Market Overview

The size of the condominium management fee market in 2022 was estimated at 820,600 million yen, up 2.2% from the previous year (based on the condominium management fee). Although the number of newly built condominiums has been on decreasing slightly (data source: the Ministry of Land, Infrastructure, Transport and Tourism estimates), management costs have been increasing stably in tandem with the rises in price of new condominiums and labor costs.

Meanwhile, the size of the condominium common are repair market in 2022 was estimated at 574,600 million yen, down by 21.0% from the preceding year (based on the costs of work for repairing condominium’s common areas). The market size fluctuates by the cycles of condo’s pre-planned repairment schedule. The year 2022 was the period when condominiums built around 2008 implemented a first major repair works. However, because the number of condominiums built around that time was limited due to the influence of Lehman Shock, the total number of repair works was fewer than usual. It is assumed that this led to the decrease in the number of major repairs in 2022 compared to previous years.

Noteworthy Topics

Reinforcing Development of Derivative or Peripheral Services by Utilizing Expertise and Resources

In recent years, management companies are embarking on expanding their business by increasing the service menus to meet the diversifying needs and challenges of condominium owners.

One of such services is the “third-party management” (*1). This service not only addresses the issue of "shortage of management association board members", but also achieves "optimization of condominium management" by outsourcing common area repairs and accounting duties to condo management experts.

Management companies have also developed ICT-based management services for self-managed condos (*2) and small condos. These services reduce costs of management association by providing apps and web for management association to use for accounting and information transmission, and by co-managing tasks like cleaning and inspection (maintenance) of shared facilities with neighboring condominiums. When residents of self-managed condominiums or small-scale condominiums try to outsource management, residents may find difficulties in raising funds or find outsourcing cost relatively expensive. The new services solve these challenges through the use of apps, web, and the establishment of a unique management system, which enable costs (including labor cost) smaller.

By developing new services as described above using the condo management know-how and resource including those of group companies, condominium management companies provide solutions to the condominium management market, growing their business with broader range of services.

(*1) Third-party management: A condo management method where unit owners outsource the tasks of the board member(s) of, and/or a manager of, a management association of the condominium to non-residents such as condominium management company and Licensed Strata Management Consultant.
(*2) Self-managed condos: A type of condominium where its management association takes care of maintenance tasks on shared areas and condo premises.

Future Outlook

The entire condominium management market, which consist of condominium management fee (market) and common area repair (market), is expected to continue growing in mid-to-long term perspective.

Condominium management fee market is forecasted to grow to 976,400 million yen by 2030, up by 19.0% from that of 2022. On top of the structural issues like population decline (associated with aging population and declining birthrates), the shortage of lands suitable for new condominium development and the expansion of the pre-owned houses distribution are likely to diminish the number of new condominiums further. Nonetheless, as long as there will be a newly built condos, the outlook for condominium management market remains robust.

In addition, the condominium common area repair market is forecasted to grow to 818,100 million yen by 2030, up by 42.4% from 2022. The market is expected to grow over the medium to long term due to an increase in small-scale repair and maintenance work associated with building deterioration over time and an increase in the number of condominiums reaching the appropriate age for large-scale repair and maintenance work.

On the other hand, the condominium management market faces many challenges, including the aging of condominium residents, deterioration of buildings over time, rising costs due to labor shortages, and poor financial management by management associations. Going forward, it will be important for condominium management companies to grow by solving these issues.

Research Outline