Shaping Sustainable Urban Spaces: The Global Link Management Method

ARTESSIMO properties are Global Link Management's flagship condominium development. Could you tell us about the ARTESSIMO series' track record and its performance since implementation?

Daejoong Kim (DK): Regarding our performance, we have a track record of selling approximately 1,000 units per year, achieving a revenue between 30 to 40 billion JPY. We are also recognized as a leading real estate developer of compact condominiums with environmental certification.

Tokyo's annual supply of new compact condominiums in 2023 was around 5,000 units, of which we have a share of around 20 per cent. In the most recent quarter (January to March 2024), Tokyo received the most foreign investment among major global cities, and Global Link Management is recognized as a gateway for investors to access real estate in Tokyo, especially luxury compact condominiums.

One unifying concept across many of your businesses is what you call 'Link to the Nature.' Your company places a strong emphasis on environmental performance and the inclusion of biophilic elements in the buildings. What environmental considerations does Global Link Management take into account at the design stage when developing properties?

Chiharu Iwasa (CI): Our biophilic buildings are characterized by two core features. Firstly, the design itself is biophilic, enhancing the happiness and comfort of residents by integrating natural elements such as light, greenery, wind, and trees. This concept extends to our offices as well, promoting comfort and wellbeing through biophilic design. Furthermore, we place emphasis on environmental sustainability through energy-saving equipment, reducing carbon emissions as well as long-term running costs.. Compliance with the Japanese government's environmental regulations is becoming mandatory, and we are proud to say that we exceed these standards. Our level of environmentally friendly construction is recognized by third-party certifications such as the Building Energy-efficiency Labeling System (BELS) and Net Zero Energy House Mansion (ZEH-M ).

ARTESSIMO The Nature Hamacho

Since 2021, GLM has adhered to the value of environmentally friendly construction. In 2022, we were certified as a ZEH developer under the Japanese government's initiative to promote the spread of ZEH housing. We place particular emphasis on energy conservation in buildings, reducing thermal conductivity to improve the insulation of buildings, and equipping our condominiums with highly efficient equipment such as energy-saving air conditioners, lighting fixtures, and water heaters. The Japanese government's energy conservation performance index is calculated by "design primary energy consumption ÷ standard primary energy consumption", and the standard is to achieve a value of 1.0. We have achieved a value of 0.8, which reduces energy consumption by 20%, clearly showing that our condominiums are highly efficient.

A key aspect of the ARTESSIMO Series is its compact designs. In Tokyo, condominiums tend to be relatively small. The ARTESSIMO Series condominiums range from 20 to 50 square meters, yet, they appear much larger than their actual size. From a design and architectural standpoint, how do you maximize this limited space?

CI: The average size of our compact condominiums is 25 square meters. Within this space, we include an eat-in kitchen and a bedroom. Instead of a fixed wall between the kitchen and the bedroom, we use a sliding door, allowing residents to adjust the space according to their preference. We also utilize the corner dead space for Wi-Fi and workspace creation. Storage has been a challenge, so last year we enhanced storage capacity for shoes and introduced an adaptable walk-in closet. This closet now includes a headboard for hats, enabling occupants to customize their storage layout.

ARTESSIMO The Nature Hamacho

What feedback have you received from tenants?

CI: The feedback from our tenants has been overwhelmingly positive. Proximity to railway stations is a key advantage, but residents also highly value the environmentally sound design. This has even inspired an eco-friendlier mindset among the tenants. Additionally, people greatly appreciate the benefit of reduced utility bills due to our energy-efficient designs.

In Europe, environmentally certified properties tend to perform better over time in terms of value, occupancy rates, and rent levels compared to similar non-certified properties. In Japan, these certification requirements are relatively new. Looking to the future, how do you see this trend evolving?

CI: The Japanese government is actively working to promote environmental sustainability in the construction industry. All new buildings beginning construction after April 2025 must meet energy-saving standards. Additionally, all new buildings beginning after 2030 must meet ZEH certification. The ultimate goal is to achieve carbon neutrality by 2050. Since the construction process produces a large amount of CO2, it is essential for industrial players to come together to promote the government's carbon neutral initiative.

