Message from the President

President and Representative Director,
Group CEO
Nomura Real Estate Holdings, Inc.
Eiji Kutsukake

What is the Nomura Real Estate Group?Our significance and uniqueness viewed from
Our Group Vision and the voice of the front line

Nomura Real Estate Group’s “Significance and Vision”

  We have formulated and instilled Our Group Vision “New Value, Real Value” to customers and society. This vision represents our strong desire to connect people’s lives and their work through real estate development, as well as real estate-related services and to connect an affluent society and people with the future.
  Through that we will contribute to providing high-quality services and development that offers safe, secure, healthy, and comfortable life for a long time. At the same time, we will contribute to creating a sustainable society. These are the Nomura Real Estate Group’s significance and what we will build together with our stakeholders.
  The Group is currently promoting wide-ranging discussions about what kind of company the Group should aspire to be as we look ahead to 2030 and 2050. These discussions are centered around numerous young and mid-career employees who will lead the Group in the future, including its management. Using a planning method called backcasting, we are formulating a new Mid- to Long-term Business Plan that considers what actions must be taken now with a clear vision of our aspired shape in the future. Subjects that constantly arise during these discussions include the happiness of people and the importance of the community, the Group’s approach to connect closely with individuals, and enhancing services for the future that utilize DX together with people and communities. Although stages vary by country, the same trend is increasing in overseas cities as well.
  We aspire to be a group that achieves continuous growth by contributing to people-focused sustainable urban development and the advance of society.

Uniqueness of the Group

  The Group originated from the establishment of Nomura Real Estate Development, which was spun off from Nomura Securities in 1957. Upon considering the most-ideal ways to contribute to society through real estate business, we devoted every effort toward new town development and embarked on the residential development business to solve Japan’s housing shortage, which was an urgent social issue at the time. In 1963, we took on the challenge of undertaking condominium business. We subsequently enhanced office development and related services such as property and facility management, and real estate brokerage. As people’s lifestyles evolved we continuously identified the needs of our customers and society, and we achieved continuous growth with the spirit of a challenger.
  The Group’s uniqueness and strengths are shown in our client-first approach and market-in approach. The client-first approach means we place our first priority on the people who live and spend time in our properties. The market-in approach means we pinpoint customer needs and social changes.
  The Group is a front runner which formulated the business system of residential development, called the “integrated development, sales, and management system.” That handles the entire process from development to design, sales, and management of housing. We have leveraged this system as a strength to consistently earn the trust of our customers. Listening to customer requests at the sales phase and impressions after completion continuously enables us to envision the future lives of our customers in a precise manner. This helps us to improve the quality of products and services in every process. We undertake repeated discussions and make strong commitment to the quality of product and service. We put this unique spirit into practice not just in our residential business but also in various other business areas such as offices and logistics facilities.
  Furthermore, as evidenced by the in-house 278 first-class licensed architects, the Group has a culture and human resources that continually commit to and enhance the quality of its products and services. Our approach involves listening intently to customers and emphasizing continuous quality improvements to earn their genuine trust, and this approach can also be considered our DNA. The Group believes that value is realized only when customers actually use a property and evaluate it. In other words, the building’s completion is another start of our value creation. This attitude enables the Group’s new value creation.
  In addition, the Group’s business model is not limited to owning the properties it develops, but actively earns development profits from the sales to buyers such as individual customers, REITs, and private funds managed by the Group (off-balancing of assets). A key feature of the Group’s business model is its long-term involvement in the operation and management of sold properties.
  During the Group’s history that spans more than 60 years, in addition to properties we hold, we have also forged connections with numerous customers that we consider as business stock. This includes condominiums that we continue to manage after sale and properties owned by Group REITs. We are making the most of our connections and contact points with our accumulated customer base while thoroughly understanding their needs while creating new value. Through this process, we are building a strong business growth model to become a distinctive corporate group that creates unique value from both the Development Sector that handles real estate development and the Service & Management Sector that provides real estate-related services.
  In the real estate business, each property is unique. Therefore, it is generally difficult to utilize accumulated know-how and knowledge in each individual property to another. However, we have established a system to build up and formulate our own brand based on customer evaluation of individual properties. The know-how and evaluation, integrated as a brand, can be deployed to create other brands, which will lead us to continue to create further value and that is our key feature. For example, we have applied the know-how and high-quality product and service development as well as property and facility management accumulated in PROUD, the integrated brand of housing and related services in our PMO mid-sized high-grade office, GEMS retail facility, and Landport logistics facility. This approach allows us to expand asset types and provide new value.

