Estate Industry Should Take against against Take Should Industry Estate the Real Roles

THE ROLE OF THE REAL ESTATE ROLES THE REAL ESTATE INDUSTRY SHOULD TAKE AGAINST REAL ESTATE IN JAPAN 2016 INDUSTRY MAJOR DISASTERS THE ROLE OF THE REAL ESTATE INITIATIVES TO ELIMINATE ORGANIZED CRIME GROUPS, OTHER ANTI-SOCIAL REAL ESTATE IN JAPAN 2016 INDUSTRY FORCES FROM REAL ESTATE TRANSACTION AND MONEY LAUNDERING er Recovery through Such Endeavors as Reinforcing Inter- as Reinforcing Such Endeavors through er Recovery national Competitiveness of Cities national Competitiveness Bolst It is also essential to revitalize the Japanese economy in order to support to in order economy Japanese the revitalize to essential is also It it is nec- this, achieve To recover. areas affected the victims and help the of major cities the global competitiveness enhancing promote essaryto as as well capability prevention their disaster while further improving by houses of stock good a forming as such measures implement steadily and energy-saving resistance earthquake houses with excellent supplying cities. low-carbon qualities and planning eco-friendly, the “Study Group on Disaster Prevention as Real Estate Industry” (chaired (chaired Industry” Estate Real as Prevention Disaster on Group “Study the which School), University Meiji Graduate Professor, Aoyama, Yasushi by of cities that “creation as 2012 on such issues April in report compiled a of office “enhancement capabilities,” prevention disaster excellent have indus- estate as real “responses and condominiums” for-sale buildings and etc.” disaster, returning home upon people having difficulty try to 3. of the Association, Eliminating Organized Crime Groups, Etc.” (comprised the Real Estate the four industry groups involved in real estate transaction, Real the was formerly known as which Center, Transaction Promotion the National Police Estate Transaction Modernization Center Foundation, and Tourism, The Agency, the Ministry of Land, Infrastructure, Transport lawyers, etc.) was National Center for the Elimination of Boryokudan, for the purpose of strengthening coordination between rele- established industry and promoting vant governmental agencies and the real estate anti-social forces from elimination of organized crime groups and other popularization promote to is working Council The transactions. estate real planning training and lec- of provisions for eliminating anti-social forces, tures on the subject, information exchanges, etc. laun- anti-money community’s as part of the international Meanwhile, of Criminal Proceeds Transfer of Act on Prevention the dering measures, entities in the building lots requiring 2008, in March enforced fully was confirmations, transaction make business to and buildings transaction suspicious and report records of transaction preservation and preparation serving when selling or buying buildings and when transactions as a proxy transactions. or brokering April 1, Act on of the of the partial revision with the enforcement In addition, confirmation for such as addition of items will be requirements there 2013, addition high-risk transactions, for addition of the category in transactions, for imple- confirmations (effort of transaction accuracy for of measures etc. of educational training), mentation *Four industry groups involved in real estate transactions: estate in real involved industry groups *Four Estate Real Japan All Associations, Transaction Estate Real of Federation National Association Agents of Japan and Japan Association of Real Estate The Federation, of Home Suppliers. 47 - Real Estate in Japan 2016

grade disaster prevention functions and energy networks, etc. within within etc. networks, functions and energy prevention disaster grade

‑ and Money Laundering and Money Other Anti-Social Forces from Real Estate Transactions Transactions Real Estate from Anti-Social Forces Other Initiatives to Eliminate Organized Crime Groups and Crime Groups Organized Eliminate to Initiatives With an aim to eliminate boryokudan (organized crime groups) and other crime groups) (organized boryokudan eliminate With an aim to the compiled government the activities, corporate from forces anti-social in Anti-Social Forces Damage from Companies Prevent How Guidelines for Eliminate to “Initiatives titled a report Based on the Guidelines, June 2007. published in was Activities” Corporate from Crime Groups Organized - local ordi also enforced Prefectures Okinawa and Tokyo December 2010. in crime groups with organized trading companies from nances prohibiting eliminate to of initiatives further promotion which has led to 2011, October Japan. throughout crime groups organized Preventing “Liaison Council for set up a industry groups estate The real in the Forces Anti-Social from and Damage of Criminal Proceeds Transfer Association Companies The Real Estate (comprised of Industry” Real Estate real in involved industry groups four “Association”), the (hereafter, Japan of Modernization Center Transaction Estate The Real and transaction* estate to respond appropriately in December 2007 with an aim to Foundation) of Criminal Proceeds Transfer of Act on Prevention of the the enforcement encour to The Council worked compliance system. a relevant and establish of damages. and prevention structures of responsibility age establishment also took in real estate transaction groups involved The four industry measures such as preparing model provisions concerning elimination of organized crime groups and other anti-social forces from real estate transaction contracts (brokerage contracts, sales contracts and lease housing contracts). The Association also prepared “example provisions for eliminating anti-social forces” in transaction contracts and lease con - tracts, in which its member companies are the sellers or the lessors, in Infrastructure, of Land, Ministry the with consultation in September 2011 Transport and Tourism and the National Police Agency, and requested its member companies to adopt these provisions, etc. In the same month, the “Central Liaison Council between the Real Estate Industry and Police for an entire city by enhancing coordination with responsible organizations organizations with responsible enhancing coordination city by an entire and society. parties within the community and relevant Industry as Real Estate Prevention Issues on Disaster Investigate 2. such for is required sectors the public and private by Joint implementation return- people having difficulty for countermeasures as creating initiatives disaster and preparing centers, prevention disaster establishing ing home, real the As partprocess, of this communities. unison for plans in prevention For it should make. what suggestions investigate industry needs to estate of Japan established Association Companies The Real Estate this purpose, As part of this endeavor, the real estate industry, which supplies buildings supplies buildings which industry, estate real the As part endeavor, of this secure and safe provide to required specifically is condominiums, and the such requirements, to respond To living environments. and working such as earthquake building quality, enhance to industry work must and energy, create/store/save to capabilities performance, resistance construct to important also is it addition, In specifications. barrier-free high Political, Social and Economic Events; Real Estate-Related Policy

Land Planning, City Political, Social and Year Planning, Architectural Land and Housing Policy Land and Housing Taxation Real Estate Industry News Economic Events Regulations, etc.

1995 The Great Hanshin-Awaji (Kobe) Act on Special Measures Execution of emergency safety Special and Buildings Transaction Sarin gas attack by the Aum Urban Districts Damaged by Revision to the Large City Law extraordinary taxation standard Business Law [a. Requirement cult; Disaster (special exceptions for (creation of projects to supply for real property tax, etc.; of registration with information Sharp appreciation of the yen land readjustment business in joint housing to city centers, Reduction of personal long- network organization certified to below 100 yen per dollar. disaster areas, etc.); Revised deregulation of enforcement term transfer tax (39% to property information of an City Planning Law (creation requirements for projects to 32.5% for ¥40 million or exclusive broker contract; b. of a district planning system improve housing districts); Law less); Partial reduction of land Clarification of legal standing for town promotion); Revised on Rebuilding, etc. Sectional value tax (Reduction in half of information network Urban Redevelopment Ownership Buildings in Disaster of parking lots that must be organizations and supervision Law (improvement of Areas (possible to ratify attached, etc.). by minister; c. Extension of implementation requirements rebuilding with 80% or more of valid license period (3 years for city redevelopment voting rights approving such in to 5 years), abolishment of projects, etc.); Revised Building the event a property completely certain reporting items; and Standards Law (rationalization collapses in a major disaster); d. Abolishment of testing of FAR restrictions in Establishment of Design qualifications for the testing of accordance with the width of Guidelines for Housing in an brokers, partial test exemption road in front, rationalization of Aging Society (installing hand of individuals who have passed road setback rules); City Park rails, eliminating different certain courses]. Law Enforcement. levels, etc.).

1996 Act on Special Measures Revision to the Law for the 7th Housing Construction Reduction of land value tax rate Hold general meeting of Concerning Promotion of Improvement of the Areas 5-Year Plan (7.3 million houses, (0.3% to 0.15%); Enlargement International Real Estate Disposal of Claims and Debts along Trunk Roads (enhancing half of all houses, meet of measure to adjust burden Federation in Tokyo; of Specific Jusen Companies; the roadside improvement guidance living standards; of real property tax; Reduction Chairman Tsuboi of the Real General elections based on planning system, transferring Goal of average housing floor of personal long-term transfer Estate Companies Association the single-seat constituency roadside improvement rights, area of 100m²); Focused tax (32.5% to 26% for ¥40 of Japan suddenly passes system. etc.; added roadside district Emergency Plan for Reducing million or less; 39% to 32.5% away and Mitsui Fudosan planning and district planning Housing Construction Costs for more than ¥40 million to President Junichiro Tanaka districts to the requirements (dramatic review of the Building ¥80 million or less); Reduction assumes the chairmanship. for implementation districts Standards Law, smoothing the in focused corporate tax and such of city area importing of housing, overseas rate (very short period 30% redevelopment projects). materials and overseas to 15%, short period 20% components, etc.); Revision to to 10% and general 10% the GHLC Law (strengthening to 5%; Enlargement of policy guidance function by special measure for taxation applying different interest standard on land acquisition rates according to housing (registration license tax 50/100 structures when loaning to to 40/100 and real estate certain new houses). acquisition tax 2/3 to 1/2).

1997 Consumption tax rate raised; Act on Promotion of New General Land Policy Reduction and deferment of Establish 4 information Failure of the Hokkaido Improvement of Disaster Promotion Outline (proclaimed burden from the perspective network organizations (welfare Takushoku Bank and Yamaichi Control Districts in Populated that the new objective of of balancing the burden corporations) nationwide; Securities; Urban Districts (creation of land policy would shift from standard of real property tax, Revision to the Real Estate Opening of the Trans-Tokyo Bay a system for planning the suppressing land prices to etc.; Enlargement of in the project, the application Revision to the City Planning interest rate terms and housing acquisition promotion of regulations to protect Law and Building Standards repayment period for loans tax system and phased general investors is exempted); Law (creation of zones for when buying certain existing reduction in residing years Ministry of Construction issues attracting high-rise housing housing); Bring transparency, (maximum of ¥1.8 million in its Real Estate Renovation and rationalization of FAR simplicity and speed to 1997, ¥1.7 million in 1998, Vision (future direction of rules for condominiums and procedure for approving use ¥1.6 million in 1999 and ¥1.5 the real estate industry and other joint housing); Creation conversion for agricultural million in 2000 and 2001); countering present issues of a type of sophisticated use land. Halving of reduced tax rate for including the promotion of IT zone for upgrading functions; registration license tax related and modernizing a transparent Creation of a general design to housing buildings; Raising of and fair investment market to system by lot size; Creation of special deduction of real estate meet the changes in the socio- mini lot readjustments. acquisition tax for new housing economic structure); Building (¥10 million to ¥12 million); Lots and Buildings Transaction Reduction of stamp tax. Business Law (extended the valid period of broker licenses from 3 to 5 years); The Real Estate Companies Association of Japan issues its 21st Century Vision and Corporate Code of Conduct; Sumitomo Realty & Development Chairman Shinichiro Takagi appointed chairman of the Japan Condominium Association.

