Good News from Japan

-Overcoming market barriers-

The Sumitomo Trust and Banking Co., Ltd.

Masato Ito

　 Tokyo Osaka Nagoya Sapporo Sendai Saitama Chiba

　

Before 1981 1,527 531 185 106 64 10 41

After 1982 3,461 814 327 141 147 92 153

Unknown 20 18 6 1 2 0 0

Proport ion o f "Befo re 1981"

30.5% 39.0% 35.7% 42.6% 30.1% 9.4% 20.9%

　 　 　 　 　 　 　 　 　

　 Yokohama Kyoto Kobe Hiroshima Fukuoka Total 　

Before 1981 88 43 57 57 153 2,861 　

After 1982 386 68 126 104 191 6,012 　

Unknown 1 0 2 6 0 56 　

Proport ion o f "Befo re 1981"

18.5% 38.9% 30.7% 34.3% 44.5% 32.0% 　

2

Breakdown of Office Building Inventory by Age

More than 70% of office buildings in Japan would stand long use, through proper maintenance and retrofitting.

Quoted from ; The Annual Japanese Office Survey(At the end of Dec. 2010), Japan Real Estate Institute

About 30% of office buildings:

Completed before 1981 when earthquakeresistance standard was reinforced;They need to be rebuilt or retrofitted to be earthquake-proof.(except for skyscrapers)

About 70% of office buildings:

Completed after 1981.They stand long use through proper maintenance and retrofitting.

Com

pletio

nCom

pletio

n

3

Finance approaches to encourage energy efficiency Offering preferential interest rates for companies promoting

initiatives such as global warming countermeasures and biodiversity friendliness

CSR Report 2010 The Sumitomo Trust & Banking Co., Ltd.

44

Overcoming market barriers (1)- Investor’s view on environmental issues

“Survey of Responsible Property Investment(RPI) – Summary Report”, March/2010, Ministry of Land, Infrastructure, Transport and Tourism

5

Overcoming market barriers (2)- Investor’s view on barriers

“Survey of Responsible Property Investment(RPI) – Summary Report”, March/2010, Ministry of Land, Infrastructure, Transport and Tourism

6

Overcoming market barriers (3)- Is demand really insufficient?

The SumitomoTrust’s Research(Entrusted to STBResearch Institute,July 2009)Tenants place much importance on Energy Saving”, CO2 Reduction” “ “

and Reducing Garbage” as well as “High-speed Communications Lines”, “OA Floors” and Electrical Socket “ “

Capacity”.

DI賃貸オフィスビルに入居する場合の環境配慮項目の重要度（重要度 ）

61.5

72.0

68.9

58.1

41.9

65.5

38.5

67.6

78.7

75.3

76.7

47.0

40.2

30.1

73.0

75.0

43.6

6.8

22.3

76.7

43.2

52.4

20.3

14.2

64.2

56.8

36.8

64.2

0 10 20 30 40 50 60 70 80 90 100

環境配慮

1）遮音配慮

2）室温ゾーン別制御

3）湿度制御

4）自然光の利用（採光）

5）照明（照明器具がまぶしくない・室内の明るさが均一）

6）自然換気

7）タバコの煙やにおいの拡散防止

8）高速ネット回線

9）コンセント容量

1 0 OA） フロア

1 1）バリアフリー

12）広さ感（天井高等）

13）リフレッシュスペース

14）免震・制振性能

15）室内空間の形状・レイアウトのしやすさ

16）床荷重のゆとり

17）生物環境の保全と創出

18）まちなみ・景観への配慮

19）省エネルギー性能（断熱性・高効率の設備）

20）自然エネルギー利用（太陽光・風力等）

21）節水設備の導入

22）雨水の利用・雑排水の再利用

23）再利用可能な建築材料の利用

24 CO2） 発生量の削減

25）ヒートアイランド進行の防止（緑化・風通し・日陰）

26）雨水浸透

27）ゴミの分別・減量対策

N=148

2

サービス性能

室内環境の快適性

室外環境（敷地内）

エネルギー削減効果

資源マテリアル利用

敷地外環境

6

High-speed Communications lines

Electrical Socket Capacity

Energy Saving

OA Floors

Reducing Garbage

CO2 Reduction

6

7

Recent Survey- Conducted by Mori Building 1． Impact on Office Needs in Tokyo’s 23

Wards“Intent to lease new premises (21%) remains over 20%.○Regarding the timing of leasing of new premises, “within one year” ○

(36% 60%) increased sharply.⇒“Desire to move to building with superior seismic performance” rose ○

dramatically (15％⇒ 45％ ) to the top reason for leasing new office space, overtaking “Lower rent”.Regarding the importance of an office in Tokyo, almost all ○

respondents indicate that importance will remain “unchanged” with 6% indicating it will “increase”.