Long-term Business Trends RecognitionFuture Growth and Issues

Crucial Perspectives

  In general, the real estate business is said to have a long timeline. However, looking at the changes in society over the last 10 years or so, the rapid development of ICT and AI, combined with the impact of the spread of COVID-19 are bringing rapid changes in the way of people live and work. Real estate is also the foundation of people’s lives and it is unavoidable with these social changes.
  Taking a long-term perspective, we will accurately analyze current trends and consider actions we need to take by forecasting future changes in society and values, identifying important factors, and then backcasting from there. On top of this, we believe that strategies with anticipation of future changes are crucial. Without that, we cannot continue providing value that satisfies customers over the long term. I am confident we can respond to major changes in the future because the Group consistently adheres to its “client-first approach” and “market-in approach.”

For Achieving Sustainable Growth over the Medium- to Long-Term

  Looking toward medium- to-long-term growth, the Group has already moved into action by undertaking large-scale mixed-use development projects such as Shibaura 1-chome Project. These will be sites where the Group will achieve real estate development and the provision of services with consideration of post-COVID-19 work styles and lifestyles and the changes that DX will bring. These must also be sustainable communities, for example by being carbon neutral.
  We expect that business expansion in fast-growing Asian cities will be another key driver of further growth. The Group has already decided to invest a total of ¥106 billion in 26 projects for residential and leasing business, mainly in Southeast Asia. The value created by leveraging our know-how cultivated in Japan is beginning to be highly evaluated by both local business partners and customers in these regions. Amid the dramatic advance of urbanization in Asia, the Group will provide businesses to provide new value, contribute to the happiness of the people who live and work in these areas, and promote strategies that contribute to the growth of the entire Group.
  Looking ahead to the next 10 to 20 years, the key for growth will be the ability to provide not only real estate development, but also the activation of towns and communities using IT and DX and the improvement of real estate-related services in an integrated manner. By combining real estate and related services for the people who live there with a vast amount of data, we can create cities, residences, offices, and retail facilities that connect a variety of things, and go beyond the value as hardware to provide satisfaction in life and living itself as “real estate as a service.”
  At present, business environments are drastically changing. Taking offices as an example, we are beginning to see changes taking place in our society, where previously everyone found overwhelming value only in having a center office to gather in every day. There is no doubt that the core office will continue to be important. However, in addition to these core offices, a flexible environment where each employee can demonstrate his or her high performance in a variety of places is now becoming an important factor for companies to secure human resources. The Office Portfolio Strategy we propose responds to these changes by offering real estate as a “hardware” and related services as a “software.” The rapid increase in the number of members of H1T satellite-type shared offices suggests that this change is not transitory.
  For future growth, it is important to seize these rapid social changes as business opportunities for providing new value. We can’t afford any delay and be complacent as we accelerate to find new business opportunities and to achieve breakthrough growth, with an eye on the future.
  At the same time, to further sharpen the Group’s competitiveness in existing businesses represented by PROUD and PMO and continue to build a solid position, we must firmly ascertain the changes of the times and the environment and thoroughly undertake marketing, product development, and urban development that is closely connected with individual lives.

Human Resources Strategy that Connects the Future

  Strengthening our human resources strategy is also one of our major tasks. The Group’s real estate development, urban development, and real estate-related services require a high level of expertise, as well as a broad and diverse range of human resources. We have welcomed people of all ages, genders, and backgrounds with a wide range of personalities and careers into the Group, but we need to further promote diversity in order to develop our global workforce and future managers.
  In particular, it is essential to strengthen our human resources to deal with DX. The Group has a wide variety of data obtained from its vast business stock. In order to make the most of this data, we believe that the development of a DX promotion system and the strengthening of human resources who have the know-how to realize “as a service” business by building a related-service network leveraging ICT and AI to utilize intellectual property will lead to the further improvement of the Group’s overall competitiveness.

SustainabilityInitiatives That are Integrated into Management

Importance of Sustainability

  The main reason for the Group’s focus on sustainability/ESG is to mitigate future risks as well as to expand business opportunities. As our starting point, we have identified Four key themes for sustainability that are deeply linked to people’s lives, namely Safety/Security, Environment, Community, and Health and Well-being. We will strive to discover new business opportunities and the Group’s significance through initiatives to solve social issues and create new value through business activities. From this perspective, sustainability should be integrated with business management. I assumed the duties of the Group CEO and the Chairman of the Sustainability Committee from April 2021. This shows our determination to completely align our business strategies with the direction of our sustainability.
  We aim to formulate a new Sustainability Policy whereby all present Group employees strongly share this long-term orientation and regard it as their own personal matter, or in other words, a policy that will serve as a pillar for the entire Group to unite around and demonstrate their comprehensive strengths for our next growth phase.

