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Keihanshin Building: connecting people, communities and the future

Interview - March 3, 2022

Since their foundation in 1948, Keihanshin Building has been providing various types of assets that match the social demands at that time.


Historically, Japan's real estate market has been regarded as stable, profitable, and predictable. Leading up to COVID, there were six consecutive years of land price increases; even after the advent of the virus, the market proved very resilient, with transaction volumes dipping only temporarily and quickly recovering. As a leasing specialist based in Japan, can you share with us your macro analysis of the Japanese real estate market?

Before joining the company six years ago, I worked in the department that assessed loan applications at Sumitomo Mitsui Banking Corporation for 20 to 30 years. My experience dealing with real estate companies gave me a unique perspective. I think Japan’s stable real estate market can be attributed to its citizens’ thinking that ownership of real estate is a status symbol and a valuable asset that can bring in some investment yield. However, the Japanese real estate market has experienced bubbles that burst on two occasions: once in the 1990s, and again following the collapse of Lehman Brothers in 2008. When foreign investors left, Japan’s real estate sector suffered, and people became skeptical of its stability and profitability, but it has since recovered and experienced a cyclical trend. Before COVID, investment yield had been decreasing due to rising land prices, similar to before the Lehman Brothers bankruptcy, so I had a feeling that something noteworthy would happen in the market.

As a result of the pandemic, restaurants and retail facilities have been heavily affected, but the market itself has not yet shown any substantial depreciation because the Japanese government has implemented a very generous policy with regards to providing financial support. When the previous economic bubble burst, Japanese banks did not have the capability to support the real estate industry; they retrieved loans, which eventually led to a collapse in the market. However, Japanese banks can now support industries that are struggling during the pandemic. Also, the active involvement of Japanese real estate companies, and other companies which want to own real estate as assets, has compensated for the investors who left Japan. Such active demand and transaction volume account for the current steady activity in the industry. I am expecting real estate prices to continue rising for the time being.

Turning to the overseas real estate market, there is considerable inflation in terms of price hikes for both land and leases. In such cases, investors are more likely to flock into countries that promise high investment yields. Japan has proved economically resilient in the last two years, with hardly any inflation. Its investment yield may not be that attractive or competitive, but Japan’s real estate market possesses other charms for investors, such as low interest rates, a stable political and social situation and, of course, safety.


In 2019, even before the emergence of Coronavirus, Japanese media’s prediction of an oversupply in office space in the next two years alarmed some investors. Although Class A offices in Tokyo’s central wards have a vacancy rate of around 6%, the recent democratisation of stay-at-home and remote work is somehow moulding what the office environment will be like in the future. What is your analysis of the office sector? In the mid to long term, how will the sector evolve in Japan?

Remote work and stay-at-home jobs have become more common, giving rise to concern about reduced demand for office buildings. While there are advantages to adopting remote work, there are also disadvantages to a complete transition to remote working, such as lack of efficiency and communication. We believe that the demand for office buildings will still exist, but how offices are used will change. Hence, as a developer, we need to analyse and evaluate the situation in order to provide appropriate office buildings that serve needs as they change over time.  

There is an oversupply of buildings at the moment, but historically, there were many occasions when Japan supplied more buildings than was demanded. Eventually, however, these were all occupied, especially in the Tokyo urban area. Existing supply can create new demand later. We foresee that in the 20 to 30 years following COVID, there will be more active business, a better economy, and more workers will be coming back. I think that the current oversupply will create a good market in the future. We are not a major player like Mitsui Fudosan, Mitsubishi Estate, or Sumitomo Realty & Development, but we want to give importance to combining macroscopic analysis with microscopic strategies. Our strategy is to build Class A buildings with medium-sized offices to cater to the needs of larger firms considering office downsizing as a result of increased remote working. In addition, these medium-sized offices can match the needs of start-up companies expanding their business. Through this strategy, we intend to meet the office needs of a wide range of firms.  

Keihanshin Toranomon Building. Address: Minato-ku, Tokyo. Structure: B1/13F. Total floor area: 7,263 m2

Another trend that has emerged since the beginning of Coronavirus has been the increase in the ratio of foreign investors involved in Japanese real estate transactions. It has almost doubled in just the last two years, from around 20% in 2019 to approximately 39% last year. What do you believe will be the impact of this increased foreign investment? And also, how important is it for your business to attract foreign investors?

The proportion of foreign investors in the Japanese real estate market has a significant impact. In recent years, with the rise of e-commerce, foreign investment in the logistics sector has accelerated, in addition to investment in offices. Interest rates are low in Japan and the country has political and social stability, but for the further development of the Japanese real estate market, it needs to be attractive to foreign investors. However, each country, including Japan, has its own laws, regulations and business practices, which may be a barrier to foreign investment. As a listed company, we are working towards more transparency, reassuring our foreign investors through information disclosure and other measures to ensure that foreign investors can invest without concern. Our core business is now becoming the leasing of data center buildings, and foreign investors are interested in the growth potential of this sector, so we are promoting this business in earnest, hoping that they will invest in us.

Despite the frequent occurrence of natural disasters such as earthquakes and typhoons in Japan, we focus on risk management to the fullest extent using construction technology, including seismic-resistant structures, and our business continuity plans. Moreover, we are actively building environmentally sound structures as environmental concerns become a common theme worldwide.


Keihanshin Building is considering expansion into new business areas and real estate investments overseas. Can you elaborate on some of your plans to expand your business overseas? Which markets or regions do you consider key, as part of that expansion?

Overseas business plays a role in the evolution of our company; however, we are still at the preparation stage, and it is not the best time because of COVID. Before COVID, we were introduced to some parties and visited sites, and we are hoping that after COVID, we will be able to consider our overseas business.


The demand for data centers has been growing each year and now comprises the largest segment of your business. Can you give us some insight as to why you are betting so heavily on data center buildings, and what your expectations are for this segment of your business?

We foresee a growing demand for data centers domestically as well as globally because of the prevalence of digital transformation, IoT, automation and 5G, accelerated by COVID. Our long history and hands-on experience make us a forerunner in this field.

We are one of the few companies in Japan that lease buildings dedicated to data centers. Since our lessees have mentioned their need for bigger areas to accommodate the increasing demand for their services, we are thinking of building a new data center based on a solid understanding of the needs and specifications of data center companies.

Keihanshin OBP Building. Structure: B1/16F. Total floor area: 42,132 m2

Imagine we come back to interview you again on your last day as president. What ambitions or ultimate objectives would you like to have achieved during your tenure?

I see myself as a runner in the relay marathon known in Japan as ekiden, passing the baton I received from my predecessor to my successor at the most favourable position in the race. My role is to give my absolute best throughout my term, not to pick up speed at the start and slow down towards the end. As a runner, it is also important that I continue to run in a way that inspires the spectators along the route who are cheering me on – our stakeholders. Pacing, reading the wind and analysing the situation in terms of where we are in relation to our competitors, as well as positive thinking, are important elements that I must not lose sight of as a manager of our company.