The use of technology in real estate has been increasing for past couple of years in Japan, making proptech a very exciting sector.
With abundant capital, technology power and super bright talent, proptech in Japan can give birth world leaders in 3D printing, alternative construction composites and other high tech innovations that real estate sector needs urgently. The reason behind this enthusiasm is the new government’s focus on enhancing entrepreneurship in the country.
The progressive administration believes that startup eco-system can only generate employment and help decrease the rising number of jobless youths in the country. As far as real estate is concerned, both government and realty stakeholders are trying to leverage the technology to expand the property market and maximize its reach. Of course, the government agencies have taken the initiative in this direction.
For instance, the Ministry of Land, Infrastructure, Transport, and Tourism has initiated various programs with the help of innovative technology that can address several key issues. One of them is establishing an investigative committee which with the aid of the internet, camera and other tools can hear valuable real estate and other problems through video conferencing.
Any person or group of people doesn’t necessarily need to be present for face-to-face conversation. They can do it from being far away from the committee with the help of technology. Another factor that led to innovation in the field of housing is the 2011 Fukushima disaster that forced the Japanese government to make a policy to have zero energy houses. 1,500 so-called zero-energy apartments are slated for construction in Japan by 2021, as developers expand the advanced building concept beyond detached homes as per asia.nikke.
33% of Japan’s energy requirement comes from nuclear reactors and rest from fossil fuels. The residential and commercial sector accounts for 30% power consumption. This is 140% more than what it used to be 30 years. Keeping in mind the rising energy demands, Japan has decided to build energy efficient buildings.
As per Worlddata.info, Japan can provide itself completely with self-produced energy. The total production of all electric energy producing facilities is 989 bn kWh, also 105% of own requirements. The rest of the self-produced energy is either exported into other countries or unused. Along with pure consumptions the production, imports and exports play an important role. Other energy sources such as natural gas or crude oil are also used.
To achieve a zero-energy house, Japan depends on innovative technology such as the installation of photovoltaic cells on the roof, insulating performance of the windows and walls, improving the overall thermal performance of the house by using argon gas-filled, triple-pane, low e-glass materials, etc. Experts believe that these initiatives encourage private players to use technology not only for the realty sales but also for several other housing needs.
Real estate in Japan and its impact on proptech
According to the Land Institute of Japan (LIJ) in Tokyo Metropolitan Area existing condominium units’ average prices fell slightly by 0.3% to JPY514,600 (US$4,625) per square meter (sq. m.) during the year to January 2019, in contrast to a 4.6% growth in the same period last year. The country’s current problem is that the economy is slowing, with GDP growth of just 0.7% in 2018, amidst a continuous decline in external demand.
Various reports suggest that Prime Minister Shinzo Abe’s reflationary economic policies have worked in favor of the property market. Since he came to power in December 2012, the property transactions have picked up, and prices have gone up. The increase in public infrastructure spending, devaluation of Yen and various other economic stimuli along with Tokyo’s successful bid to host 2020 Summer Olympics will intensify the new launches and demands shortly.
Major real estate destinations in Japan are metropolitan areas of Tokyo, Osaka, and Nagoya. While residential property sale is up in Tokyo only, land prices have increased in both Tokyo as well as Osaka.
Future projections show that Japan will see a huge housing surplus because of its shrinking population. National Institute of Population and Social Security Research says that Japan will lose one-third of its population in another 50 years and its 40% population will cross 65 years by 2060.
To help revive this sector, in December 2018, the Japanese government amended its immigration policy, to encourage overseas workers to counter its dwindling workforce. The reforms resulted in creation of two new visa categories for migrants – Technical Intern Class 1 and 2.
Proptech opportunities in Japan
As of March, 2019, there are 73 proptech-related startups and 17 companies in the Contech industry in Japan. Along with property websites that serve the purpose of listing, searching and marketplace, Japan has many startups and companies, which are using the latest technology in the field of artificial intelligence and Internet of Things (IoT) to look for various housing solutions. Since Japanese real estate market doesn’t attract foreign buyers or investors substantially, these websites and technologies mainly serve the native or local population.
