NTT To Redevelop 8,500 Idle Properties Nationwide

 

NTT established NTT Urban Solutions as a entirely owned subsidiary on July 1, with NTT Urban Development and NTT Facilities under its umbrella. NTT Urban Solutions will play a vital role in the group’s real estate business. It also owns a 49% stake in NTT West Asset Planning, a real estate operator affiliated with NTT West.

 

NTT owns 7,000 telephone exchange stations and 1,500 office buildings countrywide, but it has been unable to put all of those assets to productive use. Most NTT telephone exchange stations were made in prime locations in smaller cities before the company was privatized in 1985. According to NTT's financial reports, its land and buildings were worth 2.5 trillion yen ( billion) at the end of March this year. 

 

Some properties secured for rebuilding telephone exchange stations have been left idle merely because of digitization, among other reasons. There were also cases where developers other than NTT Urban Development were commissioned with the redevelopment projects of NTT East and West.

 

NTT racked up about 12 trillion yen in sales and 1.7 trillion yen in performing profit in the budgetary year that ended March. Of that, the property unit’s sales of 400 billion yen and operating profit of 30 billion yen made up only 2-3% of the full total.

 

In the meantime, NTT Docomo - which generates 35% of sales and 59% of operating profit - is facing headwinds, including government pressure to cut mobile phone fees and market maturation. NTT President and CEO Jun Sawada has vowed to grow the property unit by using the group’s assets since he took the post last June. The company prepares to invest 1 trillion yen to 1.5 trillion yen in NTT Urban Solutions to boost sales to 600 billion yen by 2025.

 

With a diminishing population and tougher competition, it certainly won't be easy for NTT to increase its profit-earning capability in Japan’s property market. NTT Urban Solutions President Hiroshi Nakagawa said he wants to use the group’s expertise on information technology and energy in urban development. 

 

As an example, a building owned by NTT East in Sendai in northern Japan will be pulled down and rebuilt as a multipurpose complex, especially offices for companies and researchers using next-generation synchrotron radiation facilities, which are used to assess the structure of materials at the atomic level. The building will feature NTT’s advanced technologies, such as ultrafast communications, security and artificial intelligence.

 

Since its privatization, NTT has actually been unable to make full use of its manpower, technology and assets as group companies sought growth on their own. A real estate subsidiary will serve as a test for Sawada's reconstruction measures.

 

Source: TRONSERVE