Japanese Construction Market ReportJapanese Construction Market Report
Sato Facilities Consultants, Inc.
Updated on August 23, 2024

Table of Contents

1 Floor Area of Construction Starts

2 Dwelling Units of Construction Starts

3 Floor Area of Construction Starts by Building Use（Non-Dwellings）

4 Building Construction Unit Price by Building Use（Non-Dwellings）

5 Construction Material Price Index (Tokyo)

6 Unit Labor Cost（Tokyo）

7 Construction Cost by Building Use

8 Number of Employees in Construction Industry

9 Construction Investment(Private/Public)

10 Building Construction Investment

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Japanese Construction Market Report

1Floor Area of Construction Starts（mil. ㎡）

Dwelling

Non-Dwelling

250

194

200

179

171

177

183

188

72

72

157

70

150

186

63

61

65

71

64

151

60

100

149
113
41

125
50

116

110

112

112

116

113

93

92

127

122

48

44

72

78

09

10

135

52

131

129

56
53

80

83

92

11

12

13

50

134

51

133

53

131

51

125

48

114
45

122

119

48

47

108
43

78

79

83

80

80

77

69

74

72

66

14

15

16

17

18

19

20

21

22

23

0
2000

01

02

03

04

05

06

0708

（Fiscal Year）

Source：Construction starts statistics (MLIT)

The floor area of new construction starts exceeded 170 million m² from FY2000 to FY2006, but it declined afterFY2007. Particularly in FY2009, due to the impact of the Global Financial Crisis following the collapse of Lehman
Brothers, both residential and non-residential construction dropped to about 60% of the level in FY2000. Since then, it
remained around the 130 million m² level, but in FY2020, due to the impact of the coronavirus pandemic, it decreased
to 114 million m², almost the same level as during the Global Financial Crisis. Although there was a slight recovery inFY2021, it did not return to pre-pandemic levels and has continued to decline. In FY2023, the floor area for residential
construction was 66 million m², for non-residential construction 43 million m², and the total was 108 million m², a 9.2%
decrease from the previous year.

2

Dwelling Units of Construction Starts（thou. units）

Ready built houses

1,400
1,213
1,200

1,173 1,146 1,174 1,193

1,249

Owned houses

Issued houses

Rented houses

1,285

1,036 1,039

987

1,000
775

800

819

841

1011893

880

921

974

946

953
884
812

8668612122800600
4002000200001020304050607080912131415161718192023（Fiscal Year）

Source：Construction starts statistics (MLIT)

The number of dwelling units of construction starts remained around 12 million units in the first half of the 2000s, but
in 2009 it dropped sharply to 775,000 units. In recent years, it has remained at the 800,000 to 900,000 level, and in
fiscal 2023, it was 800,000. The breakdown was 43% for rental houses, 27% for owned houses , 29% for ready builthouses, and 1% for issued houses.

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Japanese Construction Market Report

3Floor Area of Construction Starts by Building Use（Non-Dwellings）(mil. ㎡)
Office

18.0

Store

FactoryWarehouse

SchoolHospital

16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2000

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

21

22

23

（Fiscal Year）

Source：Construction starts statistics (MLIT)

Looking at the types of use, warehouses grew at an average rate of about 15% from FY2019 to FY2021, but havebeen on a gradual downward trend since peaking. Offices grew by 25% year-on-year in FY2021, but declined thefollowing year,and recovered by about 6% in FY2023. All other uses declined in FY2023.
4

Building Construction Unit Price by Building Use（Non-Dwellings）( thou. yen)

Office500

Store

Factory

Warehous

SchoolHospital

450
400
350
300
250
200
150
100
50
0
2000

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

21

2223（Fiscal Year）

Source：Construction starts statistics (MLIT)

In the 2000s, the cost per square meter for office space was below 200,000 yen, but since FY2016, it has risen to over
300,000 yen. In FY2021, the cost was 351,000 yen per m², in FY2022 it was 363,000 yen per m², and in FY2023 it
increased by 20% year-on-year to 434,000 yen per m².
In FY2023, the cost per square meter for non-residential spaces was 424,000 yen for hospitals, 369,000 yen forschools, 339,000 yen for factories, 200,000 yen for retail stores, and 168,000 yen for warehouses, all showing
increases from the previous year.