Along with realty tech startup activities, venture capitalist funding and angel investment have also started. According to reports, Mitsui Fudosan, which is a Japan-headquartered real estate group, is coming up with startup fund with venture capital firm Global Brain.
As per Technode, the Japanese government is even planning to use blockchain technology to underpin their property registries to prevent tampering. A bullish property market coupled with tech savviness will make Japan’s proptech scene very promising in the coming years.
Another factor to consider is that the Fintech Association of Japan has over 360 corporate members registered and the number at their annual conference reached 1000 people last year. Considering how deeply finch affects proptech, growth in this sector is bound to happen.
Proptech Japan also has a monthly meet-up with 450 professionals, including startups, investors, and government officials.
Top proptech players in Japan
Companies in the proptech in Japan can be categorized based on their area of activities and product.
For example, Japan has many real estate websites that offer a plethora of services to homebuyers. Besides providing the listing, searching and transaction facilities, which almost every property site offers, they try to innovate and bring all services related to realty transactions under one roof. Some of the prominent websites are Japan Home Finder, Hakuba Real Estate, Real Estate Japan Inc, Plaza Homes, realestatelistings.jp, RealEstate.co.jp just to name a few.
Other websites try to be different by offering services such as Documentation Preparation and Translation, Ownership Transfer and Registration, Property Renovation and Development, Comprehensive relocation services, Furniture lease, etc.
There are rarely any startups in this field, but there are Japanese home product companies or real estate firms, which claim to use Internet of Things (IoT) for many housing solutions. They claim to contribute in sustainable and zero energy house development. They call it Home Energy Management System under which an owner can control the use of energy in AC, fridge, fan, etc. through an iPad application.
Daiwa House Industry Co., Ltd. is Japan’s largest homebuilder, specializing in prefabricated houses. The company also is engaged in the construction of factories, shopping centers, health care facilities, the management and operation of resort hotels, golf courses and fitness clubs.
Other startups in proptech are:
This website makes your interior hassles more free and easy, especially for those whoare particular about living. Yourniture. Is a service that allows you to order the right furniture for you. Starting from furniture with a size of 1 cm and customized colors from 10 colors or more at a reasonable price, everything is available here to design your own home – your way.
This startup started with a CPA model from 2013 and allowed agents to list properties for free and only charge after the contract is signed. Their system is simple — part of the fee that the agents paid is transferred to the users. Doing so provides ncentives to users to make them choose to sign contract through its site.
This was a chat service operated by a real estate company Itty Co., Ltd. and handles everything from consultation to contract. Almost all properties can be brokered, including private properties. Chatting with customers makes it possible to return the cost of setting up many real stores to customers. They also have offers like 50% off brokerage fee at the time of contract.
Zenhoren Co.,Ltd. was founded in 2001. The Company’s line of business includes Federal Government and federally sponsored credit agencies primarily engaged in guaranteeing, insuring, or making loan. They have different rental systems and services that are listed on their website.
LIFULL HOME’S is a real estate and housing portal site, with databases of over 4 million properties in Japan. One can contact realtors through the site about any properties you like. They provide a variety of services relating like switching houses. They want to create and offer services that fur-fill your desire for the perfect home — thus the name life+full — Lifull.
Opportunities in Japan for proptech
Despite significant progress in the field of realty tech companies, Japan still offers a tremendous opportunity for realty tech companies to offer many other services, which can revolutionize realty sector. Culturally, Japan doesn’t encourage entrepreneurship and people are risk-averse. Even the financial system is very rigid and doesn’t support startup culture. Though things are changing for the last couple of years after the new government has taken over, yet a lot needs to be done to accelerate the pace of innovation in the realty sector.
Another factor, which emphasizes the need for the use of technology in every sphere of life, is the fact that the population of Japan is aging. The country needs technology more than any other nation in the world.
All these factors present a tremendous opportunity for realty tech startups as the country need technology to fight against the challenge of the aging population.
Way forward for proptech in Japan
With growing real estate market, the prospects of proptech in Japan are quite encouraging. Despite the economy of the country showing an unsatisfactory progress, real estate market is booming and that’s an excellent sign for realty tech eco-system in the country. With investment and VC funding coming forward to support the entrepreneurial activities, social compulsions creates an ideal situation for proptech in Japan to breed and flourish.