Boston, MA -- (SBWire) -- 01/03/2014 --Japan's construction sector continues to grow from strength to strength and we believe this could continue over the near term due to several factors - namely the stimulus package announced in January 2013, renewed demand for Japanese real estate, the growing use of thermal generation for electricity, the LDP's recent success in the Upper House elections, and Tokyo's successful bid to host the 2020 summer Olympics. However, it still remains to be seen whether the Japanese government will be able to overcome its fiscal problems and carry out the necessary reforms that could lift long-term construction demand. At present, we have seen some progress in implementing reforms specific to the infrastructure sector.
Key developments in the sector:
- In September 2013, Tokyo was selected as the venue to host the 2020 summer Olympics. The 2020 Olympics will be Japan's fourth time holding the prestigious games, and Tokyo's second time. According to official documents from the Japanese Olympic Committee, there are plans to develop around US $11.6bn worth of infrastructure for the games (such as lodging facilities for the athletes, sporting arenas and ring roads). This does not include commercial developments (such as property, retail and leisure) and infrastructure (such as new budget terminals and high-speed railway stations) that have been planned to cater to the increase in tourists during the games. There are also plans to build more than 6,000 new hotel rooms within a 50km radius of the Olympic Games centre and we have already seen mixed-development projects being awarded near the Olympic venues.
- In October 2013, Reuters reported that Japanese utilities were planning to develop 14 new thermal power plants by the end of 2014. A survey of Japanese utilities conducted by Reuters showed that two new coal power plants will be completed by December 2013, while another 12 gas-fired units would be constructed in 2014. This would enable a switch away from pricey oil, as Tokyo struggles with a shutdown of nuclear reactors and energy imports drive a record trade deficit.
- In November 2013, the Upper House of Japan's parliament approved the establishment of an independent body by 2015 to coordinate demand and supply across the nation's electricity grids. The legislation had passed through the lower house on November 1 2013, and more reforms are expected to be legislated in future parliamentary sessions. Some of the reforms proposed by upcoming bills include liberalisation of the retail electricity market by 2016 and requiring the country's 10 regional utilities to break their generation, transmission and retail operations into separate legal entities from 2018 to 2020.
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New Construction market report from Business Monitor International: "Japan Infrastructure Report Q1 2014"