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Opportunity and Challenge Changing Housing Market in Japan January / February, 3003 Kuraishi Fumiaki Advisor in charge of the Asia Builders’ Week Japan Management Association (JMA) Former General Manager of JETRO Housing Materials Center (Osaka) Outline ( Outlines )

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Opportunity and challenge changing housing market in japan l.jpg

Opportunity and ChallengeChanging Housing Market in Japan

January / February, 3003

Kuraishi Fumiaki

Advisor in charge of the Asia Builders’ Week

Japan Management Association (JMA)

Former General Manager of JETRO Housing Materials Center (Osaka)


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Outline

( Outlines )

1. Still the Second Largest Housing Market

2. Characteristics of Japanese Housing Market

3. Regulatory Changes in Recent Years

4. Steady Growth of Imported House

5. Imported Building Materials

6. Changing Attitude of Consumers and Home Builders

7. Potentials: Renovation, Home Centers, Resort Homes


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The Second Largest Housing Market

Source: National Countries (OECD) Account of OECD


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Housing Situation in Japan and US

Source:US Census Bureau(2000), Survey of Housing Loan (fiscal year 2000) by Government Housing Loan Corporation



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Reasons of Decline of New Home Market

1. No Growth of Population ( Numbers of Family)

2. Enough Numbers of Homes (50.3million homes for

43.9 million families): But Quality, not Enough

3. Depressed Economy

Source: Census of Housing and Land( latest 1998)

by Ministry of Construction


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Difficult Time for Home Builders

Giant Home Builders (Prefab Home)

Ex. Sekisui House(60,996 units /year )

Daiwa House Industry (34,695 / year)

Misawa Home ( about 30,000/year)

Medium to Large Home Builders(1,000~5,000/year)

Medium size Home Builders (100~1,000/year)

Small & Medium Home Builders (less than 100/year)

Most of 130,000 Small builders ( built 5~10/year)


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Competitive Market Force Big Companies to go Merger and Acquisition, Joint Ventures and Collaborations

Ex.

TOSTEM and INAX

set up a common holding company

TOTO and MATSUSHI DENKO

started business collaborations

MISAWA HOME and PAINT HOUSE,

joint remodeling business


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Construction of Condos (Mansions ) boomed in the past 3 Years

166 192 218 223 (1,000 Units)


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Low Cost Housing Years

  • Low cost houses are getting popular initiated by

  • ”Limited 25”of Misawa Home in 2001

  • 500,000 Yen / tubo( 3.3 ㎡)→250,000 Yen / tubo

  • 2. Followed by other medium size home builders and

  • franchise home builders

  • 3. With stagnant economy, Japanese consumers can not endure high amount of home loan (used to be 4 or 5 times of their annual income).


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Characteristics of Japanese Housing Years

  • Shorter Life

  • Price is too High

  • Quality, such as Energy Efficiency is not high

  • Resale Value of Home declines to almost Zero in 20 years


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Characteristics : Shorter Life Years

Source: White Paper of Construction 1996 (Ministry Of Construction)


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Characteristics (Japan) Years

First Generation

Second Generation

Third Generation


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Characteristics (Western Europe) Years

First Generation

Second Generation

Third Generation


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Regulatory Changes in Recent Years Years

Next Generation Energy Conservation Standard (1999)

Revision of Building Standard Law(2000)

Housing Quality Assurance Law (2000)


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Next Generation Energy Saving Standard (1999) Years

  • Stricter Energy Saving Standard closer to the R-2000 Standard of Canada, which was introduced in 1982

  • Enhancing the importance of insulation and air tightness

  • Positively affected to Imported Houses and Building Materials


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Revision of Building Standard Law(2000) Years

  • Shift from Prescriptive( Specification) Code to Performance Building Code

  • Interim and Final Building Inspection

  • Setting Up of Private Building Inspection Bodies

  • NOTE: Enforcement Order of the BSL(Relating to Indoor Air Quality) will be enforced in July 2003


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Housing Quality Assurance Law (2000) Years

10-year Warranty on Defects on Principal Structures

Housing Performance Indication System

Nine Performance Indicators (Entirely Voluntary)

Establishment of Housing Dispute Resolution Bodies


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Nine Performance Indicators Years

Structural Stability

Fire Safety

Minimizing Building Deterioration

Easy Performance of Building Maintenance

Thermal Emvironment

Indoor Air Quality

Light and Visibility

Noise Control

Accessibility to the Elderly or the Disabled



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The First Imported House in Kobe YearsImported from Portland Oregon in 1925


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Origin of Imported House(2000 F. Year) Years

Source: Imported House Survey by METI, MLIT, JETRO, Japan 2x4 Builders Association and Imported House Industry Organization in 2002







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Imported Houses are Cheaper Years

0,000 yen/ tubo( 3.3 ㎡)


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Imports of Housing Materials 99~02 (million yen) Years