Real Estate in Japan 2016 REAL ESTATE IN JAPAN 2016 POLITICAL, SOCIAL AND ECONOMIC EVENTS; REAL ESTATE-RELATED POLICY - - Real Estate Industry News Launch of the Housing & Urban Real Corporation; Development secu and monetization estate transactions Internet ritization; take off. Growing popularity large of condominiums; tower and Start estate real invest of ment trusts; Creation of investmentthe consultant registration system; JICPA issues the "Audit Handling of Judgment on Decision to Valuation Reduce Forcefully of For-Sale Real Estate"; Integration of the Japan Home AssociationBuilders the and Industry Development Housing Association to form the Japan Association Home Suppliers. of Law on Securitization of Specified Assets by Special Purpose Companies (SPC Law). - - - Land and Housing Taxation Housing and Land Creation of new housing loan deduction (deduction system period years, of 15 etc.); Enhancement of system for carrying forward deduction of losses residential capital for property; spe of Improvement cial exception to cash gift for Reduction housing; acquiring long- personal on rate tax in transfer ownership term income tax (uniform 26%); special mea in Improvement license registration and for sure tax; Enhancement of special measures for real estate acquisition tax related to the house and its lot. hous the of extension Half-year ing loan deduction system (up to taking up residence in June Improvement2001); in floor arearequirements of special real property tax measures for new housing and 2-year applicationextension period; of Phased reduction of real property tax on land in fiscal (75% 2001 and 70% in fiscal 2002); 3-year extension of special transaction land measures on tax for (1/3 registration license tax and for 1/2 real estate acquisition tax). Suspension of land tax taxa- personal of Reduction tion; long-term taxation transfer for ¥60(26% million or less and for 32.5% more than ¥60 Elimination million); of weighted tax on very short-term corporations; by ownership short- of Non-application ownership general and term categories (through 2000); restrictions Abolishment of on including interests on loans acquire corporations when land as expenses; Creation of system for carrying forward deduction of capital losses property; residential on Application measures to of reduce estate real acquisition taxes and real property taxes homes. second on - - - - - 49 Land and Housing Policy Housing and Land Special Provisions Law con Law Special Provisions cerning Promotion of the Supply of Good Quality Leased Housing (creation of fixed-term enforceleaseholdand rights ment in 2000); Housing Quality Assurance Law (requirement of warranty enforce and 10-year ment in 2000). Appropriate Promoting for Law Management Condominium and manager (condominium qualification chief managerial man condominium and system registration company agement system; enforcement in 2001). Law Promoting the Building of Superior Suburban Housing (promoting the building of agricultural superior houses in Revision suburbs); and towns to the Agricultural Land Law authority to (transferred agricultural change approve of land of 4ha or less to the gov- National the to Revision ernor); Land Law (transfer to a system for reporting after the fact and creation emphasized of dis to measures Emergency tricts); investment. housing expand - - - - Real Estate in Japan 2016 Regulations, etc. etc. Regulations, Land Planning, City Planning, Land Planning, Architectural Planning, Revision to the Act concerning Development Urban of Lending Funds (smoothing the capital raising process; enhancing using efficiently for measures land with lowuse or non-use; enhancing and improving methods); redevelopment of use efficient Promoting former factory sites (circular from the City Bureau and Housing Bureau Chiefs). Revision to the City Planning Law and Building Standards master the (enhancing Law plan; reviewing the demar- development cation and permit system; enhancing the system for securing a good the introducing environment; new system for re-adjusting introducing city areas; existing and developing for regulations building non-city planning dis- transparency promoting tricts; participation citizen and in the city planning and decision system, Law for etc.); the Construction of Recycling and (segregation Materials construction of dismantling materials and such; recycling mate construction specified of rials; fully enacted May 2002). cation of special use districts, Revisionetc.); to the Building Standards Establishing Law (a. rules for the performance of building standards, b. rules of Rationalization concerning sunlight, etc., c. confirma structure of Opening inspection and businesstion to private sector, etc.; Revision City Redevelopment the to Law and Law on the Loaning Funds Development Urban of expansion of cities subject to city rede of establishment the creation policies, velopment of a system for participants in special projects creation and of a system for certifying redevelopment projects); Law on Vitalization and Improvement in City Center (promotion of comprehensive integrated and the on based measures improvement of city areas and activating commerce utilizing the creativity of the area, in order to activate city centers out). hollowing are that Revision to the City Planning Law (expansion of the area for which district plans can be urbanization within established diversifi districts, adjustment Economic Events Economic Political, Social and Prime Minister Obuchi passes away; Miyake Island erupts, floods in Tokaithe region; Turmoil in the presidential U.S. juvenile Number of elections; rises. crimes Criticality accidentin Ibaraki; Tokaimura, mergers business or Mergers between major banks, etc.; Response to Y2K. Nagano Olympics; Nagano ReconstructionFinancial Law, etc., Act on Emergency Measures for Early Financial of Strengthening Functions; Long- the of Nationalization Term Credit Bank of Japan and the Nippon Credit Bank. Year 1998 1999 2000 Land Planning, City Political, Social and Year Planning, Architectural Land and Housing Policy Land and Housing Taxation Real Estate Industry News Economic Events Regulations, etc.

2001 Inauguration of the Koizumi Launching of Urban Enforcement of Law for Creation of new housing loan Integration of the Real Estate Cabinet which upheld struc- Renaissance Headquarters Securing Dependable deduction system (deduction Companies Association and tural reform; September (led by the prime minister); Residences of the Elderly; rate of 1%; borrowing limit of the Japan Condominium 11 attacks in the U.S.; Anti- Finalization of urban regen- Establishment of the 8th ¥50 million; deduction period Association with Junichiro terrorism Special Measures eration project (phases Housing Construction 5-Year of 10 years); Enhancement of Tanaka serving as chairman Law enacted; Universal Studio 1 through 3); Emergency Plan; Decision to abolish the donation tax on house acquisi- (chairman of the Real Estate Japan (Osaka prefecture) measures for promoting city Government Housing Loan tion funds (tax exempt limit of Companies Association); Real and Disney Sea (Urayasushi) development investment by Corporation within 5 years; ¥5.5 million); Creation of rental estate investment trusts are opens, established by MLIT in the private sector; Direction Abolish the Housing & Urban housing supply promotion tax listed. January. of emergency system reforms Development Corporation by for elderly housing (5 years for urban renaissance; Report fiscal 2003 and have a new and 40% of the urban renaissance independent administrative premium depreciation); 3-year regeneration strategy team; corporation established to take extension of the special tax- Establishment of new city cre- on a portion of the original ation on transfer income of ation vision for Tokyo by Tokyo functions. personal general long-term Metropolitan Government; ownership (26% (20% income Establishment of City Planning tax and 6% residential tax)); Operational Guidelines. Enhancement of collection grace period system for special land ownership tax; Creation of measures to reduce transaction taxes on real estate securitization (SPC and investment corporation); Reduction in capital gains tax on listed real estate investment securities for individuals.

2002 Prime Minister Koizumi visits Creation of the Special Passage of the Soil Reduction in registration Rebuilt Marunouchi Building North Korea to normalize Measures Act for Urban Contamination license tax on sale of existing opens; Caretta Shiodome, the diplomatic relations; Korea/ Renaissance; Designation Countermeasures Law; buildings (25/1000); first wave of Shiodome’s rede- Japan World Cup held; “Prompt of the urban renaissance Revision to the Law for Expansion of collection grace velopment opens. Countermeasures to Deflation” emergency improvement Smoothing Condominium period measures for special formulated. district (total of 44 districts in Reconstruction and revision to land holding tax (allow change phases 1 and 2 totaling about Sectional Ownership Law. to exempted land and transfer); 5,700ha); Revision to the Urban Abolish maximum tax rate Redevelopment Law (confer- of 39% for tax on personal ral of enforcement function general long-term ownership for private condemnation, transfer income (taxation etc.); Revision to the Building suspended). Standards Law and City Planning Law (maximum floor area ratio of 1300%, urban proposal system, speeding up comprehensive design procedures, etc.); Abolishment of the Industry (factory) Restrictions Law; Deregulation of the environmental impact assessment ordinance procedure (Tokyo); Flexibility in obligation to provide parking spaces (Tokyo); Finalization of Urban Renaissance Project (phase 4).

2003 Iraq War; Finalization of Urban Launch of securitization sup- Reduction in registration and Shinichiro Takagi becomes Second Koizumi Cabinet. Renaissance Project (phases port business by Government license tax rate (sale, etc. chairman of the Real Estate 5 and 6); Designation of Housing Loan Corporation 10/1000); Suspension of Companies Association (chair- urban renaissance emergency (acquisition type). levying of special land holding man of Sumitomo Land and improvement districts (phase ownership tax (ownership and Realty); Roppongi Hills opens. 3); ; Start of opera- 1, 2003); Creation of settle- tions by city regeneration fund ment taxation system at time investment corporation. of inheritance; Abolishment of business office tax (new or expanded portion); Creation of urban renaissance promotion tax system.

2004 Athens Olympics; Finalization of Urban Revision to Condominium Creation of measures to reduce Construction completed on Second reshuffled cabinet of Renaissance Projects (phases Management Rules; Partial ordinance concerning real COREDO Nihonbashi and the Koizumi Cabinet; 7 and 8); Enhancement of enforcement of the Personal property tax and city planning Marunouchi OAZO; Growth in Occurrence of major natural community regeneration Information Protection Law; tax of commercial property, housing loans issued by private disasters including a wave of measures and town creation Launch of the securitization etc.; Rebuilding of taxation financial institutions; Repeated typhoons hitting Japan, the Mid subsidies; Establishment of 3 support business by the system for capital gains from release of skyscraper condo- Niigata Prefecture Earthquake, landscaping and greenery laws Government Housing Finance personal land transfers; miniums and progression of and earthquakes and tsuna- including the Landscape Law. Corporation (warranty type). Extension of suspension period population's return to residing mis in the ocean off Sumatra for application of taxation in city centers. Island. system on land transfers by companies; Extension of system for reducing home loan taxation (phased contraction through 2008).

