Sony Corp. is turning to real estate for growth after the success of its financial unit, which had the biggest profit among the company’s businesses last fiscal year.
Sony has tied up with Yahoo Japan Corp. to introduce a website by the end of the year that will match property buyers and sellers, said Kazuo Nishiyama, president and chief executive officer of Sony Real Estate Corp. The unit, which was set up in 2014 and operates businesses including property management and renovation and consulting services, targets a public listing in two to three years, he said.
The Tokyo-based company, largely known as an electronics maker and entertainment producer, has been diversifying into banking since 2001. It expects the property business to complement its existing financial arm because real estate transactions can’t be done without loans, insurance and financial consulting services it already offers, Nishiyama said.
“We can’t be caught in the way we used to do business in the past,” Nishiyama said in an interview on July 21. “Even though this is new to us, it will enable us to pursue profit.”
Sony Financial Holdings Inc. is forecast to bring in 55 percent of Sony’s operating profit this business year. Sony Financial’s shares have risen 33 percent in 2015, compared with a 26 percent gain for the Topix banks index.
Sony is also betting that the existing home market in Japan will expand, increasing traffic to the website and boosting demand for other services offered by the company.
It plans to utilize its brand name and Yahoo Japan’s 61.1 billion page views on average per month to tap into a market that the Japanese government is seeking to double to 20 trillion yen ($162 billion) by 2020 from 2010.
Transactions of previously owned homes account for 14 percent of the total in Japan, according to the land ministry. That compares with 90 percent in the U.S. and 86 percent in the U.K.
Japanese typically buy property for the value of the land, tear down existing buildings and construct new ones because home values in Japan tend to decline over time. Even as residential investment rose to an accumulated 893.3 trillion yen in 2013, the value of the assets fell to 349.8 trillion yen, land ministry data showed.
That trend has prompted the government to introduce policies to encourage construction of longer-lasting buildings and to stimulate the resale and renovation market.
Sony President Kazuo Hirai has overseen an increase in operating income at Sony Financial, set up in 2004, to 193.3 billion yen in the year ended March, the highest among the company’s eight business divisions, including gaming, mobile communications and movies. Sony’s operating profit was 68.5 billion yen.
“We put consumer interests first. This is what Sony’s DNA is all about,” Nishiyama said.