Japan Green Building Market Assessment, By Product Type, By Building Type, By Application, By Region, Opportunities and Forecast, FY2019-FY2033F

Japan green building market is projected to witness a CAGR of 9.56% during the forecast period FY2026-FY2033, growing from USD 15.83 billion in FY2025 to USD 32.86 billion in FY2033. The Japan Green Building Market is a fast-growing market fueled by the focus of Japan on energy efficiency and sustainability. Being a leading economy in the world, Japan has a serious environmental issue of carbon reduction and lack of resources. For that reason, the consumer, private sector, and government are increasingly focused on green building operations. These measures are for reducing environmental footprints through energy-efficient design, eco-friendly building materials, and emerging technologies such as smart energy systems and renewable energy integration.

Green building activities are encouraged in Japan by strict regulations and certifications such as CASBEE (Comprehensive Assessment System for Built Environment Efficiency) that encourage builders to implement green building principles. Growing exposure to climate change and long-term financial gains in the form of lower operating costs and higher value to the property also drive demand. With urbanization and infrastructure growth projected to continue sweeping across the country, demand for green building is only going to increase, compelling Japan to take the lead in the world green building revolution.

In September 2024, Hitachi Ltd. and Hitachi Building Systems, Co., Ltd. unveiled a new BuilMirai building IoT solution for small and medium-sized buildings. This development leverages Hitachi's Lumada platform to improve building management efficiency, operational quality, and user comfort. The solutions will be offered as monthly subscription services, starting in November 2024, and include features such as smartphone-controlled apartment access, remote monitoring of building facilities, and security camera surveillance. By providing these scalable, as-a-service solutions, Hitachi and Hitachi Building Systems aim to support the Green Transformation (GX) and Digital Transformation (DX) of smaller buildings, which constitute the majority in Japan.

Accelerating Japan's Green Building Market Through Innovation and Policy Support

Japanese green building market are driven through innovation and robust policy support. Technology, such as energy-efficient systems, smart building technologies, and low-carbon material use, are some of the key drivers. This reduces the consumption of energy and carbon emissions, an area that is in line with the Japan's sustainability agenda. Policy frameworks are also key in driving the growth of the market. Incentives like tax credits, subsidies, and green certification programs are employed in motivating businesses and developers to adopt sustainable practices. These efforts are supplemented further by public-private partnerships by aggregating resources and skills to scale up green building projects. Public-private partnerships then supplement these efforts in the form of resources and expertise aggregation towards scaling up green building initiatives. Japan can be observed to be dedicated to decarbonization due to its participation in international climate initiatives.

For instance, In March 2024, Japan and 70 other countries have signed Declaration de Chaillot, which states to promote decarbonization of building and construction sector. The document is signed at buildings and climate global forum. Japan initiatives is to consistently push towards the lower emissions, rising focus on green construction projects and encouraging government policies and initiatives can boost up the Japan green building project.

Technological Advancements in Construction Drives the Japan Green Building Market Growth

Technological innovation in the construction sector is taking center stage in driving Japan's green building market growth. Technologies like Building Information Modeling (BIM), prefabrication, and smart construction technology are revolutionizing the industry by increasing efficiency, minimizing costs, and enhancing sustainability. The technologies allow for improved resource management, energy conservation, and lower environmental footprints, all of which support Japan's aspirations for sustainable urban development. Further, incorporation of IoT (Internet of Things) and AI (Artificial Intelligence) into construction activities enables real-time monitoring, predictive maintenance, and optimized building performance, also contributing to green building activity. Since Japan targets achieving carbon neutrality by 2050, these technologies play an important role in building energy-efficient and sustainable buildings.

In December 2023, Japan is under a challenge in the construction industry by due to shrinkage workforce and ageing population. Therefore, to overcome this hindrance the government of Japan is encouraging Building Information Modeling (BIM) to increase the productivity, efficiency and sustainability. In addition, Japan ministry of land, infrastructure, Transport and tourism intends to make the BIM scheme mandatory for all public works by 2025.

