Japanese real estate developers, long known for their cautious overseas approach, are steadily deepening their presence in India’s complex yet fast-growing property market. Drawn by rising office rents, relatively low construction costs, and a strong economic growth outlook, several of Japan’s biggest names are now planning to scale up investments across Indian cities, signalling a new phase of cross-border real estate collaboration.
One of the earliest movers has been Mitsui Fudosan, Japan’s largest property developer. The company entered India in 2020 through a joint venture with RMZ Real Estate to develop a premium office complex in Bengaluru. That partnership is now expected to be only the beginning. People familiar with the company’s plans say Mitsui Fudosan may invest an additional 30 to 35 billion yen, roughly $190 million to $225 million, in future Indian projects, either with RMZ or new local partners.
Senior members of Mitsui Fudosan’s management were in Mumbai and around the national capital region in recent weeks to evaluate fresh opportunities, people with direct knowledge of the visit said. The company declined to comment on its future plans, and RMZ also chose not to respond to queries on possible new investments. Still, the direction of travel is becoming clearer.
According to RMZ Real Estate chief executive Avnish Singh, Japanese developers are now moving faster after years of groundwork. Trust, he said, has been built through early partnerships. “The floodgates can open and have opened,” Singh remarked, reflecting a growing comfort level among Japanese investors with Indian market risks.
Another major Japanese player, Sumitomo Realty & Development, has already made a far more aggressive commitment. The company, which sees Mumbai as its second growth engine after Tokyo, has committed nearly $6.5 billion across five large projects in the city. Two of those projects were added as recently as this year. Industry sources also say the developer is scouting for land around the soon-to-be operational Navi Mumbai International Airport for future investments. The company did not respond to requests for comment on these plans.
Japanese developers are not alone in betting on Indian property. Blackstone, for instance, is today India’s largest commercial landlord, with roughly half of its $50 billion in Indian assets tied up in real estate. Yet there is an important difference in strategy. While most global investors prefer to buy completed, income-generating assets to avoid execution risk, Japanese firms are among the few willing to take on full-fledged development risk from the ground up.
India’s reputation for land-related delays, regulatory bottlenecks, and construction slippages is well known. Although reforms have improved dispute resolution and project transparency over the past decade, land acquisition continues to be slow and paperwork-heavy. Despite this, Japanese developers appear unusually willing to “roll up their sleeves”, as Singh puts it, and see projects through the entire development cycle.
The financial logic is also compelling. Returns in the Japanese property market typically hover between 2 and 4 percent. In contrast, Indian real estate projects can yield 6 to 7 percent, according to Seiji Ota of Deloitte India, who advises Japanese investors entering the country. For capital seeking higher long-term yields, India’s risk-reward equation is becoming harder to ignore.
A key attraction is India’s cost structure. Labour costs remain a fraction of those in developed markets. Hiring skilled workers such as electricians or plumbers costs just a few dollars per hour. Construction costs tell a similar story. Building a premium office tower can cost more than $8,000 per square metre in New York City, around $5,300 in London, and roughly $4,000 in Tokyo. In Mumbai, comparable construction costs are closer to $656 per square metre, according to data from Turner & Townsend.
At the same time, office rents in India’s top commercial districts are climbing sharply. Driven by strong economic growth averaging about 8 percent over the past three fiscal years, demand for quality office space has surged. Mumbai’s Bandra Kurla Complex recorded a 14.2 percent jump in prime office rents in the third quarter, the highest in the Asia-Pacific region, according to CBRE. Tokyo’s central wards followed with a 10.2 percent rise, with India’s national capital region close behind.
Japanese developers are also bringing new construction techniques to the Indian market. Sumitomo’s first Bandra Kurla Complex project uses a steel-structure design that allows for large, pillar-less floor plates, a feature still rare in Indian office developments. The company expects to charge a 30 to 40 percent rental premium for this design innovation. JPMorgan is set to be one of the anchor tenants in the building, people familiar with the lease said.
Other Japanese firms are increasingly active as well. Daibiru Corporation entered India with office investments across two cities last year and is now scouting for land to develop new assets, including residential projects and data centres, according to Anand Jayaraman.
A recent survey by Sumitomo Mitsui Trust Research Institute showed Japanese companies and funds increased overseas real estate investments by nearly 20 percent this year. While the US and Australia remain the top destinations, interest in India jumped sharply, with 41 percent of respondents planning to invest.
For Japanese developers, India now offers a rare mix of affordability, rising demand, and long-term growth visibility. For India, the influx of patient, technology-driven capital could reshape how its next generation of commercial real estate is built.