Specific Sustainability Initiatives

  As a corporate group involved in real estate development, the Group is working on environmental initiatives as an important management issue. Toward the realization of carbon neutrality by 2050 set by the Japanese government, we are promoting various efforts to achieve the Science Based Targets (SBT)*1 initiative target of “attaining 35% reductions in total greenhouse gas (CO2) emissions for Scope 1 and Scope 2 as well as Scope 3, respectively, by the year ending March 2031 compared with the fiscal year ended March 31, 2020.”
  As specific measures, in addition to accelerating our decarbonization initiatives such as Net Zero Energy Houses (ZEH) and Net Zero Energy Building (ZEB), we are working to create renewable energy using the logistics facility Landport and to reduce CO2 at construction sites in collaboration with suppliers. Furthermore, we will enhance information disclosure in accordance with the Task Force on Climate-related Financial Disclosures (TCFD)*2, with which we have already announced our agreement.
  Regarding the social side, we formulated the Nomura Real Estate Group Human Rights Policy in July 2021. This policy was established based on the Group Vision “New Value, Real Value” and the Nomura Real Estate Group Code of Action that stipulates we should act with respect for the dignity and basic human rights of all people. From now on, we will carry out all our business activities in compliance with this policy.
  We have already implemented on a trial basis the Nomura Real Estate Group Procurement Guidelines for engagement with suppliers and will establish a system for full-scale application of the Guidelines in the future as we contribute to solving human rights issues together with stakeholders.
  Turning to governance, we are expanding the diversity of directors, who now include persons with experience in corporate management and women. In addition to the improvement of the effectiveness of the Board of Directors, I am still planning to move forward to make further advances.
  Turning to governance, we are expanding the diversity of directors, who now include persons with experience in corporate management and women. In addition to the improvement of the effectiveness of the Board of Directors, I am still planning to move forward to make further advances.

*1. Science Based Targets: Initiative requiring companies to set science-based reduction targets to limit the rise in global average temperature to “less than 2 degrees Celsius”
*2. Task Force on Climate-related Financial Disclosures: Established to develop recommendations for climate-related information disclosures and response to these disclosures by financial institutions

Message to StakeholdersBeing a Challenger

Capital Efficiency and Shareholder Returns

  Since being inaugurated as CEO, I have focused particularly on enhancing shareholder returns, which includes cash dividends and the acquisition of treasury shares. In Phase 1 of the current Mid- to Long-term Business Plan (from the fiscal year ended March 31, 2020 to the fiscal year ending March 31, 2022), we are achieving a total return ratio of about 40% to 50% and increase of cash dividends for the tenth consecutive year.
  I recognize that our shareholders, investors, and other stakeholders have applauded our approach that involves achieving both high shareholder returns and growth based on high capital efficiency and high ROE as one of the characteristics of the Group. Looking ahead to our vision in the fiscal year ending March 31, 2028, the final year of our Mid- to Long-term Business Plan, we will lay the groundwork for our current initiatives by backcasting from that date and working to ensure we realize this desired shape. In addition, we plan to announce anew Mid- to Long-term Business Plan in April 2022 and will disclose initiatives for continuously improving corporate value that are integrated with our new Sustainability Policy and our growth strategies that look even farther beyond.

Our Thoughts for Long-term Value Creation

  We address social issues and create new value globally with collaboration of the Development Sector and Service & Management Sector. We believe that connects to our significance and increases our corporate value.
  The Group achieved record-high profits in the fiscal year ended March 2020. Although we experienced a temporary decline in business results in the fiscal year ended March 2021 due to the impact of COVID-19, we will strive to steadily attain an all-time high business profit of ¥85 billion in the fiscal year ending March 2022 as we strive to demonstrate to everyone that we are achieving a clear recovery and are on a firm path to growth.
  Established in 1957 and listed in 2006, the Group has a relatively short history in the real estate industry and has been a challenger possessing a venture spirit and I would like to maintain this posture. In the future as well, we will continue our uncompromising commitment to providing real estate development and services that have an approach to connect closely with individuals, centered on our market-in approach, and we will achieve growth through unique value creation, inheriting the DNA to cultivate new markets with a clear vision. I would like to ask all our stakeholders to look forward to it and your further support for the Group.

沓掛 英二

Eiji Kutsukake
President and Representative Director,
Group CEO