Real Estate in Japan 2016 REAL ESTATE IN JAPAN 2016 POLITICAL, SOCIAL AND ECONOMIC EVENTS; REAL ESTATE-RELATED POLICY - Real Estate Industry News Prefectural land pricePrefectural research land reveals that the prices of and land residential both commercial land in 3 major for rose areas metropolitan the first16 years. time in The number of listed REITs reaches 40 in December and the aggre- gate market value increases to about ¥5 trillion. Financial Instruments and Exchanges Law enacted. Tokyo Midtown, Shin- Marunouchi Building, Gate Common Kasumigaseki completed. buildings other and pleted; Vacancy rate in central improves. Tokyo Hiromichi Iwasa (President of as inaugurated Fudosan) Mitsui the president of the Real Estate Companies Association of Express which Tsukuba Japan; cuts travel from Akihabara to Tsukuba in 45 minutes is opened in August; Trust in safety of buildings is shaken with quake-resistance the and scandal falsification data in deficiencies of surfacing checking functions of building construction; Akihabara The Dai Building, Nihonbashi Mitsui com buildings other and Tower ------Land and Housing Taxation Housing and Land Reduction and extension of preferential measures for related building and land transaction (registration taxes and license tax, real estate acquisition Extension tax); of measures to reduce ordinance concerning real property tax, etc. of commercial property, etc.; Extension and abolishment preferential of measures in relation to housing donations; fund acquisition system taxation of Foundation promote quake-resistanceto renovation of existing homes; Extension of special measures for real estate acquisition tax hous and house the to related land. ing Extension preferential of replacement on measures property commercial of concerning land owned over the long term, etc. to land, buildings, etc.; Extension, etc. of special tax measures concerning city and regional regeneration Securing projects; effect of reduction of housing loan tax for residents moving into property in 2007 and 2008 in association with transfer of tax sources to individual residential tax; Extension of special measures for loss/aggregation and profits of deductions carried forward of loss on transfer accompanying replacement residential of properties; Extension of decreased tax rate of registration and license tax of houses and special measures to reduce stamp tax on purchase and sale agreement, etc. for real estate Extensiontransactions; of system of special deduction million concerningof ¥15 housing sector specified projects. development Extension of the scope to apply measures preferential various for taxation related to existing reduction tax (mortgage homes preferentialsystem, measure residen of replacement for properties, tial preferential measures for the tax system for settlement at the time of hous concerning inheritance ing purchases and other funds, funds, other and purchases ing reduction registration and of license registering for tax reten tion of ownership of housing mea preferential buildings, standards, taxation for sures etc. for real estate acquisition tax on existing houses, etc.); Extension and enhancement of urban renaissance promotion taxation system; Review of system to postpone collection tax; special landholding of Required taxation measure in leasehold inter term to relation est (clarification of handling of payments). lump-sum - - - 51 Land and Housing Policy Housing and Land Basic Act for Housing was enacted. Japan Housing Finance Agency Agency Finance Housing Japan inaugurated. The Government Housing Loan Loan Housing Government The engaged which Corporation, directin financing utilizing abol is fund, government the ished and instead, the Japan an Agency, Finance Housing administrative independent institution, is established to support loans supplement and for the housing fund; Kubota machinery man a Corporation, the to announces ufacturer, public that employees working at Kubota's factory have been problems health suffering causedby asbestos. Based on the fact that a lot of asbestos is used for architectural andother materials, anxiety abouthealth in relation gen the to spreads asbestos to public. eral Real Estate in Japan 2016 Regulations, etc. etc. Regulations, Land Planning, City Planning, Land Planning, Architectural Planning, In the wake of the quake-resistance data falsification scandal, the Law to Revise Portions of the Building Standards Law, etc. to Secure Safety of Buildings is enacted. laws development urban Three enacted. The Law to Revise Portions of the Urban Rejuvenation Law is enacted. Law to Secure Execution of Defect Warranty for Specific enacted. is Housing Toward activation urban of Toward areas in local regions, discussion on review of 3 urban development laws begins to intensify. - Economic Events Economic Political, Social and Zero-interest rate policy lifted in July; Inauguration of the Abe Cabinet in September. Inauguration of the Fukuda Fukuda the of Inauguration Cabinet in September. Aichi Expo held; House Lower the wins LDP elections in Septemberby an overwhelming fol majority, the of enactment the by lowed ServicePostal Privatization Act; marries. Nori Princess Year 2007 2006 2005 Land Planning, City Political, Social and Year Planning, Architectural Land and Housing Policy Land and Housing Taxation Real Estate Industry News Economic Events Regulations, etc.

2008 Inauguration of the Aso National Sustainability Plan Emergency Measures for Extension of decreased tax Law for Prevention of Transfer Cabinet; Effects of the financial (national plan) approved at a Activation of Housing/Real rate of registration and license of Criminal Proceeds enacted. crisis stemming from the U.S. Cabinet meeting. Estate Market announced. tax of houses and special Real estate companies subprime loan problem spread measures to reduce stamp successively go under. across the globe. tax on purchase and sale agreement, etc. for real estate transactions; Extension of system of special deduction of ¥15 million concerning specified sector housing development projects.

2009 H2N1 virus spreads from National spatial strategy Policy Package to Address Tax Reduction System for Real Estate Market Stabilization around springtime; Citizen (regional plan) approved by the Economic Crisis announced. Housing Loans extended and Fund established. Both land judge system begins in May; minister. Emergency Economic expanded, Tax Reduction prices that were published DPJ wins the Lower House Countermeasures for System for Long-term Excellent and land prices according elections by an overwhelming Future Growth and Security Houses established, etc.; to surveys by prefectures majority in August; change announced. Special income tax deduction decrease nationwide. The of government for the first Eco-point system for housing for barrier free and energy number of new housing time in 16 years; Inauguration established. New Growth conservation renovations of constructions falls under 1 of the Hatoyama Cabinet in Strategy (basic policies) existing houses established; million units to 780,000 units September; Inauguration of the announced. Tax rate for registration license for the first time in 42 years. Consumer Affairs Agency in tax related to real estate Completion of construction of September. transactions left unchanged; Mitsubishi Ichigokan. Special measures to arouse demand for land during the economic recovery established.

2010 Inauguration of the Kan Low Carbon City Development Increased interest-rate Expansion of measures for Completion of construction for Cabinet in June; Guidance created (MLIT). reduction from “Flat 35S”; exemption of donation tax Coredo Muromachi, Yuito, etc.; Bank of Japan announces its “MLIT Growth Strategy” for housing purchases and RECAJ formulates the “RECAJ “Comprehensive Monetary announced; “New Growth other funds, etc.; Extension of Action Plan for Low Carbon City Easing Policy” in October. Strategy” announced; “Three- special measures concerning Development” and “‘Future Step Economic Measures for donations of funds for housing Urban Development Strategy’ the Realization of the New purchases, etc. in the tax for the Growth of the Housing Growth Strategy” announced. system for settlement at the and Urban Development time of inheritance, etc.; Sectors”; “Tohoku Shinkansen” Extension of exceptions for opens in December. fixed asset tax reduction for newly constructed housing.

2011 Great East Japan Earthquake in Establishment of “Serviced Silver Home System” Establishment of special Complete opening of Kyushu March; “Comprehensive Special Zone begins; measures for specific urban Shinkansen Kagoshima Route; Yen records highest post-war System”; Implementation of Registration redevelopment emergency Keiji Kimura (President of value in March; Revision of Special Measures System for Rental Housing development areas; Mitsubishi Estate) inaugurated Inauguration of Noda Cabinet Act for Urban Management Operator; Establishment of special as the president of the Real in September; Renaissance (establishment Establishment of system for Flat measures for international Estate Companies Association World population hits 7 billion. of emergency development 35S Eco Points and Recovery strategy comprehensive zones; of Japan; areas designated for urban Support/Residence Eco Points. Extension of the tax Adoption of “Five Principles of reconstruction). system for the promotion Removing Antisocial Forces of construction of prime such as Crime Syndicates from rental senior housing upon Real Estate Transaction.” restructuring as targeting senior housing with services.

2012 Tokyo Skytree, the world’s Partial revision of enforcement Disaster Reconstruction Extension of exceptions for Terms for display of real highest free-standing tower order of Special Measures Support and Eco Point System replacement purchases of estate advertisement, etc. (643m), opened in May; Act for Urban Renaissance; for Housing System starts business assets in long-term changed; Existing homes Summer Olympics held in Statistics for stock of buildings accepting applications; ownership of land; Extension allowed to display double price; London during July and August subject to special easing Maximum of loan rate for Flat of exceptions for fixed asset tax Shibuya Hikarie and Tokyu and Japan wins 38 medals, its measures for extension 35 lowered from 100% to 90%; reduction for newly constructed Plaza Omotesando Harajuku most ever; Inauguration of the announced; Buildings with Standard apartment contract housing; Enhancement and completed. 2nd Abe new earthquake resistance revised; Law concerning the extension of exceptions Cabinet in December. standards becomes 67%. promotion of low-carbon for donation of funds for cities established; First acquisition of housing, etc. announcement of the real Establishment of special estate price index (residence); measures to promote Approved Formulation of total plan for Energy-Saving Houses. renovation of existing homes; Compilation of proposals of Real Estate Transaction Market Vitalization Forum.

