Over the last 20 years, IREM has seen tremendous growth with its program in Japan. Currently the country has five chapters with over 600 CPMs and eight AMO firms.
IREM members in Japan are actively working to improve the real estate management industry. Notably, Teruo “Terry” Suenaga, CPM® has served as president of the Japan Property Management Association (JPMA) for the past six years. His term will end in September 2020, and he will be succeeded by Noriaki “George” Shiomi, CPM®. Suenaga and Shiomi are the first two CPMs to serve as JPMA president.
JPMA has been involved in advocacy work with the Japanese government to professionalize property management, and in June 2020 the government passed the Rental Property Management Law, which will professionalize the industry and require companies to register with the government.”
IREM spoke with Suenaga and Shiomi about the JPMA and the current state of the real estate management industry in Japan.
What is the JPMA?
Suenaga:
The JPMA is an industry association in Japan created in 1995 and made up of rental property management companies. We currently have around 1,640 member companies.
In Japan, there are:
- Around 15 million rental properties
- About 3 million, or 20%, are managed by the property owners themselves
- The remaining 80%, or 12 million, are managed by management companies
- About 70% of these, or 8 million properties, are managed by JPMA member companies
Shiomi:
IREM members manage everything, including commercial office buildings and retail properties, but JPMA is focused on residential rental properties with apartments as the main focus. This point makes the association different from IREM.
How was JPMA involved in passing the Rental Property Management Law?
Suenaga:
Of course, JPMA has been active on its own, but we’ve also worked with many real estate brokers who previously also handled property management. There are several associations related to brokerage in Japan. They’ve already passed laws related to brokerage, so we worked with them to create a rental management certification called Real Estate Property Manager in 2007. We then started working with the association that manages this certification to create the law that was passed.
Shiomi:
JPMA and Mr. Suenaga having been working to pass this law for years. We met with the Ministry of Land, Infrastructure, Transport and Tourism, and we had a committee dedicated to passing this law. When Mr. Suenaga became president six years ago, he promised we would get the law passed. Passing the law was his mission. This wasn’t just something you say when you become president—it was the result of his dedication. So, recently Mr. Suenaga has looked really relieved. Everyone is saying that he seems to be filled with a sense of accomplishment.
Suenaga:
Well, I’m definitely relieved!
Shiomi:
I’ll be taking the baton from you and am hoping to work just as hard. I look forward to working together.
How has JPMA been collaborating with IREM Japan?
Suenaga:
First, IREM Japan is a member of JPMA. JPMA has regular members, which are management companies, and special members, which aren’t companies but still participate. JPMA works with IREM Japan on an NOI survey, and many of the JPMA companies are involved with IREM. Many of the people at these companies have achieved CPM certification.
Shiomi:
The CPM has become a nice designation for JPMA members who want to learn more, who want to earn a higher certification. I think JPMA and IREM have good chemistry. They work really well together.
What concerns do property owners have in Japan when they talk with CPMs?
Suenaga:
The population in Japan began decreasing in 2010. It’s now 2020, and over the next 30 years the population is expected to decrease by 30 million. Japan’s population is currently 126 million, so that’s a 25% decrease. In addition, the population will likely become more concentrated in large cities like Tokyo, so it may be difficult to find tenants depending on where you are. Vacancy will be one of the biggest issues.
Japan has also recently been thinking about how to extend the lifespan of buildings. After World War II, Japan has basically followed the American model of scrap and build. They let things get run down and then rebuild. But because the population will decline and the economy isn’t expected to grow much, the thinking is beginning to shift from an American model to a European model. We’re planning to use rental property for a longer period of time. In order to do so, proper maintenance will be necessary, and property managers will be able to help owners with how best to perform this maintenance.
Shiomi:
There’s starting to be a generational change amongst owners. The people who have owned land are beginning to pass it on to the next generation. Japan doesn’t really have an investment mindset, so there’s a growing need for investment advice. Previously a property owner might build an apartment with someone they got along with and liked. Now, though, people want to know what kind of income an investment will have, and they want a logical, financial explanation.
You can’t just tell someone, “This apartment is good because it’s close to a train station.” You have to say, “If you make this investment, this will happen. If not, then this will happen.” The new generation of owners want options similar to what we study in CPM courses at IREM. I think we have really high expectations of the future in Japan. By which I mean that CPMs here will be able to use what they’ve learned with a lot of success.
What is the future of the property management profession in Japan?
Shiomi:
The coronavirus pandemic has had an effect on rental property management, but honestly, compared to other industries like hotels, tourism, and restaurants and bars, it’s been a very small effect. I think this has made the industry look really good—it’s having a moment in the limelight. People who otherwise may not have had an interest in property management may decide to join the business. So we might start to see some competition—it’s very active right now. I think the future is bright.
Suenaga:
Rental property management in Japan is going to get more complicated. The population will decrease, making everything more difficult. Rental property management is going to become more sophisticated, so there will be an increased number of opportunities for professional management companies, and people will need management companies with professionals like CPMs, who have industry knowledge to support owners who can’t manage properties themselves. So, in a certain sense, rental property management itself is going to become a lot more challenging, but it will flourish and become more popular, and CPM certification will become even more useful.
With a proven need for property management professionals, IREM sees great potential in Japan, and is exploring areas for growth and development.