Our Business

According to the data from Housing and Land Survey in 2008 (Statistics Bureau of Ministry of Internal Affairs and Communications), 17.77 million households out of 49.80 million ordinary households in Japan live in leased housing. This shows that 35.7% of ordinary households in Japan live in leased housing.

Looking at the figures of Leased household rate (ratio of households living in leased housing) by prefectures, major urban areas generally tend to have a high ratio of leased houses, with Tokyo having a ratio of 48.8%, Osaka 42.6% and Fukuoka 43.1%.

Leopalace21 manages 571,908 units (as of September 30, 2011) centered on major cities with high leased household rates. Looking at the numbers by areas, approximately 70% of the units are covered in the 3 major urban areas, with the Kanto area centered on Tokyo covering 36% of the units, the Kinki area centered on Osaka covering 14%, and the Tokai area centered on Nagoya covering 16%.

Many businesses offer lease housing including local real-estate agencies to public corporations, but Leopalace21, being the only company offering approximately 560 thousand rooms, could be referred to as Japan’s largest scale private Landlord.

The Japanese population reached its peak in 2005, and then has shifted to a downward trend, but the number of total households has continued to increase due to the increase in nuclear families, the aging population, and declining birthrate. According to an estimate by the National Institute of Population and Social Security Research, the number of total households will reach 50.6 million in 2015, and single households is said to cover 32.7% of the total households with over 16.5 million households.

Looking at the ratio by age group of the number of single households in 2005, the under 35 age group covered 35.6%, 35-64 age group covered 37.7%, over 65 age group covered 26.7%, and the 35-64 and over 65 age groups have been estimated to grow after 2005.

We defined the young generation layer in urban areas/one-person households as our major target customer layer and made efforts to fulfill this layer’s needs (ex: broadband and bathroom clothes dryer implementation), to enhance convenience of signing the contract (ex: development of website which offers everything from room searching, contracting, to payment), and to implement monthly contracts (short term contract) to fulfill corporate needs for dormitories, company housing, and for business travel.

As a result, we gained 2.7% share in 2000 and 6.5% share in 2005 in the under 35 age group of the single household layer market.

In addition, we are offering a new lineup that includes larger studio units and family-type units, as well as residences with attached rental units to target new tenants to improve occupancy rates and to create new demand. Indeed, proposals we submit to owners are for the construction of apartment buildings located in areas where we expect large lease demand based on detailed analysis of the market.

According to Building Construction Starts by the Ministry of Land, Infrastructure, Transport and Tourism, the number of new rental housing starts in FY2010 was 291.8 thousand units.

Over 300 thousand rental housing are constructed each year. Of this number, the under 30m² housing that Leopalace21 mainly supplies covers 38.9 thousand units (approximately 13.3%), which has covered approximately 20% of the total for the past few years.

Leopalace21 has consistently maintained top share in supplying rental housing under 30m². During FY 2007 (fiscal year ended March 2008), amidst the decrease in number of units supplied by the entire Industry due to the amendment of the Building Standards Act intensifying quake-resistance inspections, Leopalace21 was able to show slight increase gaining a large increase in shares.

In Japan, it is typical for people to obtain their own housing as their age/income increases, and there is a rapidly growing trend in self owned household rate for people in their 30s.

Recently however, there is also an increase in the layer that positively chooses lease housing due to the flexibility to change housing according to income and lifestyle, and also due to the risk of utilizing large housing loans under the current uncertain economy.

As a result, quality of the lease housing including enhancement of equipment and design and size of the living area is becoming increasingly important for the customers.

In the past, Leopalace21 has specialized in providing studio apartments in the three main metropolitan areas of Japan. However, as part of the Medium-term Management Plan and the “New Area Strategy” to shift towards a “stock” business model, Leopalace21 plans to shift investment from existing 30 square meter area studio apartments to larger studio and family units to meet the needs of target areas and customer demographics.

Specifically, while continuing to invest in VERDURE, high class studio apartments in high-rise buildings, Leopalace21 will also invest in large class studio apartments targeting customers in their 30s and older as well as family units in the suburbs. The result of this part of the Medium-term Management Plan is to increase the number of family units sold to be approximately 15% of the total units sold in building contracting (The corresponding units sold was 9.8% as of March 2010).