BMI View: Despite ongoing fiscal stimulus measures, structural challenges will continue to inhibit Japan's infrastructure sector and as such we expect to see only minimal growth in construction industry value in 2016. Ongoing reconstruction efforts following the 2011 earthquake and the more recent April 2016 earthquake will ensure continued growth in residential and non-residential construction, while a slight shift towards renewables will stimulate marginal growth in the energy sector.
Latest Updates And Structural Trends
Japan's housing market has received a boost from government measures (including the negative interest rate) and the Residential Property Price Index was up 2.3% in May 2016 according to figures from the Ministry of Land, Infrastructure, Transport and Tourism. New housing starts are also up, supporting our forecasts for a return to growth in the residential and non-residential construction sector in 2016.
A number of transport projects are underway, including airport expansions and further development of the high-speed rail network. We are therefore forecasting 1.2% growth in transport infrastructure industry value in 2016.
More subdued growth will be seen in the energy sector where Japan's mature power market and limited consumption growth mean there is little scope for large-scale new capacity projects, despite the continued outage at the vast majority of the country's nuclear power plants.
Overall we are forecasting growth of 1.6% in Japan's construction industry value in 2016 with growth expected to decline over the remainder of the forecast period. While the stimulus package does include significant infrastructure investment, the project pipeline remains slim and Japan's major construction firms will continue to focus expansion efforts on overseas markets.
|e/f = BMI estimate/forecast. Source: Cabinet Office, BMI|
|Construction industry value, JPYbn||29,627.81||30,206.87||31,037.56||31,984.20||32,910.33||33,867.46||34,856.67|
|Construction Industry Value, Real Growth, % y-o-y||-0.58||1.55||0.75||0.45||0.15||0.06||-0.03|
|Construction Industry Value, % of GDP||5.9||6.0||6.0||6.0||6.0||6.0||5.9|
Japan maintains an infrastructure Risk/Reward Index of 61.9 out of 100 this quarter. In terms of regional performance, Japan is ranked seventh out of 21 countries assessed in Asia Pacific.
Although one of the largest in the world in value terms, Japan's infrastructure sector is expected to see only slow growth moving forward which limits the country's performance on the Rewards side.
Japan has a very strong Risks profile with excellent access to financing options and a high degree of policy continuity.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Japan Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Japan Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Japanese infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Japan to test other views - a key input for successful budgetary and planning in the Japanese infrastructure market.
- Target business opportunities and risks in the Japanese infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Japan.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.