MUGEN ESTATE Co.,Ltd

Business Details

Centered on the purchase and resale of sectioned-ownership condominiums, investment real estate (whole-building rental apartments and office buildings), and detached houses, the business also engages in real estate interior and exterior construction, real estate brokerage, real estate development, and real estate specified joint enterprise business (fractionalized products). While the Tokyo metropolitan area (Tokyo and three surrounding prefectures) is the main operating area, the company also has bases in Hokkaido, Tohoku, and the Western Japan area. Targeting domestic and international real estate investors and residential purchasers, properties undergo value-up work (interior/exterior construction, etc.) and are sold as "regenerated real estate."

Recent Overview

Sales and profit declined sharply year on year due to sluggish sales of large properties and high-priced residential properties

In Q1 FY2026 (ending December 2026) (January–March 2026), the Real Estate Sales Business recorded sales of ¥11,661 million (down 29.3% year on year) and segment profit of ¥1,436 million (down 57.7% year on year), representing a substantial decline in both revenue and profit. The main causes were a partial softening in demand from overseas investors and sluggish sales of large properties. For investment real estate, although the number of units sold decreased, the average unit price rose to ¥157 million due to an increase in whole-building property sales, resulting in higher sales. For residential real estate, although the number of units sold increased, sales of high-priced properties were weak, causing the average unit price to plunge to ¥52 million and sales to decline significantly. In the real estate specified joint enterprise business, the second round of the "Ogikubo Project" and the "Soka Project" were advanced, recording ¥335 million in sales.

Key Products

Growth Drivers

• Continued growth in the number of contracted sales of used condominiums in the Tokyo metropolitan area (5,001 units in March 2026, up 0.2% year on year, marking 17 consecutive months of increase) and market expansion driven by 71 consecutive months of year-on-year increases in the contracted price per square meter (¥863,400, up 9.3% year on year)
• Rise in average selling price of investment real estate driven by increased sales of whole-building properties (¥157 million in Q1 FY2026, ending December 2026)
• Expansion of new project formation in the real estate specified joint enterprise business (fractionalized products) (such as the "Ogikubo Project" and "Soka Project")
• Shift in demand toward used real estate against the backdrop of soaring new construction real estate prices
• Continued rise in land prices driven by large-scale redevelopment in the Tokyo metropolitan area and Osaka City and steady office demand (nationwide average up 2.8% year on year, rising for the fifth consecutive year)

Risks

• Risk of increased borrowing costs for acquisition funds and reduced customer purchasing appetite amid expectations of interest rate hikes by the Bank of Japan (interest expense increased from ¥188 million in the same period of the prior year to ¥309 million)
• Risk of fluctuation in investment real estate sales due to weakening demand from overseas investors and sluggish sales of large properties
• Risk of localized price adjustment due to sluggish sales of high-priced residential properties and a continued rise in the rate of price discounting in the five central Tokyo wards
• Increased construction costs and pressure on profitability due to constraints on housing equipment supply and rising construction material prices amid soaring crude oil prices stemming from worsening conditions in the Middle East
• Impact on sales trends of the real estate specified joint enterprise business (fractionalized real estate products) from tightened inheritance tax countermeasures under the "FY2026 Tax Reform Outline"
• Increased interest-bearing debt due to aggressive purchasing of investment real estate and heightened importance of inventory turnover management (real estate for sale and real estate for sale in process increased by ¥4,041 million compared to the end of the prior fiscal year)
• Risk of imbalance in the business portfolio due to revenue concentration in the Real Estate Sales Business (approximately 93% of consolidated sales)