Tokyo’s real estate boom is clearly reflected in the strong performance of Japan’s top property developers. In fact, the Nikkei reported that all five of the major real estate developers are set to achieve record profits for the fiscal year ending March 2025. This group includes big names like Mitsui Fudosan, Mitsubishi Estate, Sumitomo Realty & Development, Tokyu Fudosan Holdings, and Nomura Real Estate. It will be the second consecutive year of record-high earnings for these companies, underscoring how robust the market has been through 2024 and into 2025.
What’s driving these record profits? A combination of factors boosted developers’ revenues in 2024: the inbound tourism boom lifted hotel occupancy and room rates (benefiting developers’ hotel and retail segments), strong demand for new condos (especially in cities, allowing firms to sell units at higher prices and margins), and even a rebound in the office sector as workers return to corporate hubs (leading to rising office rents in areas like Marunouchi).
For example, Mitsubishi Estate, which has a huge office portfolio in central Tokyo, saw increased rent levels for its Marunouchi office buildings and enjoyed a 36% jump in net profit for April–December 2024 versus the previous year. Its outlet mall and hotel businesses also performed strongly as domestic consumption and travel recovered. Similarly, Tokyu Fudosan Holdings reported rising profits, with gains in office rents and robust sales in its commercial facilities and resort properties.
One standout is Mitsui Fudosan, which revised its earnings forecast upward. In February 2025, Mitsui projected a full-year net profit of ¥240 billion, a 7% increase year-on-year (and ¥5 billion higher than its prior forecast). The company cited booming hotel performance thanks to foreign tourists, plus “unstoppable” demand for new condominiums and improving office leasing as reasons for the optimism. Mitsui Fudosan also announced a major share buyback of up to ¥45 billion (up to 50 million shares) to reward shareholders, to be conducted through January 2026. This indicates confidence in its cash flow and a commitment to improving shareholder returns.
In fact, shareholder returns have become a big theme across all developers, in line with Japan’s broader corporate governance push. Companies are under pressure to use their hefty profits to boost stock value – either via dividends or share repurchases – especially when stock prices are seen as undervalued relative to assets.
A notable case is Sumitomo Realty & Development, which historically had an extremely high profit margin and was trading below book value. In late 2024, activist investor Elliott Management took a significant stake in Sumitomo Realty, aiming to spur changes. Soon after, Sumitomo Realty launched a ¥35 billion share buyback and pledged to accelerate dividend growth in response to investor pressure. These moves helped its stock price reach record highs. Sumitomo’s net profit margin is around 20%, remarkably high for the industry, and the company has signaled even more focus on shareholder returns going forward.
Other developers are also enhancing their shareholder strategies. For instance, Nomura Real Estate Holdings has outlined a plan to raise its dividend payout ratio to 40% by fiscal 2026 (up from a 40~50% total return target in earlier years). This means a larger portion of earnings will go directly back to investors as dividends. Across the board, Japan’s property firms – once considered quite conservative – are now embracing a more investor-friendly stance: higher dividends, buybacks, and improved transparency. This trend is partly why real estate stocks have been in favor on the Tokyo Stock Exchange recently.
Looking ahead to 2026, the big developers forecast continued strong earnings, albeit with some caution. They expect the supportive factors (tourism, housing demand, effective utilization of properties) to persist into the next year.
However, they are also aware of potential headwinds: rising construction material costs, any further interest rate hikes by the BOJ, or global economic slowdowns that could affect investor sentiment. For example, in Mitsui Fudosan’s three-year plan, they target an annual EPS growth of around 8% through 2026, driven by new project completions and asset sales. Such growth, while healthy, is not overly aggressive, indicating they are factoring in a bit of prudence.
From an investor’s perspective, the performance of these major developers is a positive sign. It shows the real estate sector’s fundamentals in Japan are strong. When developers are profitable, they can reinvest in new projects, upgrade portfolios, and continue to drive the market forward. As we head further into 2025 and beyond, keep an eye on how these firms balance growth and returns.
(For more insights on Japanese real estate and investor tips, see our TokyoPortfolio article “2025 Tokyo Real Estate Market Forecast for Foreign Investors” – an internal deep dive on market changes and opportunities.)
