Japanese property giants deepen their push into a booming Indian market
Japanese real estate
developers are wading further into a tricky Indian market and
more of their peers are expected to get their feet wet, drawn by
rising rents in a rapidly growing economy as well as low
construction costs.
First case in point is Mitsui Fudosan, Japan’s
biggest property developer, which forayed into India in 2020,
partnering with local developer RMZ Real Estate to build an
office complex in Bengaluru.
Mitsui Fudosan could embark on fresh investment of 30-35
billion yen ($190-$225 million) or more in projects with either
RMZ or other developers, said two sources with knowledge of the
plans.
Last month, members of Mitsui Fudosan’s management team
were in Mumbai and the region around the capital New Delhi
looking at opportunities, they added, declining to be identified
as the information was private.
Mitsui Fudosan declined to comment. RMZ declined to comment
on the potential new investment.
RMZ Real Estate CEO Avnish Singh did say, however, that
Japanese developers are kicking into higher gear now that trust
with local partners has been established.
“The floodgates can open and have opened,” he said.
Sumitomo Realty and Development, Japan’s No.3
developer which describes Mumbai as its second engine of growth
after Tokyo, has committed $6.5 billion across five projects in
the city, including two sites added this year.
It is also scouting for land around a soon-to-be operational
Navi Mumbai city airport for new investment, said a senior
industry source familiar with its strategy. The source declined
to be named because the information was confidential.
Sumitomo Realty did not respond to a request for comment.
Sleeves rolled up
Japanese companies are far from the only overseas investors
keen on Indian property. U.S. investment firm Blackstone,
for example, is India’s biggest commercial landlord, and roughly
half of its $50 billion in Indian assets are in real estate.
Like Blackstone, most foreign players purchase existing
assets given India’s notorious reputation for construction
delays that can leave prospective tenants and buyers high and
dry. Although reforms in recent years have improved construction
timelines and created a new framework to resolve disputes,
acquiring land can be very slow, involving much red tape.
“Japanese investors are one of the few willing to take
development risk. They like to roll up their sleeves,” said
Singh.
Despite red-tape headaches, the returns can be worthwhile.
“Expected returns in the Japanese market are maybe around
2-4%. In India, you can easily expect 6-7%,” said Seiji Ota, a
partner at Deloitte India who focuses on Japanese investments in
the country.
Ota and Singh said a number of other Japanese developers
want to make their first foray into India and are assessing
opportunities to develop office, retail and hotel projects.
Japanese companies and funds have boosted investment in
overseas real estate by a fifth this year, according to a survey
by Sumitomo Mitsui Trust Research Institute conducted in
September.
While the U.S. and Australia remain long-favoured
markets, interest in India notably spiked, with 41% of those
surveyed intending to invest, up 6 percentage points from a year
earlier.
Low costs and climbing rents
One key draw for Japanese developers is India’s low labour
costs. Hiring an electrician or a plumber, for example, costs
just $2 an hour.
Constructing premium office buildings of up to 20 floors
costs more than $8,000 per square metre in New York, around
$5,300 in London and $4,000 in Tokyo, but is just $656 in
Mumbai, data from real estate consultancy Turner & Townsend
shows.
Just as importantly, rents for premium office space have
surged in India on the back of economic growth that has averaged
8% over the past three fiscal years.
Mumbai’s Bandra Kurla Complex – its central business
district – led growth in commercial rents for the Asia Pacific
region in the third quarter with a jump of 14.2%, according to
CBRE, a commercial real estate services and investment firm.
That was followed by Tokyo’s central five wards which rose
10.2%, while India’s national capital region and Seoul’s central
business district both climbed over 9%.
Japanese firms’ preference for designing a building from
scratch allows them to bring in technology not used in India.
Sumitomo Realty’s first project in Bandra Kurla Complex is
using a steel structure that enables very wide floor plates and
thus pillar-less offices – something that Indian developers
cannot do yet, said the source familiar with its strategy.
The firm expects to charge a 30%-40% premium over normal
rents in the area for this design feature, the source added.
JPMorgan will be a tenant in the building, according
to two sources and a copy of the lease. The U.S. bank did not
respond to a request for comment.
Other Japanese developers in the Indian market include
Daibiru Corp, which started with investments in office deals in
two cities last year. It is now scouting for land and could even
look at developing residential buildings and data centres, said
Anand Jayaraman, South Asia CEO of its parent Mitsui O.S.K.
Lines.
($1 = 155.8600 yen)
Published on December 1, 2025
