Business Overview and Vision
The Industrial Infrastructure & Urban Development Division is engaged in creating function-oriented businesses in Japan and throughout Asia, by striving to quickly grasp the continually changing customer needs of each region in the industrial park, infrastructure, and real estate fields.
In Asia, against the backdrop of the rapid rise in living standards as well as structural changes in industry, we are contributing to industrial development and job creation through the development of industrial parks and related infrastructure. Furthermore, given that urban infrastructures must be established for economic growth to occur in emerging countries, we are engaged in creating a comprehensive infrastructure development business based on an “urban master plan.”
We are working to provide better housing options in Japan through new real estate development and securitization of existing properties, and are also helping to revitalize local economies through our comprehensive living support business.
Furthermore, subsidiary Sojitz REIT Advisors KK is responsible for asset management of Nippon REIT, which was first listed on the Tokyo Stock Exchange Real Estate Investment Trust (REIT) Securities Market in 2014 (total contracted assets: 204.8 billion yen (acquisition cost)). Striving for a total asset value of 300 billion yen by 2020, we are expanding the scale of our assets while working to maintain and grow the value of assets consigned to our company. Targets for investment include office buildings, residential apartments, and commercial facilities.
<Strengths That Drive Value Creation>
Long-established influential connections and networks in Asia help boost value
The strength of our businesses that tie Japan with Asia, including our industrial park; social, lifestyle, and urban infrastructure; and real estate-related businesses, lies in the networks and customer base that Sojitz has built over many years throughout Asia.
Sojitz has forged relationships of trust beginning in Vietnam, with whom we have had dealings since the Doi Moi policy was first implemented in 1986. Our business partners in each country are tremendous advantages that have improved the quality and quantity of information available to us and greatly accelerated business promotion. Moreover, with a firm grasp on each country’s domestic demand, conditions affecting industry and distribution companies, the labor situation and other factors, we play an important role in offering solutions to Japanese companies establishing bases in Vietnam.
Operating Environment and Value Creation Strategy
Creating value in Asia as a “production base”
In view of factors such as the economic slowdown in China and rising interest rates in the United States, there are currently some concerns about slowing growth in Asia, centered on the ASEAN region. However, we anticipate firm growth in the region’s overall population, centered on the working-age population of 15 years and older. Consequently, we expect brisk consumption and strong economic growth to outstrip population growth. We therefore view Asia as an attractive region from the perspective of a production base.
In terms of developing this “production base,” we are focused on the industrial park business in Vietnam and Indonesia, given the continually increasing demand for Japanese and Taiwanese companies expanding to the ASEAN region. Our industrial park business includes not only development, sales, and management operations, but also infrastructure such as electricity, water and sewer services; logistics; rental factories; and support services for setting up a company. These aspects of our business enable us to secure stable, long-term profits. By covering diverse transactions that include everything from providing fuel and raw materials to product management, we will expand the breadth of our services and geographic reach, as a central operating base for businesses looking to expand their operations abroad.
||Expansion of auxiliary services focused on providing various functions to support the growth of Nippon REIT Corporation (including a warehousing business that increases value, functions as a bridge, and supports asset replacement from a REIT investment perspective.)
||As a platform for real estate-related business for business divisions throughout the company, we will make use of the expertise acquired through management of Nippon REIT Corporation to provide support with asset replacement and off-balance sheet investments. Additionally, we aim to create company-wide synergy by expanding new investment management businesses further.
||Growing opportunities for industrial park development and operation support services as Japanese manufacturers set up new bases in Asia
||Increasing business opportunities due to special demand ahead of the Tokyo Olympics and upswing in Japan’s real estate market
||Increasing comprehensive real estate management functions and expanding surrounding businesses, which contribute to increasing the value of Nippon REIT portfolio assets
||Risks associated with revisions to legal and other regulatory systems in Asian countries, and fluctuations in economies and exchange rates