Residential Buildings are Expected to Hold the Largest Market Share

In the building type, Residential segments hold the highest share in the Japan green building market. The residential sector is booming because of the increasing awareness of sustainability and energy efficiency. With the rising focus on sustainability the urban homes are moving towards eco-friendly housing solutions. It also incorporates energy-efficient systems, renewable energy resources and sustainable materials. This rising demand of eco-friendly solution will not increase the demand of green building but will also push towards the sustainability solution which in turn boost up the demand in Japan for green building.

The "Tokyo Zero Emission House" program is a perfect case in point, with houses such as Adachi Ward using solar panels and intelligent energy systems to reduce energy bills and carbon emissions. These environmentally friendly buildings, complete with green gardens and sun-powered designs, support the Tokyo Metropolitan Government's vision of lowering greenhouse gas emissions by 2030. It not only encourages green lifestyles but also builds urban resilience and livability in Japan's capital city.

Central [Kanto and Chubu] Region dominates the Japan Green Building Market Size

Japan's Central region, comprising Kanto and Chubu, control the green building industry in Japan by virtue of being highly urbanized, sensitive to going green, and government policies supporting green growth. Tokyo, as the economic and cultural hub of Kanto, pioneered the uptake of green building, while Chubu, with the industrial cities of Nagoya, is also embracing eco-friendly buildings to minimize its ecological footprint. The focus in the country on energy efficiency, green certifications, and renewable energy has continued to drive the growth of sustainable construction, placing it at the vanguard of Japan's green building market.

In July 2023, Tokyo Metropolitan Government launched "Tokyo Green Biz ". This project aims to improve the enhancement of urban greenery, fostering ease and calm in daily life and preserving green spaces for future generations. These initiatives' focus is on three key strategies: protecting, nurturing and utilizing Tokyo's greenery.

Future Market Scenario (FY2026-FY2033F)

Japan's commitment to achieving carbon neutrality by 2050 will continue to drive investments in green buildings. The government's initiatives, such as subsidies and tax incentives for renewable energy and low-carbon technologies, will support this growth.

The integration of advanced green technologies, including energy-efficient systems and sustainable materials, will enhance the market. Further solar panels and implementation of green construction materials are expected to play a significant role in reducing carbon emissions.

The market is highly competitive, with major construction companies competing for market share. This competition is expected to drive innovation and further growth in the green building sector as companies strive to offer more sustainable solutions.

The increasing focus on sustainability and environmental protection will continue to drive demand for green buildings. As consumers become more environmentally conscious, the demand for eco-friendly and energy-efficient buildings is likely to increase, supporting market growth.

Key Players Landscape and Outlook

Japanese green building market is growing steadily behind increased environmental awareness, governmental influences, and requirements for energy-saving technologies. It is dominated by Schneider Electric Japan Inc, Owens Corning Japan, LLC, BASF Japan Ltd. that led the initiatives to make construction processes sustainable and the drive towards developing new technology. They are focusing on the green material market, energy-efficient cooling and heating, and intelligent buildings technology as they work on diminishing carbon impact and building efficiency. Additionally, public policies and initiatives such as CASBEE (Comprehensive Assessment System for Built Environment Efficiency) are promoting the use of green building techniques.

Start-ups and organizations that are new to the industry are also contributing to the market by launching advanced material and technology. For instance, in February 2024, BASF introduced new Hydrofluoroolefin (HFO)-blown PIR technology, where HFO is utilized as the blowing agent, to improve the energy efficiency of sandwich panels for insulation. It is reducing GWP substantially, while ODP is zero compared to pentane, and also increasing thermal conductivity to decrease carbon emissions. The system also supplies more non-flammability, allowing customers such as Japan's TATUMI Industrial Co., Ltd. to successfully pass rigorous flammability certification testing in compliance with the Japanese Building Code, providing safer and more sustainable building solutions. This is proof of the change of the market to innovative, green solutions that can facilitate Japan's sustainability momentum.