Globally, Japan lags behind other advanced nations in this area, but it is obvious that the gap will close in upcoming years. We are advancing our business through comprehensive supply chain management to enhance environmental sustainability.

One criticism of ZEH is that it may not create a fully circular environmental supply chain. A single non-compliant element can undermine the entire purpose. How is Global Link Management ensuring the environmental soundness of its entire supply chain?

CI: Achieving circular energy use requires renewable energy, but currently, solar panels are the only viable option in urban areas. These need to be installed on large roofs, and with current capacity it is difficult to provide all the electricity required. However, advancements in battery technology hold promise. Once such advancements are realized and available, more renewable energy sources can be effectively utilized.

Utilizing renewable energy leads to increased upfront costs. Additionally, zero-emission housing involves more complex designs compared to traditional buildings, resulting in different maintenance and operational needs. How has Global Link Management managed to become a pioneer in zero-emission housing despite these challenges?

CI: Initially, it was a significant challenge. We had no prior knowledge of ZEH, so we reached out to the ZEH Association and conducted thorough research. We collaborated with general contractors to calculate the cost increases associated with ZEH compliance. This effort and support has enabled us to forge new paths.

We have pioneered environmentally sound compact condominiums, facing two major issues: cost and space. Fortunately, we discovered that we could limit the cost increase to just 2% in comparison to traditional buildings with ZEH compliance. Regarding space, we learned that 27 square meters are sufficient to achieve ZEH certification while maintaining a spacious feel. These achievements were possible thanks to collaborations with multiple architectural design firms and constructors.

When your company was first listed on the Tokyo Stock Exchange, you primarily catered to retail investors. However, in 2020, your business model shifted to focus more on institutional buyers. From the perspective of an institutional investor looking to invest in Japan, what are the competitive advantages of choosing ZEH buildings?

DK: For institutional investors interested in ESG construction, we have ready-to-introduce products available in central Tokyo. The portfolio we can offer and the knowledge we have acquired places us in a unique position to cater to ESG-conscious investors.

As government policies evolve, more companies will enter the ZEH field, increasing competition. How are you preparing for this new competition?

DK: One of our key strengths is our ability to identify and acquire land in Tokyo, particularly in central areas. The competition for land is intensifying, but our capability to secure prime locations and expand our developments sets us apart. Our collaborations with construction firms allow us to expedite development and achieve better financial returns.

One of the challenges in working with institutional buyers is that they often have specific criteria. What does a partner of choice look like for Global Link Management, and how do you handle difficult requests?

DK: For the average institutional buyer, properties need to be within 10 minutes' walking distance of the nearest station, with a unit price of roughly JPY 1 billion. A typical bundle purchase is around JPY 3 billion. Our products comply with these criteria, making them very attractive to institutional buyers. Additionally, we provide environmental certification, enhancing their appeal.

Your subsidiary AtPeak is developing an AI-powered platform that combines structural data with map data for developers. Can you elaborate on the specific advantages AtPeak will offer clients?

DK: At this stage, I can’t say much about the services that AtPeak is developing but it is envisioned as a comprehensive digital platform which could, for example, estimate construction costs using map data and provide information on CO2 emissions, soil pollution, and air pollution. Essentially, it will offer comprehensive data sets for construction and real estate developers before they commit to a project.

Are there plans to expand the customer base for this system beyond construction companies?

DK: We are not limiting our target clients to just developers; we aim to target governments and other entities as well. Furthermore, we want to make this service an AI platform that can be used by developers all over the world.

Why did you decide to join Global Link Management?

CI: In my previous job, I worked at a very large company, and my entire job was to carry out the tasks I was assigned. At Global Link Management, I am free to try new things and innovate. Also, in my previous job, I planned buildings with a focus only on the residents, but now I feel a sense of accomplishment in being able to work with a broader perspective, being conscious of the impact that buildings have on society and the environment.

DK: Our company was established in 2005 with the mission of contributing to our customers' prosperity through real estate. Since 2021, we have expanded this mission to contribute to the wellbeing and enrichment of society, reflecting our broader commitment to environmental and societal contributions.

With the IPO, out customer portfolio has greatly diversified, and our operation is now progressing beyond the real estate business spearheaded by AtPeak. Looking ahead, Global Link Management will continue to strive for the enrichment of global society.