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Japanese Construction Market Report

5Construction Material Price Index (Tokyo)

Paper/wood products

Ceramics/clay and stone products

Ready-mixed concrete

Steelmetal products

190.0Index（Year 2005＝100）

170.0

150.0

130.0

110.0

90.0

70.0

50.0
2000

01

0203

04

05

06

0708

09

10111213

1415161718192021

2223（Year）

Source：Building Material Price Index （Construction Prices Research Institute）

Steel prices surged after 2020 due to China's economic growth and the global economic recovery from the COVID-19
shock, but their growth has been slowing down in 2023. Lumber and wood products saw a sharp increase due to theexpansion of housing demand in the United States and the impact of the Ukraine crisis that began in February 2022,
but they have stabilized in 2023 with a 7% year-on-year decrease. Since 2020, the costs of materials such as readymix concrete, formwork, and metal products have generally continued to rise, leading to an increase in the cost ofstructural work.

6Unit Labor Cost（Tokyo）（Yen/Hour）

Ordinaly worker

Electrician

Rebar worker

steel worker

0912

formwork worker

Interior worker

plumber

35,00030,00025,00020,00015,00010,0002000 01

0203

0405060708

1011131415161718192021222324（Fiscal Year）

Source：Labor costs for public works design and construction （MLIT）

The nationwide weighted average public works design labor unit price for fiscal year 2024 is 23,600 yen for all job
types, marking the 12th consecutive year of increases since fiscal year 2013. In 2023, there was a 5.9% increase
compared to the previous year.

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Japanese Construction Market Report

7Construction Cost by Building Use

Housing Complex(RC)Office(S)Hotel(RC)Construction Cost Index（Year2011＝100）

130120110

10090802000010203

0405

06

07

08

09

10111213

1415

16

1718

1920

21

22

23（Year）

Source：Construction Cost Index （Construction Prices Research Institute）

For all three uses, there has been an upward trend since 2012, with a sharp rise of over 7% year-on-yearfrom 2021 to 2022, and over 6% from 2022 to 2023.

8

Number of Employees in Construction Industry(Mil.）

700
618
600

604

584

568

560

554

541

522

504

502

10

11

500

504

500

507

503

495

498

503

499

492

483

479

483

1213

14

15

16

17

18

19

20

21

22

23

400

300

200

100

0
2002

03040506

0708

09（Year）

Source：Lavor Force Survey （MIAC）

The number of workers in the construction industry has been on a declining trend, peaking at 6.85 million in1997 and decreasing to 4.79 million in 2022, which is 70% of the peak. However, in 2023, it slightly recovered
to 4.83 million.

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Japanese Construction Market Report

9Construction Investment(Private/Public)（trn.yen）

PrivatePublic80.0
70.0

68.8 70.3
66.4 67.8

66.2
61.3
56.8

60.0

53.7 52.8
51.6 51.3

50.0

56.6

58.761.3 61.8 62.3

48.3 47.5

47.7 48.2
43.0 41.9 42.1 42.4

40.0
30.0
20.0
10.00.0
2000

01

0203

0405

06

0708

09

10111213

1415161718192021

2223（Fiscal Year）

Source：Construction investment outlook（MLIT）, Nominal Value

Construction investment has been on the rise due to the reconstruction demand from the Great East Japan
Earthquake and an increase in private capital investment. Government construction investment for fiscal year
2023 is projected to be approximately 25.34 trillion yen, a 4.5% increase compared to the previous year, while
private construction investment is expected to be about 44.98 trillion yen, a 1% increase year-on-year. In
terms of the composition of construction investment, the private sector accounts for 64% and the government
sector 36%.

10

Building Construction Investment（trn.yen）

Building Construction Investment(LHS)

Year-on-year ratio(RHS)

50.0

50%

40.0

37.1

38.3

40.9 40.5 40.2 40.9

42.9 43.2 43.4

30%

33.6
30.8
30.0

29.2 28.7 29.7 29.7

30.6

20%

28.7 28.2

27.7 28.4
22.7 22.1

23.8

40%

24.9

10%

20.00%-10%10.0-20%
0.0-30%2000 010203040506

0708091011121314151617181920212223（Fiscal Year）

Source：Construction investment outlook（MLIT）,Nominal Value

Breaking down construction investment by type of work, buildings account for 61.8% and civil engineering for38.2%. Most private investment goes into building construction, while most government investment goes into
civil engineering. Building investment significantly dropped to 22.1 trillion yen in 2010, but has been at a levelof over 40 trillion yen since 2017, with a forecast of 43.4 trillion yen for fiscal year 2023.

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