Real Estate in Japan 2016 REAL ESTATE IN JAPAN 2016 POLITICAL, SOCIAL AND ECONOMIC EVENTS; REAL ESTATE-RELATED POLICY Real Estate Industry News Opening of Hokuriku Hokuriku of Opening between line Shinkansen Kanazawa; and Nagano Change of terminology to “real transactionestate specialist” partial of enactment on based amendment to Building Lots Transaction Buildings and Act; Business Real Estate Transaction Center Modernization name changes Foundation to Real Estate Transaction Center; Promotion MIPIM held in Japan for the first time; Completion of Dai Nagoya Building. City of Osaka opens Grand Front Osaka redevelopment of former Umeda Freight Station site; Completion of Otemachi Tower; Japan Association Home of National and Suppliers Industry Housing of Federation Associations merge to form Industry Housing National the Association. Abeno Harukas is completed, becoming the tallest building in Japan; constructionCompletion of of Hills; Toranomon Passage of revised Building Transactions Buildings and Lots Act. Land and Housing Taxation Housing and Land Extension of special measures commercial of replacement on property land concerning term; long the over owned Extension of measures to adjust burden of real property tax on land; Extension of urban renaissance system; taxation promotion Enhancement of special National to measures relating Strategic Special Zones; expansion Enhancement and of special measures relating to housing for funds of donations etc. purchases, Measures accompanying consumption tax rate hike (relating to home buying, etc.); Renewal Urban the Extension of system; Tax Promotion special exceptions Creation of disaster- strengthen to order in prevention capacitycities; of Creation of tax system-related preferential measures for urbanintensive development projects; Extension and expansion of special exceptions for stamp tax on real estate transaction contracts. Extension of system for carrying forward transfer losses in cases of residential property replacement, etc.; Extension of system for carrying forward transfer losses onspecified residential properties; Extension of measures to reduce fixed asset tax for newly constructed housing; Extension of measures to reduce registration license tax for registering ownership of certified long-life quality housing; Extension of measures to reduce estate real acquisition tax on housing and land. 53 Land and Housing Policy Housing and Land Publication of Existing Home Publication of Table Round Vitalization Market report; Passage of bill proposing Act the of partial amendment Special National Strategic on Zones and Act on Special Reform; Structural for Districts certified low- of number The surpasses carbon houses units; 9,000 Start of pilot program to provide Explanation Important of IT. Matters using documents Ministry of Land, Infrastructure, Transport, and Tourism Inspectionformulates Housing; Existing for Guidelines City of Tokyo implements Zones Development Special to Advance Fire Resistance and creates housing subsidy system; Estate Real the to Amendment Act Enterprise Joint Specified passed; Revised Seismic Retrofitting passed; Law Promotion 100% of Implementation financing for Flat 35 further mortgages, and lowering of Flat 35S interest rate; Japan of Finalization Strategy. Revitalization Individual Publication of Promotion Residence Rental Investigative Committee report; Formulation of Real Estate Information Stock System Basic Plan; for Guidelines Publication of Application of Health Care REITs; Finalization of revised Japan Strategy; Revitalization Japan Formulation of Construction and Real Estate on Industry Based Strategy International by Analysis Market Region; Houses Vacant of Passage Special Measures Act; of Implementation revised Act on Facilitation of Reconstruction of Condominiums. Real Estate in Japan 2016 Regulations, etc. etc. Regulations, Land Planning, City Planning, Land Planning, Architectural Planning, Passage of the Act on Energy of Improvement Consumption Performance of Buildings; National Spatial Changes to Strategies approved by Cabinet. Implementation of Law to Revise Portions of the Special Measures Actfor Urban Renaissance; Passage of City, People, and Job Creation Act; Passage of Law to Revise Portions of the Local Revitalization Act; Implementation of Law to Revise Portions of the Basic Act on Disaster Control Measures; Passage of Law to Revise Portions of the Act on Sediment for Countermeasures Disaster Areas; Prone Disaster Sediment Houses Vacant of Passage Special Measures Act. Passage of National Strategic Strategic National of Passage Special Zone Law; Industrial of Passage Enhancement Competitiveness Act; Passage of Basic Law of Enhancement; Land National Economic Events Economic Political, Social and Battleship Island and others granted World Cultural Heritage Status in July; Third Abe Cabinet is reshuffled and adopts the slogan “A Society with Million 100 Active Citizens” in October; In December, the LDP agrees introduce to Komeito the with a reduced tax rate with the raising of the consumption tax rate to 10%; In December, an agreement is COP21. at adopted Consumption tax increased to 8% in April; Basic Policies for Economic and Fiscal Management (Big- Boned Policy) approved by Cabinet in June; Japan approves of Bank in easing monetary additional October; next of Postponement hike consumption tax announced November; in Third Abe Cabinet inaugurated in December. Introduction Special of Reconstruction Income Tax January; in 2037) (until Prime Minister Abe declares intent to participate in TPP March; negotiations in Tokyo selected as host of the 2020 Summer Olympics/ September; Paralympics in in October, it is decided to raise starting 8% to consumption tax 2014. Year 2015 2014 2013 Overview of Present Land and Housing Taxation

Personal Corporation

Acquisition ❍ Income tax (national tax) ❍ Personal residential tax (local tax) • The Housing loan tax deduction system: If taking out a mortgage to buy a house, for a 10-year period 1% of the mortgage balance at the end of each year is deducted from income tax. If deduction from income tax is not possible, a portion will be deducted from residence tax.

Maximum Maximum Loan Maximum Applicable Deduction Deduction Amount Amount Amount Covered Main Requirements Tax Rate Rate Period Deducted from Deducted from by Deduction*2 Income Tax*2 Residence Tax ¥40 million ¥4 million 8% or 10% ¥136,500 per year (¥50 million) (¥5 million) 1) Floor space must be 50 m² or more Person 1.0% 10 years ¥20 million ¥2 million 2) Loan repayment period must be other than ¥97,500 per year (¥30 million) (¥3 million) 10 years or more the above

*1 Applied in cases where housing is acquired based on application of the 5% consumption tax rate and in cases where existing housing is acquired via a transaction between individuals. *2 Figures in parentheses are for long-life quality housing and low-carbon housing. • Transfer losses accompanying the disposal or replacement of residential property deducted from income and carried forward for 3 years. Recognized as deductions carried forward for 3 years according to calculations of profits and losses during the year the transfer was made as well as income tax and residential tax. This covers transfers through the end of December 2015.*1

❍ Real estate acquisition tax (municipal tax): 3% of real property tax assessment amount on housing or land purchasers (limited measure through March 2018) and extension prolonging special measures on residential land taxation standards (1/2; limited measure through the end of March 2018) (*There are special reductions for acquisitions of certain houses and lots). *Refer to 10.

❍ St amp tax (national tax): Taxation in accordance with contract amount on the preparation of sales contracts, etc.

❍ Registration and license tax (national tax): Taxed when registering real estate (*Special reduction measures exist for certain houses).

(Inheritance) ❍ Inherit ance tax (national tax): Taxation of 10-50% depending on the inheritance tax assessment amount.

(Gift) ❍ Gift tax (national tax): There are special tax exemption cases if gift funds for purchasing a home are received from a lineal ascen- dant (temporary measure until June 2019)

Ownership ❍ Fixed asset tax (local tax): Annual tax of 1.4% of the real property tax assessment amount levied on owners of land and buildings (there are certain measures for adjusting the burden).

❍ City planning tax (local tax): Annual tax of 0.3% of the valuation amount of fixed asset tax that is levied on land and building owners in city districts (same as above).

❍ Land value tax (national tax): Annual tax of 0.15% on valuation amount under inheritance tax law levied on landowners and leaseholders *Application has been suspended for the time being (from 1998).

Transfer ❍ Income tax (national tax and capital gains) ❍ Corporation tax (national tax): ❍ Personal residential tax (local tax and capital gains): Only corporation tax regardless of possession period 1) General transfer after long-term ownership: *Special measure through the end of March 2017 Uniform tax rate of 20% on capital gains of land owned for more than 5 years (income tax 15%*2 + residential tax 5%). ❍ Corporate inhabitant tax (municipal tax) 2) Superior transfer after long-term ownership: ❍ Corporate enterprise tax (municipal tax) The following applies to capital gains on specific land owned for more than 5 years. 14% on a portion ¥20 million or less (income tax 10%*2 + residential tax 4%) 20% on a portion more than ¥20 million (income tax 15%*2 + residential tax 5%). *Special measure through the end of December 2016 3) Transfer of residential property: 4) Shor t-term transfer: After subtracting the special deduction of ¥30 million on capital gains from 39% of capital gains on capital gains from residential land and buildings owned for more than 10 years; 14% on a por- land owned for 5 years or less (income tax tion ¥60 million or less (income tax 10%*2 + residential tax 4%); 20% on a 30%*2 + residential tax 9%). However, 20% for 2 portion more than ¥60 million (income tax 15%*2 + residential tax 5%). transfers to the State, etc. (income tax 15%* + residential tax 5%).

*1: Item for which an extension of the applicable period is expected based on 2016 tax system revisions. *2: From 2013 to 2037, a reconstruction tax of 2.1% will be added to the calculated tax amount.

Real Estate in Japan 2016 REAL ESTATE IN JAPAN 2016 OVERVIEW OF PRESENT LAND AND HOUSING TAXATION - tional conferences National Strategic Special Zones National Strategic Special Zones Strategic Comprehensive of cities at enabling restructuring 2-year extension and expansion of special measures relating to measures relating and expansion of special 2-year extension relating to International of special measures 2-year extension to develop urban capacity aimed Extension of special measures tax exemption system for foreign tourists Expansion of consumption to help attract and host interna Creation of support measures

. . 1. 1. 2. 3. 4 5. competitiveness Tax policy supporting the enhancement of cities’ international of cities’ international the enhancement Tax policy supporting ■ 55 - - - Real Estate in Japan 2016 dential properties serviced elderly housing rebuilding of aging condominiums rebuilding of aging condominiums resale of housing relating to purchase and and barrier-free relating to earthquake-proofing, energy-saving, conversion relating to acquisition of housing or residential land relating to acquisition of housing bon housing new housing new housing system relating to 1-year extension of extra depreciation deduction measures relating to promotion of 2-year extension of special measures for registration license tax 2-year extension of special renovations Extension and expansion of special measures for 2-year extension of special measures for replacement/sale of resi for replacement/sale of special measures 2-year extension measures for real estate acquisition tax 2-year extension of special measures relating to long-life quality 2-year extension of special measures relating to certified low-car 2-year extension of special 2-year extension of special measures reducing real property tax on reducing real property of special measures 2-year extension Creation of special measures relating to renovation work for hous Creation of special measures relating to renovation ing to accommodate three generations of the same family ing to accommodate three generations of the same

3. 3. 7. 8. 9. 1. 1. 4. 5. 6. 2. 10. Tax policy supporting the formation of quality housing stock the formation of Tax policy supporting The following revisions are anticipated regarding the land and housing tax system in the 2016 revisions in the system tax housing and the land regarding anticipated are revisions following The ■ Real Estate-Related Data

