Real Estate Business Department Strategies and Initiatives
Industry Environment and Fiscal 2010 Results
Commercializing Existing Projects and Engaging in Carefully Screened Investments
In 2010, roughly 84,000 condominium residences were supplied in Japan, increasing year on year for the first time in five years. The office building market, meanwhile, saw vacancy rates in Tokyo’s five central wards largely flat at around 9%. It is expected to be some time yet before the decline in rents completely bottoms out. In China’s real estate market, the government took measures as needed to prevent the market from overheating, but demand is solidly underpinned by continued movement of the population into the cities.
In fiscal 2010, along with strides made in commercializing existing domestic and overseas properties, we focused on identifying land for business use in preparation to take on new projects.
In the condominium business in Japan, we invested in new projects, with a focus on major cities where demand is firm. Elsewhere, condominium management company Marubeni Community Co., Ltd. increased the number of units under management, while condominium Internet connection professional Tsunagu Network Communications, Inc. steadily increased the number of service subscribers during the year.
In the asset management business, United Urban Investment Corporation, a real estate investment trust under the management of Japan REIT Advisors Co., Ltd., merged with Nippon Commercial Investment Corporation to form Japan’s largest comprehensive J-REIT in terms of asset scale.
In the overseas real estate development business, the department began sales for the first stage of House Huang Ma Yuan, a 700-unit condominium development in Shanghai, and is moving steadily to close contracts on all available units.
Although the Japanese condominium market and the Chinese real estate market are both favorable, Marubeni’s businesses in these markets are not expected to contribute earnings until fiscal 2011. In fiscal 2010, gross trading profit was ¥16.0 billion, and the segment recorded a net loss of ¥2.9 billion.
Initiatives in Fiscal 2011
Identifying New Domestic and Overseas Investment Projects and Bolstering Operating Company Earnings Strength
In the domestic condominium business, the department is planning products in response to the aging of Japan’s population, growing environmental consciousness, and other lifestyle changes. In parallel, we are moving to acquire land for development in step with demand trends in each area. Meanwhile, Marubeni Community Co., Ltd. and Tsunagu Network Communications, Inc. are increasing the number of units under management and service subscribers in a bid to reinforce and expand their respective earnings bases.
In the asset management business, the department will strengthen the functions of Japan REIT Advisors Co., Ltd. and Marubeni Asset Management Co., Ltd. to expand the fee business by increasing the entrusted assets under management.
In the overseas real estate development business, we will continue to promote our housing development business centered in Shanghai, while working to identify new projects in other parts of China and in Southeast Asia. In fiscal 2011, we anticipate improved earnings from the condominium business in Japan and our housing development business in Shanghai. However, it will take time for the commercial and office space markets to recover, and overall earnings are likely be only slightly higher than in fiscal 2010.
