Both online and at its wide network of branches, Apaman provides a leading platform for locating rental properties in Japan and a host of other countries in Asia – and its expertise in IT is central to its success in real estate. “Real estate = IT in my mind,” says Apaman President Koji Omura, whose company applies cutting-edge cloud technology and artificial intelligence to find just the right home for its customers. In a bid to cater to a wider range of its clients’ needs, Mr. Omura explains that Apaman has also branched out into other lines of business related to real estate, such as property management, insurance and energy.
Japan’s population has been steadily declining since 2011. By 2050, one-third of the population is expected to be over 65 years of age. However, metropolitan cities such as Osaka and Tokyo are actually seeing the opposite trend and a steady increase in population. For example, the population of Tokyo is expected to peak in 2040. What impact will this demographic change have on Apaman?
The government is currently attempting to design solutions that can solve the social and economic problems linked to Japan’s aging population. Despite the increase in metropolitan areas, the long-term projections are no cause for optimism. As an enterprise active in the real estate sector, Apaman has been proactively contributing to solving Japan’s demographic issues.
I am a member of the government's Committee on Measures to Deal with the Declining Birthrate, and I understand the situation and am making efforts to increase the population. Apaman has also volunteered to open marriage counseling offices in 10 locations nationwide. Both the government and we are making efforts to increase the number in the future. Although the number of inbound people has decreased, we and the government have a policy of increasing the number of foreigners so that the population living in Japan will not decrease as much as possible.
In terms of business, I think the population will decrease for a certain period of time. However, there are about 130,000 real estate companies now, so the oligopoly is not over yet, and I believe that APAMAN's business is not a problem, but I think that the number of small and medium-sized real estate agents will inevitably decrease.
Your company heavily utilizes Cloud Technology and AI for real estate needs. How do you envision the impact of digital technologies on the real estate sector in ten to fifteen years?
Real estate is an information industry, so I think it is the most suitable industry for IT because it does not manufacture anything. I believe that more than 90% of what we are doing now will be automated. As automation, convenience, and expediency become better everywhere, there will be companies left to pursue this. I think we will be competing not only with domestic companies, but also with foreign companies. I believe that in some ways we will not only compete, but also collaborate.
There are many systems we have developed together in collaboration with SystemSoft to meet this need. Then, as for the cooperation with foreign companies, I am now an advisory board member of Docusign which is based in the U.S. That came about because I was good friends with Keith Kutch, the former chairman of Docusign. We have partnered with this American company in the area of electronic signatures and expanded it to Japan. We also provide products that we have developed ourselves because I think speed is important.
How is APAMAN contributing to the development of Smart Cities?
I think that smart cities are Japan's strongest point. China and the U.S. are more advanced when it comes to individual products, but I think Japan excels when it comes to the use and integration of the whole. Toyota Motor Corporation's Smart City and Fukuoka City's initiatives are well known in Japan, and Japan is also good at using a variety of IT technologies for the movement of entire towns, and we are also cooperating with the government.
APAMAN runs coworking spaces called fabbit and WeWork, both aim to support small enterprises and startups. What is your strategy to further develop these businesses?
fabbit and WeWork are completely different. fabbit is a school for innovation. Right now, we have more than 10,000 members, and we communicate and solve problems every day. From our point of view, fabbit is a platform. There are more than 10,000 member startups, and we provide the infrastructure and support the technology that comes out of it.
We've held about a thousand networking events a year so far, so that innovation can come from mutual communication. In that sense, it looks similar to WeWork, but how much rent we get or anything like that is almost meaningless; we are there to study and communicate. To give you an example, the U.S. government and fabbit recently paid for the creation of such an ecosystem for a kind of school in Hawaii.
We don't put a lot of emphasis on the number of locations, but we are thinking of creating about 500 locations globally. In Japan, about half of them are being built with local governments.
Can you run us through the history of APAMAN?
The premise is that Real Estate = IT in my mind. In short, I believe that IT will dominate the real estate industry and that the winner will be decided. I also used to be an IT planner, so I am half real estate and half IT.