72011 Survey of Office Needs in Tokyo’s 23 Wards (Special Edition) Mori Building Co., Ltd.

Overcoming market barriers (4)- Simplifying environmental metrics to inform

Making Simple, Comparable and Compatible Systems

Sharing “Common Metrics”in the world

Including each country’s particular items

Connecting to property appraisal Coexisting of “For DfE” version and

“For Investors” version

8

Rating Systems for DfE

in the World

CommonMetricsCASBEE for DfE

CASBEE for

Investors

RatingSystems

for Investors

1/10/2010 Masato Ito

In Japan CASBEE is beginning to discuss with market participants a short form version of CASBEE metric (the CASBEE for Market Promotion tool.) In the US and Europe, LEED and BREEAM are also beginning to roll out ‘short-form’ versions of their better known measurement schemes, for existing stock.

In Japan CASBEE is beginning to discuss with market participants a short form version of CASBEE metric (the CASBEE for Market Promotion tool.) In the US and Europe, LEED and BREEAM are also beginning to roll out ‘short-form’ versions of their better known measurement schemes, for existing stock.

Overcoming market barriers (5)- Investors require such concise systems

This study argues that environmental property metrics users and suppliers must bridge the gap that separates them to successfully measure the environmental performance of property portfolios and related improvement activities.

9

1010

The Sumitomo Trust is offering preferential rate loans based on Tokyo Apartment Environmental Performance Indication Program.

Tokyo Green Building Program taught us that simplified metrics help to encourage building owners to carry out voluntary environment-conscious efforts.

Good point of simplified environmental metrics

Tokyo Green Building Program Tokyo Apartment Environmental Performance Indication Program

1111

Overcoming market barriers (6)- Showing the way to increased net income

Cash E

x pense

s

Net income

Cost of NewTenants

Utilities

Leasing &Mgt

Maintenance

Gross Incom

e

Taxes &Insurance

Added value

Net Income

Cost of NewTenants

Utilities

Leasing &Mgt

Maintenance

Taxes &Insurance

Decreasesby

Energy Saving

Decreasesby

Improvement ofDurability

Net IncomeIncreases

If there is a reduction of

property taxes, or carbon credit…

If the total income

increases by quality

improvement, carbon credit..

…

“A note on environmental value added for real estate” (Masato Ito) On the occasion tenth anniversary commemorative article for Tokyo Association of Real Estate Appraisers, 2005

Value added by Increasing Net IncomeConventional

Properties

Sustainable

Properties

1212

Overcoming market barriers (7)- Showing the way to reduced risks

Marketability

environmental

Capitali zation

r ate

Risk FreeRate

Added value

Environmental

depreciation

DepreciationRisk prem

ium marketability

Other

Risk FreeRate

When Durability of a building

increases

Green Real Estate will not be affected by future taxation ,regulations and carbon credits thanks to its environmental nature.

“Image Improvement Effect” thanks to environmental consideration

“A note on environmental value added for real estate”(Masato Ito)On the occasion tenth anniversary commemorative article for Tokyo Association of Real Estate Appraisers, 2005

Environmental value-added means risk premium reduction

Other

Conventional

Properties

Sustainable

Properties

131313

Fujisawa Sustainable Smart Town

Aiming to realize Panasonic' concept of a safe, secure and sustainable smart town.

Aiming to reduce carbon dioxide emissions by 70 percent, compared to the 1990 levels.

Developing real estate assessment indices that facilitate market acceptance of environmentally-conscious urban development as real estate value.

( News Release by Panasonic Corporation, May 26, 2011)