Sumitomo Realty and Development Co. is building an office building in Mumbai, western India.
12:48 JST, July 21, 2024
BANGKOK — Major Japanese real estate companies are expanding their presence across Asia, driven by rising demand for high-quality office and residential buildings and as emerging economies such as India see increases in business activity and revenue levels.
Sumitomo Realty and Development Co. is involved in three large-scale projects in Mumbai, a commercial hub with several financial institutions. Sumitomo has positioned Mumbai as its “second engine” of growth after central Tokyo and plans to invest a total of ¥700 billion in the city.
In October 2023, Sumitomo acquired a plot of land measuring around 80,000 square metres in Mumbai’s new city centre to develop a large complex comprising business and commercial facilities. The company also plans to build office buildings at two other locations in the city.
“We have received inquiries from potential tenants, including major corporations in India and Western financial institutions,” said Hironori Kawahara, managing director of the company’s Indian subsidiary.
Other Japanese real estate companies are developing facilities in southern Indian cities. Mitsui Fudosan Co. is building an office building in Bangalore, and Mitsubishi Estate Home Co. is involved in a project to develop an industrial park in Chennai.
At the end of March, the average annual office rent in Mumbai was $421 (¥67,000) per square meter, higher than Osaka’s $371, according to a survey of rental prices in major cities in the Asia-Pacific region conducted by Jones Lang LaSalle IP, Inc. (JLL), a major real estate services firm. Demand for office space is expected to increase in Indian cities as foreign companies expand their presence there.
Some developers are involved in residential projects. Tokyu Corp., for example, is building a new 10-square-kilometer city in Binh Duong Province, in southern Vietnam, consisting of apartments, commercial facilities and other buildings.
Nomura Real Estate Development Co. is involved in 26 projects, including the construction of apartment complexes, mainly in Bangkok.
According to JLL, global real estate investment fell by 6% year-on-year in the January-March period in 2024. Rising interest rates, which slowed investment in the West, were the main reason for the decline. On the other hand, real estate investment rose by 13% in the Asia-Pacific region in the same period.
However, rapid urbanization has led to serious environmental problems in emerging economies. Amid the growing global trend toward decarbonization, technologies developed by Japanese companies, such as those that reduce the energy consumption of buildings, are attracting much attention.
“I hope that Japan’s environmental technologies will improve energy efficiency in our buildings,” said Bangkok Governor Chadchart Sittipunt.
