Japan's pre-Olympic infrastructure faces oversupply

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02:19

Pre-Olympic infrastructure needs are fueling a construction boom in the Japanese capital but the problem of oversupply goes beyond just homes and apartments.

Construction investment associated with the Tokyo Olympics includes not only for the building of Olympics facilities, but also other projects such as the refurbishment of hotels, urban redevelopment, the construction of commercial facilities, and the enhancement of transport infrastructure, the Bank of Japan (BoJ) said.

Most private-sector analysts estimate total construction investment will be around 10 trillion yen (around 92.9 billion US dollars).

Japan's National Stadium built for the upcoming Tokyo 2020 Olympic Games in Tokyo, on April 19, 2017 (top L), May 27, 2017 (top R), September 26, 2017 (bottom L) and January 23, 2018 (bottom R). /VCG Photo

Satoru Kubo, who specializes in remodeling and reselling abandoned properties, told CGTN that Japan’s decreasing population is the main cause. The issue of empty structures has expanded well beyond just living spaces in this rapidly aging society.

“We didn't pay tax on abandoned homes in the past. The law has changed now to increase such taxes year-on-year. By law, the owners should do something with the structures. But the reality is... it doesn't work well,” Kubo said.

In fact, Japan is facing a significant demographic problem.

Seth Sulkin, president of Pacifica Capital in Tokyo, a firm specializing in property investment and development, said, “at the moment, the overall population is slightly declining. Within two to three years, even greater Tokyo is expected to have the population start to decline.”

Besides, Sulkin is not so positive about the future of those shopping centers, which were established to serve tourists during the coming Olympic.

“Inbound tourists love going to department stores or outlet malls, but they don't go to ordinary shopping centers. And so it's these ordinary shopping centers that are really going to struggle in the years to come.” Sulkin explained.