It took me a long time to create my own system, so I changed the signage of a large local company. At that time, I was providing IT systems and the first system was made by me. Recruit was our rival at the time, but we were ahead of them in IT and became the real estate company with the largest number of stores in Japan. 70% of my time per day is spent on IT. We grew by winning with IT.
With franchisees in China, Taiwan, Malaysia and the Philippines, how do you ensure that the quality of your service is respected throughout all your franchises?
Overseas, regulations and ways of thinking are different, so I think it will be difficult to customize the system. Among the systems, I think there are some points that are common, but I don't think that all of them are common. This is an issue for the future. The president of Zillow in the U.S. gave a lecture at fabbit the other day, and his conclusion was that it is very difficult to use the system in different countries. However, for example, we believe that the fabbit system can be used in the US and Japan as well.
Buildings consume 40% of global energy and represent up to 30% of energy-related costs globally. How are you providing inexpensive electricity to your clients and what other services are able to provide them?
Apaman's energy business has just started and is not large yet, but we are in the process of expanding it into housing related services. Some of these services are insurance, warranties, and energy, and we would like to hold on to them.
APAMAN is a diversified group. On top of your franchise for real estate agents, APAMAN also provides IT services, cloud services, sharing economy and recently an energy business. How are you able to create synergies between the various business segments that you operate in?
In a customer survey, we found two years ago that the most important thing that they want is a one-stop service, that the total cost will be lower, and that it is easy to understand and see. We are diversifying in line with these keywords. However, when we say diversification, we are not thinking of going out to buy electricity, but rather providing a platform that we can use, and then doing whatever we can within that platform. We think it is important to say that we will not do everything, but we will not give up the platform.
It will take time. For example, 80-90‰ of the properties we manage are insured by us. It took a long time, but we have a guarantor, and about 80-90% of the guarantors use our insurance as well. We have not received that much electricity yet, but we hope to increase the percentage to 40-50% in the future, and we would like to do the same for our lifestyle services.
The most important thing is that we will hold down the IT infrastructure. When we created Apaman, there was one thing that was non-negotiable. That was to get people to use our computers. Now, more than 1,000 stores have our computers in them. As a second step, SystemSoft has started selling our infrastructure to real estate companies all over Japan. Actually, about 2,000 companies have already installed SystemSoft systems in just two months. SystemSoft has the potential to grow as a real estate infrastructure. In the future, we believe that if we can provide infrastructure for the real estate industry, our services will improve.
With the COVID-19 situation, Japan’s office market has taken a hit, as the vacancy rates of Type A offices in Tokyo took a significant drop. What is your prediction for the Japanese office market?
The occupancy rate is difficult; we expect about 10% vacancy. I think the number of companies that don't need office space is increasing, including around the world. fabbit is a flexible office, I think the impact will be minimal, but for the big real estate companies, the occupancy rate will drop and rents will fall, so I think profits will drop considerably.
By far, the most famous cities are Kyoto and Fukuoka, but Fukuoka has Itoshima next door, which has a huge number of foreigners. Fukuoka is a city where there are places for foreigners to live. I think we need to work on this kind of development. We need to make preparations for foreigners to live in our city.
What have been the main reasons for Apaman’s success?
I think it is IT and social. I am currently pursuing two things. First, I would like to expand the infrastructure of real estate and increase the number of houses we manage. We have the largest number of stores in Japan, but our property management business is not that large, so we would like to raise it to the largest in Japan. Another thing is that the Japanese government has said that the declining birthrate and technology are critical factors for the nation. We would like to develop fabbit to create technology. I think that the relationship between the U.S. and Japan is particularly important, so we want to make sure that startups can do business in the U.S. and that U.S. businesses can be incorporated in Japan.
What would you like to achieve at APAMAN?
As I mentioned earlier, I would like to take over the real estate business by expanding the platform and providing great services to customers, and I would also like to use fabbit to create more innovation so that Japan can grow. As a side note, after I take over, I would like to go to a university in the US.