Market Overview

The non-residential building refurbishment market in Japan is sized at 11.59 trillion yen in FY2024, representing 2.8% increase from the previous fiscal year (on the value of construction orders received at primary contractors; estimated using the data from the Construction Work Survey by the Ministry of Land, Infrastructure, Transport and Tourism [MLIT].)

The demand for building refurbishment has surged, fueled by escalating construction costs resulting from spikes in material prices and labor wages. These financial pressures have prompted building owners to pivot their investment strategies, shifting focus from new construction toward the strategic utilization of existing assets.
Market growth is further bolstered by broader industry trends. Specifically, the value enhancement of existing buildings through renovation has become increasingly active. This trend is a response to the massive volume of building stock constructed during Japan’s Bubble Economy (late 1980s and early 1990s), which has now reached a critical stage in its lifecycle requiring comprehensive management and modernization.

Noteworthy Topics

Pivot to “Value Enhancement”

In the non-residential building refurbishment segment, value enhancement is gaining traction. To transform underperforming properties —such as obsolete office buildings and aging retail spaces—into high-demand assets, owners and tenants are increasingly adopting retrofitting measures. These include achieving net zero energy performance (Net Zero Energy Building [ZEB]) and introducing energy-efficient systems.
At the same time, improvements to the workspace environment can help strengthen business continuity planning (through enhanced disaster preparedness) and foster stronger engagement with both current and prospective employees. As a result, enhancing occupant comfort while maximizing asset value is becoming increasingly important in the non-residential refurbishment market.

Future Outlook

The size of non-residential refurbishment market is projected to attain 11.8 trillion yen in FY2025 (on the value of construction orders received at primary contractors; estimated using the data from the Construction Work Survey by the MLIT.)
While the market faces potential headwinds—such as a shortage of construction labor, high interest rates that may dampen investment, and the increased durability of modern materials which can extend repair cycles—the overall outlook for non-residential refurbishment remains positive.
High costs for new construction continue to drive building owners toward asset utilization rather than new development. This strategic shift, combined with a rising demand for value enhancement and the aging Bubble Economy building stock, suggests that the refurbishment market is poised for significant growth.

Research Outline