Domestic Eight Major Construction Market Size Decreased by 1.9% on a YoY Basis to 2,209,800 Million Yen
Yano Research Institute (the President, Takashi Mizukoshi) carried out a survey on the domestic eight major construction markets and found out the market size, trends by each category, and future perspectives.
The total eight major construction market (total market size of eight categories: Housing/Residence, Commercial Facility, Office Building, Hotel, Factory/Plant, Distribution Warehouse, School, and Hospital) for FY2019 based on the estimated construction cost fell to 2,209,800 million yen, 98.1% of the previous fiscal year.
In FY2019, while the construction demand for Tokyo Olympic and Paralympic Games somewhat subdued, the office building category thrived because of increased demand for large-scale urban redevelopment projects, and the category of distribution warehouses also expanded, encouraged by increasing demand for ecommerce. However, all the other categories ended up decreasing from the previous fiscal year. This scaled down the entire market of eight major constructions to 98.1% on a year-to-year basis. The reduction, however, was slight, because of soaring costs for labor and building materials as well as equipment, stemming from special construction demand for Tokyo Olympic and Paralympic Games, which raised the unit price per construction.
In addition, the influence of COVID-19 pandemic to the total market of eight major constructions was relatively small in FY2019, though the housing category somewhat affected, causing delivery delay of housing equipment that put off handover of houses.
Influence of COVID-19 Pandemic to Office Buildings
The COVID-19 pandemic has brought about diversification of workstyles, which spread teleworking. This resulted many companies to reconsider the necessity of offices themselves. Some major companies have already relocated their headquarters, have sold their office buildings, or have diminished the office floors. Such cases are likely to increase furthermore hereafter. In such circumstances, the office-building construction projects currently underway may be forced to change the specification or to postpone, or consequently to be suspended. The category of office buildings seems to be facing the transition period, as the conception and required functions of offices are changing amidst workstyle diversification.
The total eight major construction market (total market size of eight categories: Housing/Residence, Commercial Facility, Office Building, Hotel, Factory/Plant, Distribution Warehouse, School, and Hospital) based on the estimated construction cost is expected to be 1,890,000 million yen by FY2023, 85.5% of the size of FY2019.
While the market size significantly scaled down in FY2020 due to COVID-19 infections, increasing demand is expected in distribution warehouses because of expanding ecommerce, and in hotels, as hotel constructions in progression for the Osaka-Kansai Japan Expo in 2025. However, the categories of housing/residence, commercial facility, and school are likely to be on the decline hereafter, as no specific growth factor detected.
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