Over the past few years a number of Japanese building companies have invested in Australia. Sekisui House and Sumitomo Forestry Company have been doing business in Australia for a considerable amount of time. More recently Asahi-Kasei Homes and Daiwa House, among others, have made significant investments in the Australian residential construction sector.
Given we have a population of 25 million while Japan has a population of 127 million one might think that there is much more fertile business ground in Japan, and wonder what is driving these investments. The three driving forces are trends in population growth, demographics and our economy.
Japan’s population growth has been negative for some years leading to a declining population rate of around 0.2 per cent. The average age is currently 46.7 and GDP growth hovered around 0 per cent for most of 2017. So with a very sluggish economy and an ageing and declining population, market growth for many Japanese businesses is necessarily offshore. Australia has stable government and a regulatory system similar to that in Japan.
Business collaboration and investment between the two countries has been strong for decades. The Australian residential construction market has recently been through a record period, with the east coast in particular forecast to remain strong over the next few years. Australia’s population is currently growing at around 1.6 per cent per annum with GDP growth of around 3 per cent. Australia needs to continue building at the rates we have seen in recent years just to keep pace with underlying demand, so it makes sense that the Australian residential construction market represents an attractive long-term investment for these large and highly successful Japanese companies.