Market Trends of Japan Construction Industry
This section covers the major market trends shaping the Japan Construction Market according to our research experts:
Increase in Infrastructure Developments Boosting the Market
The urban infrastructure of Japan is among the greatest in the world. Japan's strategy for infrastructure development was in response to many stages, each emphasizing the significance of striking a balance between economic growth and sustainability. In August 2022, the Japanese government ordered the construction of a new nuclear plant. Notably, the construction and development of the new nuclear plant will help the country reduce its reliance on energy imports amid the global energy crunch.
Tokyo is considering partnering with India on international infrastructure development initiatives. Joint planning, design, and implementation of infrastructure projects in nations like Nepal, where both countries are already engaged in projects, might aid New Delhi and Tokyo in maximizing their effect. India's less innovative and more affordable digital solutions are suitable for developing nations, especially those in Southeast Asia. Infrastructure development has been a priority for Japanese businesses and government agencies in East Africa, Vietnam, Indonesia, and Cambodia.
Beijing has increased its influence in the area by using infrastructural assistance due to China's Belt and Road Initiative. However, claims of "debt-trap diplomacy" have plagued Chinese sponsorship. The four-nation Quad established a working group on infrastructure since it is now a crucial aspect of the growing diplomatic rivalry in the area.
Government Funding is Being Used as a Development Driver for Japan's Residential Construction Sector
The Japanese government has been providing housing subsidies to families with children for the past few years. In 2022, this tendency was anticipated to intensify. The land ministry intends to expand the lineup of measures after establishing a variety of policies and measures, such as tax incentives for individuals who take out mortgages to help with home purchases, to ease the financial burden of home ownership in Japan.
The government took action in 2021 to help families with children buy homes by providing incentives for brand-new construction. Notably, the government offered incentives for the scheme that ranged from JPY 600,000 to JPY 1,000,000 per unit. The initiative began in November 2021 after receiving financing of JPY 54.2 billion (USD 0.42 billion) under the fiscal 2021 additional budget.
The government allocated an additional JPY 60 billion (USD 0.46 billion) for the program in 2022. The government also extended the deadline from the end of October 2022 to the end of March 2023 due to the expectation that 120,000 applications will be submitted for the subsidies. Over the next 3-4 years, these government initiatives may increase the expansion of the residential building sector by reducing the demand from Japanese homebuyers.