Land Prices

History of Year-on-Year Changes in Published Land Prices (unit: %) 1 Study Year 1985 1990 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Usage, etc. Tokyo metropolitan area 1.7 6.6 -2.9 -3.4 -3.0 -6.4 -6.8 -5.8 -5.9 -5.6 -4.7 -3.2 -0.9 3.6 5.5 -4.4 -4.9 -1.7 -1.6 -0.7 0.7 0.5 Osaka metropolitan area 3.0 56.1 -1.9 -2.2 -1.5 -5.2 -6.1 -6.7 -8.6 -8.8 -8.0 -5.2 -1.6 1.8 2.7 -2.0 -4.8 -2.4 -1.3 -0.9 -0.1 0.0 Nagoya metropolitan area 1.6 20.2 -4.0 -1.7 -0.8 -3.3 -1.8 -1.9 -4.4 -5.6 -4.9 -3.3 -1.3 1.7 2.8 -2.8 -2.5 -0.6 -0.4 0.0 1.1 0.8 3 major metropolis average 2.0 22.0 -2.8 -2.8 -2.2 -5.7 -5.9 -5.6 -6.5 -6.5 -5.7 -3.7 -1.2 2.8 4.3 -3.5 -4.5 -1.8 -1.3 -0.6 0.5 0.4 Local average 2.4 11.4 -0.3 -0.4 -0.6 -1.9 -2.3 -2.8 -4.0 -5.1 -5.7 -5.4 -4.2 -2.7 -1.8 -2.8 -3.8 -3.6 -3.3 -2.5 -1.5 -1.1 Residential National average 2.2 17.0 -1.6 -1.6 -1.4 -3.8 -4.1 -4.2 -5.2 -5.8 -5.7 -4.6 -2.7 0.1 1.3 -3.2 -4.2 -2.7 -2.3 -1.6 -0.6 -0.4 Tokyo metropolitan area 7.2 4.8 -15.4 -13.2 -8.2 -10.1 -9.6 -8.0 -7.4 -5.8 -4.5 -2.5 1.0 9.4 12.2 -6.1 -7.3 -2.5 -1.9 -0.5 1.7 2.0 Osaka metropolitan area 5.0 46.3 -15.3 -9.9 -6.8 -9.6 -11.3 -11.0 -11.3 -10.2 -8.8 -5.0 0.8 8.3 7.2 -3.3 -7.4 -3.6 -1.7 -0.5 1.4 1.5 Nagoya metropolitan area 2.7 22.4 -12.7 -8.5 -6.2 -11.2 -7.3 -5.6 -8.1 -8.0 -6.0 -3.3 0.9 7.8 8.4 -5.9 -6.1 -1.2 -0.8 -0.3 1.8 1.4 3 major metropolis average 5.8 18.6 -14.8 -11.5 -7.5 -10.2 -9.6 -8.3 -8.5 -7.1 -5.8 -3.2 1.0 8.9 10.4 -5.4 -7.1 -2.5 -1.6 -0.5 1.6 1.8 Local average 2.6 15.4 -5.5 -5.4 -5.1 -6.8 -7.0 -7.0 -8.1 -8.7 -8.7 -7.5 -5.5 -2.8 -1.4 -4.2 -5.3 -4.8 -4.3 -3.3 -2.1 -1.4 Commercial National average 3.8 16.7 -10.0 -7.8 -6.1 -8.1 -8.0 -7.5 -8.3 -8.0 -7.4 -5.6 -2.7 2.3 3.8 -4.7 -6.1 -3.8 -3.1 -2.1 -0.5 0.0 Tokyo metropolitan area 2.4 7.2 -5.0 -5.1 -3.9 -7.1 -7.4 -6.4 -6.4 -5.9 -4.9 -3.2 -0.7 4.6 6.7 -4.7 -5.4 -1.9 -1.7 -0.6 0.9 0.9 Osaka metropolitan area 3.2 53.9 -4.0 -3.4 -2.3 -5.9 -6.9 -7.4 -9.1 -9.1 -8.3 -5.4 -1.4 2.7 3.4 -2.3 -5.3 -2.7 -1.5 -0.9 0.2 0.3 Nagoya metropolitan area 1.7 19.9 -5.6 -3.0 -1.9 -4.9 -3.0 -2.8 -5.3 -6.1 -5.3 -3.5 -1.0 2.8 3.8 -3.5 -3.3 -0.8 -0.6 -0.1 1.2 0.9 3 major metropolis average 2.5 22.1 -4.8 -4.3 -3.2 -6.4 -6.6 -6.1 -6.9 -6.8 -5.9 -3.9 -0.9 3.8 5.3 -3.8 -5.0 -2.0 -1.5 -0.6 0.7 0.7

All usage All Local average 2.3 11.7 -1.2 -1.6 -1.7 -3.0 -3.4 -3.8 -5.0 -6.0 -6.5 -6.0 -4.6 -2.8 -1.8 -3.2 -4.2 -3.9 -3.6 -2.8 -1.7 -1.2 National average 2.4 16.6 -3.0 -2.9 -2.4 -4.6 -4.9 -4.9 -5.9 -6.4 -6.2 -5.0 -2.8 0.4 1.7 -3.5 -4.6 -3.0 -2.6 -1.8 -0.6 -0.3

Source: Public Notice of Land Prices, Ministry of Land, Infrastructure, Transport and Tourism. Notes: 1. For each year, the change rate is the simple average of standard land price change rates since the previous year. 2. L and areas are divided as follows Tokyo metropolitan area: All existing city areas and suburban improved areas according to the Tokyo Metropolitan Area Improvement Law. Osaka metropolitan area: All existing city areas and suburban improved areas according to the Kinki Metropolitan Area Adjustment Law. Nagoya metropolitan area: All city improvement areas according to the Chubu Metropolitan Area Adjustment Law.

History of Standard Land Price and Nominal GDP with 1983 as 100

240

220 National Tokyo commercial areas Tokyo usage and areas

200 Tokyo residential areas Nominal GDP

180 166.7 160

140

120

100 92.9 80 82.5 60

50 58.2 1985 86 8887 89 90 91 92 93 94 95 96 97 98 99 2000 01 0302 04 05 0706 08 09 121110 13 14 15 (year)

350 Tokyo Metropolitan Area Tokyo commercial areas Tokyo usage and areas

300 Tokyo residential areas Nominal GDP

250

200 186.4

150

100 99.8 94.6

50 75.8 1985 86 8887 89 90 91 92 93 94 95 96 97 98 99 2000 01 0302 04 05 0706 08 09 121110 13 14 15 (year)

Source: Public Notice of Land Prices by the Ministry of Land, Infrastructure, Transport and Tourism; Annual Report on National Accounts, Annual Report on Prefectural Accounts and Quarterly Estimates of GDP by the Cabinet Office. Notes: 1. The Tokyo Metropolitan Area GDP represents the sum of nominal prefectural GDP of Tokyo, Kanagawa, Saitama and Chiba Prefectures. 2. T he nominal GDP and the Tokyo Metropolitan Area GDP represent figures for respective fiscal years. 3. T he nominal GDP figures were calculated based on 93SNA (fixed-base method) until 1993 and based on 93SNA (chain-linking method) for 1994 and after.

Real Estate in Japan 2016

REAL ESTATE IN JAPAN 2016 REAL ESTATE-RELATED DATA

0.9 8 ）（ ) ) ) 14 14 90.8 84.1 65.2 49.3 90.8

14 84.4 74.4 70.6 44.0

123.6 880 358 236 278

118.2

0.5 5 ）（40.7）（（26.8）（31.6）〈-10.8〉 fiscal year fiscal year fiscal year ( ( (

86.1 78.0 68.9 46.0 88.4 80.5 51.0 92.2 92.2

125.0 987 370 259 353 118.8

0.7 6 ）〈10.6〉（37.5）（（26.3）（35.7） Issued house sale Ready-built homes for Issued house sale Ready-built homes for

Rental house Rental Issued house sale for Ready-built homes Owned house

12 13 86.2 79.0 66.0 46.2 88.9 70.6 51.1 92.4 92.4

893 321 250 317 118.4 124.9

0.9 8 ）〈6.2〉（（35.9）（28.0）（35.4）

11 87.8 79.9 71.3 45.7 93.1 90.0 69.9 50.8 841 290 239 305

119.1 125.5

0.8 7 ）〈2.7〉（（34.4）（28.4）（36.2） 10 11 12 13 10 11 12 13

88.2 80.1 67.0 45.2 10

90.2 69.5 50.4 93.6 93.6 93.1

819 292 212 309 119.4 125.9

Rental house Rental house Rental

1.7 13 ）〈5.6〉（（35.6）（25.9）（37.7）

89.8 77.0 46.4 43.2

95.3 87.4 53.8 48.0 311

775 164 287 119.9 127.2

1.1 11 ）（40.2）（（21.1）（37.0）〈-25.4〉 08 09 08 09 84.6 74.3 51.6 41.9

91.5 83.1 65.7 45.5

445 273 311 123.2 130.2

1,039 1.0 10 ）〈0.3〉（（41.6）（26.2）（29.9） Overall averageOverall Owned house averageOverall Owned house 89.7 78.0 55.8 41.6

07 08 09 95.8 85.3 63.6 45.5 45.5 45.5 95.8 91.5 95.3

123.6 431 283 312 131.6

1,036

0.7 9 ）（41.6）（（27.3）（30.1）〈-19.4〉 63.3 41.9 88.0 77.3

06 93.8 84.5 66.8 46.0 46.0 93.8 124.8 538 383 356 133.3

1,285

0.7 〈2.9〉 9 ）（41.8）（（29.8）（27.7） 05 06 07 05 06 07 63.0 42.5 88.5 77.9

93.8 85.4 67.4 46.7 124.3 353 370 518 133.8

1,249

0.8 〈4.7〉 9 ）（（28.3）（29.6）（41.5） 04 04 90.7 80.4 64.8 43.3

04 05 95.9 88.5 68.9 47.4 47.4 46.7 124.0

349 367 467 134.2

1,193 0.7 8 57 ）〈1.7〉（（29.3）（30.8）（39.2） 88.8 80.0 60.8 44.7

03 89.4 70.8 48.8 95.0 95.0 95.9 93.8 123.7 334 373 459 134.8

1,174

0.8 〈2.5〉 10 ）（（28.4）（31.8）（39.1） 90.9 81.9 63.5 46.0

90.3 72.1 50.0 96.1 96.1 125.0 455 316 366

135.8

1,146

0.8 10 Real Estate in Japan 2016 ）〈-2.4〉（（39.7）（27.6）（31.9） 92.4 85.2 58.0 50.1

92.7 68.9 51.4 98.1

125.2 442 344 377 137.0

1,173

0.9 11 ）〈-3.3〉（（37.7）（29.3）（32.1） 88.4 92.6 70.4 52.2

96.9 71.7 53.0 97.5 126.8 418 346 438

1,213

1.0 12 ）〈-1.1〉（（34.5）（28.5）（36.1） 99 2000 01 02 03 99 2000 01 02 03 90.3 88.1 61.7 52.9

95.4 69.6 53.2 97.5 97.5 97.5 98.1 126.8

426 312 476

1,226

1.3 16 ）〈4.0〉（（34.7）（25.5）（38.8） 87.1 86.1 75.5 52.5

92.8 75.2 51.2 94.1 94.1 126.7

444 282 438

1,180

1.8 24 ）（37.6）（（23.9）（37.1）〈-12.0〉 97 98 97 98 86.7 86.2 70.2 55.3

92.3 72.8 52.0 92.4 127.5

516 351 451

1,341

1.7 26 ）（38.5）（（26.1）（33.6）〈-17.7〉 85.3 95 95 65.5 55.6 84.9 93.0 90.6 70.1 52.3 93.0 92.4

125.3 137.4 139.2 139.0 139.3 139.0 564 345 551

1,485

2.2 37 ）〈-4.9〉（（38.0）（23.2）（37.1） ) 80.8 90 90 66.9 73.7 43.3 71.3 45.1 83.7 45.1

125.9

136.8 387 474 767

1,665 1.6 20 ）（ 71.1 〈-0.4〉（23.2）（28.5）（46.1） wner-occupied housing is housing that the owner constructs for the purpose of residing there. Leased housing is housing that the owner constructs for the purpose of leasing it. it. leasing of purpose the constructs for owner the that housing is housing Leased there. residing of purpose the constructs for owner the that housing is housing wner-occupied he figures in parentheses represent the breakdown by usage (%). The figures on the graph in parentheses are year-on-year variation (%). variation year-on-year are parentheses in graph the on figures The (%). usage by breakdown the represent parentheses in figures he here may discrepancies in the totals due to rounding.