1999 2001 01/99

Prefabricated Building (Package House) 19,299 23,108 20%

Solid Wood Flooring 15,023 17,599 17%

Wood Windows & Frames 6,108 5,622 -8%

Wood Doors & Frames 11,711 12,226 4%

Structural Laminated Lumber 15,104 25,113 66%

Plastic Windows & Doors 3,076 3,402 11%

Glazed Ceramic Tiles 2,906 4,328 49%

Lumps & Lighting Fittings 30,103 43,814 46%

Source: Japanese Trade Statistics


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Positive Trend of Japanese Housing Market Years

Changing Consumers

Half of Home owners are not Satisfied

More information (mass media and internet)

Awareness of quality of housing( more

information)

Durability

Design

Healthy house

Energy efficiency

Barrier free

Cost consciousness


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47.5% of Families are not Satisfied with their Home Years

Source:Housing Demand Survey by Ministry of Construction(1998)


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Positive Trend of Japanese Housing Market Years

Changing Attitude of Homebuilders

Crisis of losing business in the future

Changing attitude toward imported

building materials

Looking for New Building Products and

Technologies

Cost consciousness


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Survey of Home Builders Years

Imported Housing Materials also used

for Post & Beam House s and Remodeling

Users Survey of Imported Housing Materials 1999

by JETRO Housing Materials Center Osaka(JHMCO)


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Client’s (Consumers) Demand is More Important Years

Question: What made you use imported materials for the fist time ?

Users Survey of Imported Housing Materials by JHMCO


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Design, Function & Price are Important Years

Question: Why did you choose imported materials?

Users Survey of Imported Housing Materials by JHMCO


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Problems of Using Imported Housing Materials Years

Delivery Time 57

Quality of Materials 31

Maintenance 29

Inaccuracy 29

Treatment of Defects 27

Response to Complaint 21

Standard and Regulation 18

Installation 14

Small or No Stock in Japan 7

Lack of Knowledge 7

Question: Please specify problems of using imported materials ?

Users Survey of Imported Housing Materials by JHMCO


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Survey of Home Builders Years

Question: Are you going to use imported materials again?

Users Survey of Imported Housing Materials by JHMCO






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Swedish YearsVentilation System





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Home Improvement and Renovation Market to Grow Years

( 7.3 8.0 8.7 9.3 )

Source: Ministry of LIT( Construction)


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Ratio of Home Renovation to Housing Investment is much Smaller in Japan

( 40.9% 44.7% 55.0% 65.1% 10.9% )

Source: Ministry of Land, Infrastructure and Transport


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Renovation Market is Expected to Grow Smaller in Japan

Renovation Market

Opportunities for Imported Housing Materials

(Lesser extent of Regulatory Restriction )

Consumers’ Preference can be easily Reflected

(Fear of Potential Large Scale Earthquakes in Kanato, Tokai

and Nankai area)


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48% of Wood Structured Detached 2F Houses , judged Very Dangerous at time of Large Earthquake

Percentage of Dangerous Wood Structured 2F Houses

Houses built before 1980 82%

Houses built after 1981(Revised BSL) 33%

66% of People said They can not Spend more than 1 million yen

(about US$ 9000) for Renovation of these Dangerous Houses

Research was concluded in June 2002 by Japan House Renovation

for Earthquake Organization. 45,000 houses( Average 31 years old)


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Home Center to Play an Important Roles in Home Improving Market

More numbers of Aged Consumers to

have more Free Time

DIY for Enjoyment and Money Saving

Home Renovation may be done by Home Owners

Small Home Builders started to use

Home Centers more



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Consumer's Preference of Next Home Market

Survey of Consumer’s Preference of Next Home 2002 by

“Gekkan Housing “ (Housing Monthly) of Recruit Co.


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Summary Market

1.New Housing Starts, No Growth

2. Imported Houses will Steadily Increase

3. Imported Housing Materials continue to be Used in Japan

4. Competition in Building Materials will be intensified (China ?)

5. Renovation Market and Condos (Mansions) will be a Factor

6. Quality of Multi Family Housing in Japan is still very Low

7. Changing Attitude of Consumers and Home Builders

8. Home Center may be playing an important role


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Summary Market

  • Important KEY Words for Marketing in Japan

  • Sustainable and durable Housing( For Three Generations)

  • Energy Saving and Environmentally Friendly Homes

  • Healthy Housing

  • Barrier Free Housing ( for the Elderly and Disabled)

  • Safe Housing ( Structural Strength against Earthquake)

  • Safe Homes ( Protection of Robberies and Pickings)


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Some Suggestions Market

  • More Value Added Housing and Building materials

  • (Promotion of Design, Function, Performance, Technology,

  • Science of Home Building, Experience of Elder Care Home)

  • More Education for Consumers is Important

  • More Publicity toward Consumers and Small Builders

  • Finding Good Partners (Person) is Important

  • Continuous Presence in Japan is very Important

  • (Visiting Japan and Communicating with Your Clients and Exhibiting in Japan Home Show Etc.)

Thank you very much for your attention


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