Boston, MA -- (SBWIRE) -- 04/21/2014 -- The Japanese construction industry recorded a compound annual growth rate (CAGR) of 0.14% during the review period (2009-2013). The country's economy contracted following an earthquake, subsequent tsunami and nuclear disaster in 2011. In a bid to reconstruct and revitalize the economy during the review period, the government introduced economic reforms, such as an increase in subsidies and tax breaks for companies that invest in factories. The construction industry outlook is favorable, as a result of the government's focus on reconstruction activities. According to the Ministry of Economy, Trade and Industry (MEIT), indices of construction activity increased from 87.5 in the fourth quarter of 2012 to 99.4 in the fourth quarter of 2013, registering growth of 13.6%. The construction industry's output is expected to increase at a CAGR of 3.19% over the forecast period (2013-2018).

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Report Highlights

- Construction activity in Japan has increased since 2012, according to data on the value of contracts by orders with civil engineering works, showing a slightly faster rate of expansion than buildings. The number of housing starts has also risen since early 2010. While the rise in activity indicates improvements in the industry, there are concerns over the impact this will have on material and labor prices.
- The country's Fourth Science and Technology Basic Plan, introduced in 2011, aims to spend JPY25 trillion (US$313.3 billion) over 2011-2015. The plan addresses societal challenges and sets out priorities, such as reconstruction and revival following the 2011 natural disaster. In 2013, total science and technology expenditure, including planned spending and a stimulus package, reached JPY4.6 trillion (US$57 billion). The JPY76.7 billion (US$958 million) stimulus package was allocated to the upgrade of research facilities. Increased government spending is expected to enhance the research facilities category, which will, in turn, support the institutional construction market over the forecast period.
- The introduction of new economic reforms has improved business confidence in the country. In order to pump the money into the financial system, the Bank of Japan (BOJ) purchased government bonds and other securities. According to the BOJ, since April 2013, JPY4.4 trillion (US$546.3 billion) has been supplied into the country's economic system, boosting business sentiments to a peak since 2007. In 2013, direct commercial transactions reached JPY3.3 trillion (US$41.7 billion), a 67% increase over 2012. This renewed business confidence and financial stimulus will support the growth of the commercial market over the forecast period.

Companies Mentioned in this Report: Daiwa House Industry Co., Ltd, Sekisui House, Ltd, Kajima Corporation, Mitsui Fudosan Co., Ltd, Obayashi Corporation

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