T O there. reside etc., teachers, staff, employees, its having of purpose the constructs for like the or school, agency, government company, a that housing is housing Issued lots. or housing ready-built as selling for constructed housing is housing Condominium T . . . 44.7 83.9 88.5 79.8 46.8 46.8 78.8 1985 1985 127.4 120.1 544 227 460 S S S 2 3 /unit) /unit) thousand units 1985 90 95 97 98 99 2000 01 02 1,251 83.1 81.9 〈3.6〉（43.5）（18.1）（36.8）㎡㎡ 0 0 0 Note: Tokyo area = Tokyo, Kanagawa, Saitama, and Chiba prefectures 500 History of Floor Space per Unit for New Housing Starts (Tokyo Area: by Overall Average and Use) History of Floor Space per Unit for New Housing Starts Overall (by Average and Use) History of Housing Starts 50 50 Notes: 1. 1. Notes: 100 150 ( 100 150 ( 1,000 2,000 ( 1,500 Source: tatistics on Construction-started Dwelling Houses issued by MLIT. Source: tatistics on Construction-started Dwelling Houses issued by MLIT.

Source: tatistics on Construction-started Dwelling Houses issued by MLIT. Housing and Housing Lots Housing and

History of Housing Investment

(%) Nominal housing investment (left scale) 10

Nominal housing investment/nominal GDP (right scale) 9 25 (trillion yen) 26.0 25.7 8 24.3 7 20 21.7 21.4 5.8 21.2 6 19.5 19.3 18.8 18.7 19.0 19.0 5 5.2 4.3 4.2 4.8 4.7 4.0 17.1 4 15 3.8 3.8 3.8 3.8 3.8 16.9 4.2 3.1 3.4 15.6 2.9 3.1 2.9 2.7 3 3.3 3.4 16.5 13.4 13.9 14.6 15.3 12.9 2 10 1 1985 90 95 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 (ﬁscal year)

Source: P repared from the Annual Report on National Accounts 2014.

History of Housing Construction Permits and Area of Approved Land Readjustment Projects

Area of approved land readjustment projects

8,000 (ha) Area of housing construction permits

6,000 5,420 5,115 5,145 4,660 4,473 4,463 5,215 4,000 3,887 3,682 3,805 4,200 4,387 3,437 3,312 3,448 3,182 3,091 3,035 3,098 3,029 3,250 3,293 2,759 2,815 2,639 3,367 2,290 2,000 1,678 2,063 1,741 1,264 1,166 1,505 869 835 1,073 911 792 581 632

1985 90 95 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 (ﬁscal year)

Source: P repared from "the White Paper on Land, Infrastructure and Transport in Japan", "the Land Readjustment Annual Report" by MLIT. Notes: 1. The construction permit is the approval granted primarily for the objective of building a house based on the City Planning Law. 2. T he area of approved land readjustment projects represents the total for individuals, joint projects, associations, public bodies, government agencies, the Urban Development Corporation (present Urban Renaissance Agency), Japan Regional Development Corporation (present Organization for Small & Medium Enterprises and Regional Innovation, JAPAN and Urban Renaissance Agency) and the Local Housing Supply Corporation.

History of New Condominium Sales

100,000 (units) Tokyo metropolitan area Kinki metropolitan area

95,635 89,256 88,516 80,000 84,885 86,297 83,183 85,429 84,243 74,463 70,543 60,000 66,308 61,021 56,478

40,000 43,733 44,535 44,494 45,602 44,913 40,709 40,449 39,548 38,611 39,737 39,087 35,625 36,673 36,376 33,147 33,064 29,452 31,258 31,857 30,146 30,219 20,000 24,841 27,299 24,691 22,744 21,716 23,266 19,784 20,219 18,814 18,930

1985 90 95 97 98 99 2000 01 0302 04 05 06 0807 09 10 1211 13 14 15 (year)

History of New Condominium Annual Contracted Rates

100 (%) Tokyo metropolitan area Kinki metropolitan area 93.5 91.3 1,09790.8 91.7 91.4 90.9 91.990.0 89.9 90.3 90.1 90.0 89.7 89.4 90.0 89.6 88.8 88.0 89.3 88.0 87.4 88.1 86.0 86.8 86.3 83.8 85.0 86.0 84.1 84.7 84.4 83.8 84.6 81.4 78.3 79.6 80 80.2 78.0 79.5 76.6 74.1 75.1 74.5 72.6

70.8

1985 90 95 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 (year)

Real Estate in Japan 2016 REAL ESTATE IN JAPAN 2016 REAL ESTATE-RELATED DATA ）） 14 80 80 15 15 210210 5.24 6.30 6.30 7.12 7.12 7.34 7.536.85 4.03 7.45 7.45 7.34 619 3,788 15 10.50 10.50 (year) (year) 5,518 (year) 69 69 13 （ﬁscal year 186 609 186 3,647 5,060 65 65 3,496 14 13 14 612 612 240 240 4,929 3,438 1211 60 60 583 583 259 259 4,540 National area metropolitan Tokyo area metropolitan Osaka 3,490 63 63 555 250 250 555 4,578 11 12 13 14 11 12 13 14 3,452 4,716 09 10 11 706 706 367 367 119 119 10 10 3,411 09 10 4,535 97 97 858 858 388 388 09 09 3,513 0807 4,775 86 86 264 739 739 264 08 08 3,478 4,644 06 07 08 793 793 318 177 177 318 3,380 06 4,200 05 113 776 776 267 113 267 3,164 4,107 75 75 04 808 808 358 358 3,177 59 04 05 4,014 73 73 755 289 289 755 3,165 0302 4,069 Yokohama Fukuoka 85 85 683 227 227 683 3,237 03 04 05 06 07 03 04 05 06 07 Real Estate in Japan 2016 4,003 91 91 832 335 335 832 Nagoya National average 3,188 4,026 02 02 90 90 3,243 817 308 308 817 Kinki metropolitan area Kinki metropolitan Sapporo Sendai 4,034 01 01 3,419 90 90 880 355 355 880 4,138 Tokyo Osaka 3,562 98 99 2000 01 859 859 4,168 236 121 236 121 99 2000 99 2000 3,687 97 4,374 275 142 275 142 1,119 1,119 98 98 3,447 95 291 291 Tokyo metropolitan area area metropolitan Tokyo 4,148 170 170 1,097 1,097 5,279 90 6,123 90 95 97 98 99 2000 01 02 03 907 392 392 907 2,452 2,452 95 97 95 97 2,101 ational averages calculated by the editors. the by calculated averages ational his is a compilation of offices by usage that have filed construction reports based on Article of the Building 15-1 Standards Law. igures as of December each year. ump presentation of the scheduled construction start month in the filed construction report. construction filed the in month start construction scheduled the of presentation ump okyo metropolitan area: Tokyo, Kanagawa, Chiba and Saitama; Osaka metropolitan area: Osaka, Kyoto and Hyogo. Local city areas and nationally and nationally city areas Local 1985 Metropolitan areas areas Metropolitan 2,683 T F T N L ) . . . . . 85 488 245 731 281 M P P 2 2 3 1,510 1,929 ha ( 0 1990 1990 500 Note: Tokyo metropolitan area: Tokyo, Kanagawa, Chiba and Saitama; Kinki metropolitan area: Osaka, Hyogo, Kyoto, Nara, Shiga and Wakayama History of Floor Space for Launched Office Construction History of Office Building Vacancy Rates History of Average Price for New Condominium Units 8 6 4 2 0 8 6 4 2 0 Notes: 1. Notes: 1. Notes: 1. Notes: 1. 1,000 1,500 2,000 2,500 2,000 3,000 4,000 5,000 6,000 7,000 (10,000 yen) 7,000 (10,000 18 16 14 12 10 12 10 20 (%) 14 (%)

Source: iki Shoji Co., Ltd., “Office Data.” Source: repared using Annual Statistical Report onBuilding Construction by Ministry of Land, Infrastructure, Transport and Tourism. Source: Ltd. Co., Institute Economic Estate Real the by issued Area Metropolitan Kinki the for Trends Market Condominium and Area Metropolitan Tokyo the for Trends Market Condominium using repared Offices

History of Asking Rent

45,000 (yen/tsubo) Metropolitan areas Tokyo Nagoya Osaka National average 40,000

35,000

30,000

25,000

20,000 17,692 15,000 11,114 10,000 10,935 5,000 10,794

0 1990 95 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 (year) (unit: billion yen) 20,000 (yen/tsubo) Local city areas and nationally Sapporo Yokohama Sendai Fukuoka (unit: billion yen)

15,000

10,000 10,565 9,217 9,013 8,155

5,000

0 1990 95 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 (year)

Source: Miki Shoji Co., Ltd., “Office Data.” Notes: 1. The areas covered in Tokyo are Chiyoda Ward, Chuo Ward, Minato Ward, Shinjuku Ward, and Shibuya Ward. 2. T he buildings covered are buildings with a standard floor space of 100+ tsubo in Tokyo and buildings with a total floor space of 1,000+ tsubo in Osaka, 500+ tsubo in Nagoya, 100+ tsubo in Sapporo, 300+ tsubo in Sendai, 500+ tsubo in Yokohama, and 1,000+ tsubo in Fukuoka.

