image

Japan

Japanese housing manufacturers head for other Asian markets to make up for shrinking business at home

  • Property developers such as Panasonic Homes Co. and Daiwa House Industry Co. have been trying to meet overseas needs, from single homes to condos and prefabricated flats for construction workers.

PUBLISHED : Monday, 29 October, 2018, 8:03pm
UPDATED : Monday, 29 October, 2018, 8:20pm

Japanese housing manufacturers are strengthening their overseas businesses, tapping into potential growth in China and other Asian countries as demand for new construction declines in the shrinking domestic market.

Property developers such as Panasonic Homes Co. and Daiwa House Industry Co. have been trying to meet a variety of overseas needs, from single homes to condominiums and prefabricated flats for construction workers.

“We want to improve the severe housing environment for construction labourers in China, which has also become a social issue,” Daizo Ito, managing executive officer of Panasonic Corp., said when he visited a construction site in China’s Xian in mid-September.

In a departure from makeshift flats, notorious for poor air and sanitary conditions, Panasonic set up prefabricated housing for construction workers, with glassed-in outer walls and well-lit, heatproof rooms, pitching comfort for long-term lodgers.

The buildings are also equipped with solar panels and heat-insulating materials, helping local general contractors reduce costs.

The Osaka-based electronics manufacturer sees its housing business as a new growth sector after its home electric appliances sector began losing out to Chinese and South Korean rivals.

It made PanaHome Corp. into a wholly owned subsidiary in October last year and renamed it Panasonic Homes in April.

Can China fix its runaway housing market?

Panasonic hopes to capitalise on the growing demand for housing amid a construction boom in China. The company is well known in the world’s second-largest market, as it was the first foreign company to establish a factory in Beijing after World War II in 1987.

Daiwa House Industry Co., which has built condominiums in the US and China, kicked off a large-scale residential and commercial complex project this summer with 5,000 rooms in Jakarta’s southeastern area of Cipayung.

The major property developer has been expanding its business by meeting local needs such as installing ceiling fans inside homes in Malaysia to improve ventilation.

Sekisui House Ltd. has been involved in building multi-complexes combining commercial facilities and condominiums in Australia and other countries.

Landlords brace for Hong Kong’s rent to decline as history shows leases tracking home sales

In China, where air pollution is severe, Sekisui House sells condominiums using materials that contain a reduced amount of chemical substances in consideration of the environment.

The domestic market in Japan, meanwhile, is shrinking fast due to its falling population.

The number of new housing starts decreased to 950,000 in fiscal 2017 from its peak of 1.29 million in fiscal 2006. Nomura Research Institute estimates that the number will fall to 550,000 by fiscal 2030.

Panasonic and Toyota Housing Corp., which have previously focused on their mainstay steel-frame housing, said earlier this year they would newly build lower-priced, wooden housing aimed at expanding their target range of customers.

But there is no guarantee they will succeed due to a limited market share for vying companies. “We are forced to fight a severe battle,” a major housing company official said.

“In Japan, it has become more difficult to make profits in the housing business as people who can spend money (on housing) are decreasing,” said Masahiro Mochizuki, an analyst at Credit Suisse.

“Because of political risks and issues with regulations, the ratio of overseas operations is still small among Japanese housing companies, but from the long-term perspective, they have no choice but to expand into foreign markets,” he said.

business-article-page