Real Estate in Japan 2016 REAL ESTATE IN JAPAN 2016 REAL ESTATE-RELATED DATA

- 14 8.9 2.6 1.2 3.0 2.6 (8.9) (2.6) (3.0) yen) 3,698 4,299 2014 2014 yen) 2014 (ﬁscal year) (2.7) (8.7) (2.8) 1,705 1,773 3,770 3,929 12,250 12,250 12,851 2013 billion 140,916 144,784 2013 2013 Land transport Steel (unit: billion 10 (3.0) 4,116 1,627 1,627 8.3 2.4 1.2 3.0 2.4 3,268 (unit: (unit: trillion yen) (unit: trillion 11,499 2012 137,541 2012 2012 3,571 3,857 11 12 13 8.0 2.6 1.3 2.8 2.6 10,945 10,945 2011 138,104 138,104 2011 (1.3) (1.3) (1.2) (1.2) (1.2) (2.6) (2.6) (2.4) 3,663 3,302 11,130 10 2010 8.0 2.3 1.3 2.6 2.3 2011 138,574 2010 Construction Real estate (1.1) (8.8) (8.0) (8.0) (8.3) (3.0) 3,212 1,572 1,821 1,806 4,098 09 8.8 2.3 1.1 3.0 2.3 136,802 2010 (8.4) 3,867 3,603 12,628 12,628 12,070 2008 2009 150,820 150,820 08 8.4 2.4 1.5 2.6 2.4 2008 2009 (2.5) (2.4) (2.3) (2.3) (2.8) (8.5) 2,191 2,191 2,252 3,980 3,709 2007 158,017 07 8.5 2.3 1.4 2.5 2.3 2007 (8.6) (2.7) 4,222 4,222 3,386 2008 2009 13,499 13,502 06 8.6 2.2 1.3 2.7 2.2 (1.2) (1.3) (1.4) (1.5) (8.5) 3,514 1,841 1,986 3,450 2007 05 8.5 2.3 1.2 2.3 2.3 (1.1) (8.8) 1,560 1,560 3,530 2004 2005 2006 61 142,036 142,036 150,812 156,643 2004 2005 2006 2.5 2.3 8.8 2.3 1.1 (9.5) (1.0) 3,399 12,746 12,746 12,480 12,886 2003 133,467 2003 03 04 2.5 9.5 2.5 2.5 1.0 1,251 1,294 3,703 3,348 3,363 3,325 (10.2) 2002 Real Estate in Japan 2016 132,680 132,680

2.8 2.5 2.5 0.9 10.2 (2.4) (2.5) (2.5) (2.3) (2.3) (2.2) (2.3) (2.6) 3,186 1,222 1,222

(10.4) 13,935 13,545 2001 2004 2005 2006 133,821 2.5 0.9 2.42.4 (2.1) (0.9) (0.9) (0.9) 10.4 2,991 2,991 (10.1) 2000 143,503 2003 (1.0) 2.3 2.1 2.1 0.9 10.1 3,237 3,049 3,049 3,303 3,334 (10.4) 14,437 14,455 1999 138,346 138,346 (0.9) 2.2 1.0 2.3 2.2 1,297 1,330 1,246 3,447 3,309 10.4 15,192 15,192 138,134 159156 161 160 173 169 182 181 201 201 340 212 345 212 347 212 356 214 361 216 365 218 350 209 349 209 344 210 339 207 350 211 357 212 (34) (35) (38) (37) (37) (22) (21) (20) (20) (21) (22) (21) (21) (20) (19) (18) (17) (1.1) (2.3) (2.4) (2.3) (2.3) (2.5) (2.2) (2.3) (2.5) (2.8) (2.5) (2.5) (2.3) 1,574 1,004 1,2572,132 1,673 2,455 1,840 2,800 2,136 3,231 3,706 1,319 1,267 5,683 1,249 5,807 1,269 6,203 1,303 6,167 1,287 6,006 1,227 5,590 1,192 5,651 1,159 5,724 1,135 5,715 1,122 5,978 1,118 6,751 6,943 3,936 4,5361,320 5,341 1,578 5,994 2,014 6,858 2,203 2,538 8,483 8,575 1,871 8,979 1,824 8,996 1,808 8,913 1,839 8,508 1,880 8,457 1,870 8,488 1,786 8,448 1,750 8,669 1,713 9,295 1,681 9,684 1,683 1,687 (11.8) (11.0) 3,402 2.4 2.5 2.4 0.9 1985 1986 1987 1988 1989 17,0 03 11.0 28,06312,440 46,390 16,971 100,853 100,656 30,799 88,433 30,383 90,731 30,789 94,012 30,215 94,580 30,808 91,541 25,082 91,266 23,742 91,183 23,766 93,254 22,430 94,350 21,865 95,385 21,482 21,089 22,65422,506 32,35870,232 25,381 53,576 94,672 31,667 53,788 98,914 31,200 54,042 100,915 29,018 55,365 99,699 29,547 55,721 100,268 29,385 103,565 56,013 28,091 98,666 56,879 26,948 83,351 56,890 26,198 94,333 56,726 26,461 87,284 56,505 26,797 87,948 56,161 28,385 88,319 56,307 29,564 90,149 148,469 148,469 1980 1985 249,050 333,678240,175 320,418 494,519 499,252 498,855 500,608 503,725 503,291 503,903 509,559 506,687 496,705 512,975 467,336 501,209 478,775 471,139 468,964 482,677 472,746 471,579 475,355 475,332 482,851 479,084 486,939 (2.1) Year (9.8) (2.9) 4,150 1,895 1,895 3,009 3,352 95 98 99 2000 01 02 14,022 2.3 2.3 2.3 1.1 11.8 Year (7.7) (1.6) (1.3) (1.7) (2.0) 2,153 2,153 1,689 1,689 1,804 8,205 1985 1990 1995 1998 (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) 2.9 2.1 1.3 9.8 105,907 105,907 142,818 evisions to the counts were done by tracing back the data from onward 1993 so the premise of these figures differs from that and of earlier. 1985 evisions to the counts were done by tracing back the data from onward 1992 and so the premise of these figures differs from that and earlier. of 1989 he production amount for the real estate industry also includes imputed rents (imputed rents are the recording of amounts equivalent to rent as the production amount of an individ an of amount production the as rent to equivalent amounts of recording the are rents (imputed rents imputed includes industry also estate real the for amount production he he price indicated by producers is used for the production amounts of each industry. Therefore, they include indirect taxes, imputed interest, etc. and so the totals do not match the the match not do totals the so and etc. interest, imputed taxes, indirect include they Therefore, industry. each of amounts production the for used is producers by indicated price he he total value also includes government service producers outside of each industry and non-profit private service producers for households. service for producers private non-profit industry and each of service outside producers government includes also value total he ual proprietorship to the gross production amount based on the judgment that the homeowner is involved in the home leasing business). leasing home the in involved is homeowner the that judgment the on based amount production gross the to proprietorship ual T R R T product. national gross T . . . . The figures in parentheses show the percent of gross national product. national gross of percent the show parentheses in figures The . . . T P T 2 2 3 4 2.0 1.6 7.7 Land Housing Non-housing buildings 1985 90 1.7 History of Sales Share by Industry Production by Industry and Gross Domestic Product Valuation of Real Estate Gross in National Assets 業種別売上高シェアの推移 8 6 4 2 0 Fiscal Year Fiscal Notes: 1. Notes: 1. Notes: The figures in parentheses represent the share (%) versus the sales of all industries. all of sales the versus (%) share the represent parentheses in figures The Notes: Notes: 1. 1. Notes: Land Land transport Construction Steel All industries estate Real Real estate Real Total for all industries all for Total GDP (Reference) Construction Manufacturing Service Finance/Insurance Financial assets Financial Gross national assets national Gross estate real of Valuation Category 12 (%) 10 Source: he Cabinet Office’sNational Economic Statistics Report (2000) was and used the –1989 for same 1985 and for after 1996 version). (2014 Source: Source: Finance. of Ministry the by issued Statistics Corporation For-Profit on Special Annual Review: Finance Monthly the using repared 1

Source: he Cabinet Office's National Economic Statistics Report (2000) was used and forand the 1980 1985 version) same and for (2014 after. 1996 1 Others

4.1 5.1 5.1 3.7 3.7 4.3 3.5 4.8 4.8 3.6 3.0 3.0 3.2 (％) 12.6 12.6 12.6 12.6 38.9 35.7 35.7 0.24 34.5 （0.8） 12 10 8 6 （0.1） ¥1 billion or more 338 ¥100 million less than to ¥1 billion 2,555 4.1 3.1 4.9 2.7 3.7 2.4 2.4 3.2 2.3 2.8 4.0 4.2 3.5 4.5 5.0 5.0 3.5 3.2 3.2 3.2 11.0 31.4 31.4 31.2 10.9 0.21 0.64 0.67 9.9 4.1 3.1 2.9 0.7 2.5 2.5 2.3 2.0 2.8 4.4 4.4 3.5 4.2 4.5 3.4 0.8 3.0 3.2 3.3 3.2 -0.1 37.4 37.4 37.6 32.9 0.72 28.5 0.26 11.3 (unit: billion yen) 310,413 123,477 （36.6） 194,043 (unit: billion yen) （62.5） Less than ¥10 million ¥10 million to less than ¥100 million 1.1 -0.1 1.9 1.9 1.7 4.1 3.1 (ﬁscal year) 1.5 1.3 3.7 2.4 2.4 2.6 2.8 11.7 29.6 29.6 26.9 26.9 30.2 32.6 32.6 34.9 0.21 35.3 35.7 38.3 40.8

11.1 306,280 9.1 9.3 9.5 1.7 1.7 1.4 1.4 1.4 1.6 1.6 1.6 2.4 2.9 2.7 2.7 2.7 2.7 2.3 2.3 2.5 2.0 2.8 2.0 4.4 4.4 3.0 3.8 3.8 3.2 3.3 27.1 12.1 25.4 25.4 27.4 35.6 0.83 0.85 0.82 0.86 0.88 30.0 0.22 1.1 1.9 1.9 1.9 7.5 9.3 11.1 3.1 1.4 1.4 2.4 2.4 2.3 2.0 2.8 2.8 4.0 304,000 -0.7 -0.5 13.0 0.71 0.95 0.96 0.95 0.96 0.94 0.94 0.25 34.5 30.6 1.9 7.6 7.6 1.7 1.7 2.1 1.0 1.3 5.9 5.9 3.7 2.5 2.2 2.5 2.0 2.3 2.3 3.0 8.8 8.8 11.0 37.5 37.5 37.0 1.06 0.67 0.67 0.61 0.61 0.68 302,939 24.6 24.6 33.9 0.26 Percentage of total companies for all industries (right scale) companies for of total Percentage 1.6 1.6 9.2 3.9 8.7 3.7 4.5 3.4 2.4 8.6 5.7 8.6 5.5 -0.6 8.6 5.7 -0.4 2.4 2.2 1.17 27.0 1.01 1.04 29.3 29.0 38.1 0.73 25.0 25.0 26.2 26.4 33.5 10.9 0.30 301,005 9.9 9.7 9.6 9.6 3.1 3.1 2.9 2.9 2.4 2.4 4.0 4.0 3.5 3.0 3.4 11.0 11.0 32.1 10.0 10.0 10.2 24.3 32.8 0.27 38.8 10.8 302,939 9.1 2.1 3.9 2.7 2.7 2.0 2.8 2.8 2.0 5.4 5.5 3.4 3.3 3.4 3.3 3.2 11.1 1.14 1.14 27.1 17.5 10.7 0.97 0.97 30.1 10.2 26.4 26.4 29.4 38.7 0.29 10.7 301,005 9.1 1.7 1.5 1.7 9.6 9.6 10.6 3.1 3.1 8.1 3.1 1.8 1.7 1.8 1.7 1.3 1.3 1.8 3.5 4.8 8.5 2.2 2.2 2.0 2.2 2.0 1.11 29.8 36.1 36.1 28.9 22.9 10.2 20.7 0.89 0.89 0.28 10.6 299,818 7.5 1.6 1.6 1.4 1.4 1.4 1.4 2.9 2.9 4.9 2.7 3.7 2.0 2.3 2.0 2.3 2.8 4.5 5.2 6.5 6.8 27.1 11.0 0.76 32.5 22.5 28.3 10.6 297,586

7.1 9.6 9.6 3.1 1.5 1.8 1.3 1.3 2.6 2.6 2.4 2.4 2.4 2.4 2.3 2.3 2.0 3.0 3.3 3.4 4.4 4.6 14.3 1.20 1.27 1.27 1.27 1.28 1.28 1.27 1.28 1.22 1.22 1.28 1.33 1.32 24.8 22.4 22.4 0.27 0.27 30.2 62 10.4 293,330 1.1 2.1 2.1 9.7 1.7 2.1 7.2 1.4 1.4 3.4 5.9 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.0 2.5 2.4 2.4 2.6 3.0 3.4 3.6 3.6 2.2 3.3 4.6 4.4 0.2 0.2 1.6 27.9 19.8 1.07 1.06 1.09 22.0 0.26 10.4 288,638 2.1 1.6 1.6 1.4 1.3 2.9 2.5 2.6 2.6 2.4 2.4 2.0 2.8 2.3 2.5 2.8 2.2 4.3 8.6 1.11 1.16 1.19 29.9 21.2 25.7 25.7 25.2 27.4 20.7 0.24 Real Estate in Japan 2016 10.5 2.1 2.1 1.5 1.4 1.4 1.6 1.4 1.4 1.4 1.6 1.8 1.9 0.9 2.9 2.3 2.3 2.3 284,693 4.3 4.2 0.6 3.4 5.3 6.1 1.17 28.3 22.3 0.25 20.8 1.9 1.9 1.7 1.8 1.9 1.5 1.6 1.6 1.6 1.6 1.3 1.3 1.9 1.3 1.8 1.2 2.4 2.4 2.6 3.6 0.8 1.6 3.0 0.2 0.8 10.4 -8.4 5.7 14.6 -0.5 -0.3 281,046 17.7 0.18 19.2 1.04 1.08 0.64 0.69 0.69 0.67 0.69 1.1 7.5 7.0 7.9 2.1 3.1 1.5 1.4 1.4 1.6 1.6 1.8 1.5 1.9 2.7 2.7 2.7 2.5 2.0 2.4 2.4 2.0 2.0 4.5 3.5 3.6 2.2 -0.3 1.12 10.4 0.74 18.9 18.9 0.69 0.67 0.62 0.66 0.66 0.68 0.66 0.66 0.61 0.63 0.22 277,143 1.1 -0.1 7.3 6.1 6.1 5.1 5.1 8.1 8.1 3.1 2.7 3.9 4.7 4.6 4.6 4.6 4.6 5.6 3.5 3.5 3.5 5.3 3.8 3.8 4.2 19.1 11.5 23.9 1.35 1.23 1.22 0.92 0.90 0.37 0.37 10.4 273,202 1.1 2.1 2.1 9.4 9.4 3.1 3.1 1.6 1.6 3.4 1.4 1.4 1.3 3.9 3.9 2.4 2.4 2.0 2.3 2.8 4.4 4.4 4.3 3.5 8.0 3.3 3.8 3.8 17.7 1.16 16.1 16.1 26.1 26.1 27.4 14.9 15.4 15.4 15.6 18.4 21.4 22.6 1.44 1.44 1.54 1.31 0.42 0.42 0.88 1985 1990 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 270,555 10.4 10.4 265,166 10.5 257,358 Steel transport Land Construction Steel transport Land estate Real Construction Real estate Real Construction Steel transport Land Steel transport Land estate Real Construction Steel transport Land Real estate Real Construction Steel transport Land estate Real Construction Real estate Real All industries All All industries All industries All industries All All industries All industries All

Year 10.1 204,700

perating profit is sales – (sales cost + sales expenses and general administrative expenses) rdinary profit is operating profit + (non-operating revenues – non-operating expenses) – revenues (non-operating + profit operating is profit rdinary et worth is the total amount for the capital section on the credit side of the balance sheet. orporations are unlimited partnerships (gomei kaisha), limited partnerships (goshi kaisha), joint stock corporations (kabushiki kaisha) and limited corporations (yugen kaisha) with with kaisha) (yugen corporations limited and kaisha) (kabushiki corporations stock joint kaisha), (goshi partnerships limited kaisha), (gomei partnerships unlimited are orporations he figure for fiscal is the breakdown 2014 bypaid-in capital amount. The figures in parentheses show the percentage of the total (unit: %). otal capital is the total of liabilities indicated on the credit side of the balance sheet (notes payable, accounts payable, accrued payments, corporate bonds, borrowings, allowanc- O *Non-operating received, interest revenues discounts, are investment security received from investment dividends, securities, interest, capital gains etc. *Non-operating expenses are interest paid, discounts, corporate bond interest, amortization of bond issue discount, capital losses from investment securities, etc. O C head offices in Japan. T es, reserves, and etc.) capital (paid-in capital, capital surplus and profit surplus) until 2006. it is From liabilities 2007, indicated(total of paid-in on the credit capital, side of capital the balance surplus, sheet profit and net surplus, assets etc.). T N . . . . . 8.9 M P 2 2 3 4

1985 90 95 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 162,208 0 50 History of Number of Real Estate Companies History of AdministrativeIndices by Industry Type Notes: 1. 1. Notes: Notes: 1. Notes: 1. Ratio of net worth (%) capital total to Net worth/ capital Total Turnover of total (times) capital Sales/ Ratio of ordinary ordinary of Ratio (%) sales to profit profit/ Ordinary Sales capital Total Ratio of operating operating of Ratio (%) sales to profit profit/ Operating Sales Ratio of ordinary ordinary of Ratio total to profit (%) capital profit/ Ordinary capital Total Ratio of operating operating of Ratio total to profit (%) capital profit/ Operating Total capital Total 100 150 200 250 (thousand companies) 300 Source: Source: Finance. of Ministry the by issued Statistics Corporation For-Profit on Special Annual Review: Finance onthly 1

Source: Source: Finance. of Ministry the by issued Statistics Corporation For-Profit on Special Annual Review: Finance Monthly the using repared

REAL ESTATE IN JAPAN 2016 REAL ESTATE-RELATED DATA List of Figures

Number of For-sale Condominiums in Stock Nationwide 11 BELS Symbol 43 Number of Condominiums over 30, 40 or 50 Years Old 14 Housing Performance Indicator Image 43 Flow Chart of Condominium Business 14 CASBEE Label Image 43 Primary Systems for Promoting Urban Redevelopment 16 Changes over Time in Elderly Population 45 History of Building Vacancy and Floor Area (Stock) 16 Annual Breakdown of Total Number of Households by Household Structure 45 Flow of an Urban District Redevelopment Project 17 Report of the Committee for the Study of the Role of Real Estate in Reinforcing Disaster Prevention Functions of Cities (Summary) 46 History of Supply Volume of Major Office Buildings in 23 Wards of Tokyo 18 Overview of Present Land and Housing Taxation 54 Major Private City Redevelopment Projects 20-21 History of Year-on-Year Changes in Published Land Prices 56 National Strategic Special Zones Approved to Date 24 History of Standard Land Price and Nominal GDP with1983 as 100 56 Tokyo Area Policies 24 History of Housing Starts 57 Development of Global Business Hub Based on National Strategic Special Zones (Tokyo Prefecture) 25 History of Floor Space per Unit for New Housing Starts (by Overall Average and Use) 57 History of Office Floor Space in the Wards of Tokyo 27 History of Floor Space per Unit for New Housing Starts Flow of Real Estate Brokerage Work 30 (Tokyo Area: by Overall Average and Use) 57 History of Building Lot and Building Transaction Firms 30 History of Housing Investment 58 Market Trends for Existing Housing 31 History of Housing Construction Permits and Area of Approved Land Number of Contracted Stand-Alone Houses in the Tokyo Metropolitan Area, Readjustment Projects 58 Average Contracted Price and Building Age 32 History of New Condominium Sales 58 Number of Contracted Existing Condominiums in the Tokyo Metropolitan Area, History of New Condominium Annual Contracted Rates 58 Average Contracted Price and Building Age 32 History of Average Price for New Condominium Units 59 History of Real Estate Securitization 33 History of Floor Space for Launched Office Construction 59 Real Estate Investment Trust (Company Type) Structure 34 History of Office Building Vacancy Rates 59 Tokumei Kumiai Structure Using Real Estate Syndication 34 History of Asking Rent 60 Major International Projects Announced in Recent Years (Implemented and Planned) 37 Valuation of Real Estate in Gross National Assets 61 Major Resort Projects of Japan 40 Production by Industry and Gross Domestic Product 61 Image of ZEB 42 History of Sales Share by Industry 61 Image of Environmental Value-Oriented Real Estate Market 42 History of Administrative Indices by Industry Type 62 History of Number of Real Estate Companies 62

Real Estate in Japan 2016 ● Published: May 5, 2016 (Japanese version: March 10, 2016) ● Publisher: The Real Estate Companies Association of Japan Head office: Kasumigaseki Building 17th floor, 3-2-5 Kasumigaseki, Chiyoda Ward, Tokyo 100-6017 Tel. 03-3581-9421 Fax. 03-3581-7530 Osaka office: Sumitomo Nakanoshima Building 2nd floor, 3-2-18 Nakanoshima, Kita Ward, Osaka City 530-0005 Tel. 06-6448-7460 Fax. 06-6448-3507 Nagoya office: Nagoya Sanko Building 11th floor, 3-21-7 Meieki, Nakamura Ward, Nagoya City 450-0002 Tel. 052-571-8050 Fax. 052-561-5872 Website: http://www.fdk.or.jp ● Translation and editing: Transpacific Enterprises Any duplication without receiving express permission from the Real Estate Companies Association of Japan is expressly forbidden. ● Photo Sources (alphabetical order): Daikyo Incorporated, Daiwa House Industry Co., Ltd., Kita-Shinagawa 5-Chome Area 1 Urban Redevelopment Association, Mitsubishi Estate Co., Ltd., Mitsui Fudosan Co., Ltd., Nomura Real Estate Development Co., Ltd., Sumitomo Realty & Development Co., Ltd., Tokyo Tatemono Co., Ltd., Tokyu Land Corporation

Real Estate in Japan 2016 2016 Real Estate in Japan Japan in Estate Real

Creating New Value for the Economy and Society 2016