This report comprehensively analyzes Japanese commercial real estate regulations and provides an authoritative guide for companies with pollutants entering the Japanese market. The content covers the latest regulatory updates in 2024, an overview of the commercial real estate legal system, interpretation of industry-specific regulations, typical case analysis, compliance guidance, regional differences comparison report, in-depth discussion of important changes such as the revision of the Building Energy Efficiency Act, and a detailed explanation of land Act, Building Standards Act and other core regulations, and provide specialized analysis for different industries such as retail, office, logistics and so on. Through actual cases in Tokyo, Osaka and other places, the application practice of regulations in China is demonstrated. At the same time, the report provides comprehensive compliance strategies to help companies effectively avoid legal risks. In addition, the report also analyzes the differences in business practices and real estate policies in various regions of Japan, and makes bright predictions about future regulatory changes based on the current economic situation. This report combines the latest legal insights and practical experience, aiming to provide clear guidance and a rigorous legal basis for enterprises to enter and long-term development in the Japanese commercial real estate market.

Interpretation of the latest regulatory updates

1.1 Overview of Important Regulatory Updates in 2024

In 2024, Japan’s commercial real estate sector will usher in a series of regulatory updates. These updates reflect the Japanese government’s emphasis on sustainable development, digital transformation and vital economic recovery after the pandemic. Major regulatory updates include the revised Building Energy Efficiency Act, changes to lease provisions in the Civil Code, relevant policy adjustments after the epidemic, and new regulations for the digital age. These changes will have an inevitable impact on the development, operation and investment of commercial real estate, and companies need to adjust their strategies in a timely manner to adapt. Overall, these regulatory updates are designed to promote the development of the Japanese commercial real estate market in a more environmentally friendly, smart and flexible direction, while also Provides new impetus for innovation and sustainable development.

1.2 Contents and impact of revisions to the “Building Energy Saving Law”

The revision of the Building Energy Efficiency Law (Building Energy Efficiency Law) is one of the most notable changes in 2024. The newly revised law significantly strengthens the energy-saving requirements for commercial buildings. Its core content includes expanding the scope of application of energy-saving efficiency standards from the original buildings of more than 2,000 square meters to more than 1,000 square meters. This means more small and medium-sized commercial and commercial buildings will need to comply with strict energy efficiency standards. The law also introduces a standard life cycle carbon emission assessment system based on the life of a building, requiring that carbon emissions throughout the entire life cycle be considered during the building design stage.

Specific policies include: requiring all new businesses to install smart energy management systems (BEMS) to monitor and optimize energy use in real time; improving energy efficiency standards when retrofitting existing buildings, such as requiring the use of triple low-e glass and heat pump systems; encouraging the use of renewable Energy, stipulating that new commercial buildings over 1,000 square meters must have at least 15% of their energy from renewable sources. These revisions will significantly increase the development and operating costs of commercial real estate, but at the same time as the supply of energy-saving technologies and green building materials for investors, the long-term value and comparison of energy-efficient buildings will be enhanced and are expected to drive a wave of energy-efficiency Upgrading is the leading wave of change in commercial real estate.

1.3 Impact of amendments to the Civil Code on commercial leasing

Amendments to the Civil Code (Civil Code) have had a significant impact on commercial leasing relationships. The most significant change is the removal of the 20-year lease limit, allowing longer-term commercial leases. This change provides laws for the development and stable operation of large-scale commercial projects. The new law also clarifies the legal effect of sublease clauses, stipulating that if the original lease contract does not explicitly prohibit it, the lessee can sublease after notifying the original lessor, which strengthens the protection of the rights and interests of the lessee.

In terms of repair obligations, the new law clearly stipulates that the lessor is responsible for maintaining the main structure of the building, while the lessee is responsible for minor repairs during daily use. This provision will help reduce the hassle of changes between the parties to the lease. Another important thing is the introduction of the “Leasing and Loans Allowed for Fixed-term Buildings” system. Both parties clearly agree on the lease period in the contract. After the expiration, the contract will automatically terminate without additional notice. This provides a more flexible option for commercial leasing and is particularly suitable for short-term or specific-use commercial projects.

These changes have brought greater flexibility and certainty to the commercial property leasing market. At the same time, the new regulations also require both parties to formulate contract terms more strictly to adapt to the new legal framework. It is recommended that companies consider including periodic review and adjustment clauses when leasing long-term lease contracts to respond to possible future market changes.

1.4 Regulatory adjustments and relaxations after the COVID-19 epidemic

In order to cope with the economic recovery after the epidemic, the Japanese government has made a series of adjustments to regulations related to commercial real estate. The government has relaxed the interim plan for commercial land use changes, which will determine the intermediate time required from 6 months to 3 months, and this policy aims to allow commercial real estate experience to adapt to changes in market demand more quickly, especially for those who want to Projects that convert office space to mixed use or convert retail space into commercial properties.

The government has simplified the supporting process for small commercial facilities. The new policy stipulates that small commercial facilities with an area of ​​less than 500 square meters can complete all necessary administrative procedures through a one-stop service platform, minimizing entrepreneurs’ time and energy. This measure aims to encourage entrepreneurship and promote economic vitality. , is expected to drive leasing demand for small commercial spaces.

In terms of population density restrictions, the government has adjusted relevant regulations for commercial areas. The new policy allows for a 15% increase in population density within specific commercial areas, creating conditions for flexible office and mixed-use developments. This change is particularly beneficial for the development of co-working spaces and innovative integrated live-work-play projects.

The government has also increased financial support measures for repurposing existing commercial space. Specifically, it includes tax relief of up to 50% for qualifying renovation projects, as well as low-interest loan support. These policies aim to improve the flexibility and elasticity of the commercial real estate market, help revitalize existing assets, and promote urban renewal. Enterprises should make full use of these policies and explore innovative business models and space utilization.

1.5 New regulations on commercial real estate in the digital era

With the in-depth application of digital technology, the Japanese government has introduced a series of new regulations for smart buildings and digital operations. The first is the introduction of the “Smart Building Certification Standard” (Sumaートビル Certification Standard), which provides an evaluation system for the standardization level of commercial buildings. The certification is divided into five levels, covering energy management, security systems, communication infrastructure, user experience and other aspects. Buildings with high levels of certification will be rewarded with tax benefits and higher black hole rates.

In terms of data protection, the revised Personal Information Protection Law (Personal Information Protection Law) strengthens regulations on data collection and use in commercial settings. The new regulations require commercial real estate operators to clearly inform users of the purpose and scope of data collection. For commercial venues that use identification, mobile device tracking and other technologies, they need to set up obvious notification signs and provide an opt-out mechanism.

The Cybersecurity Law (Symbol Basic Law) revised the security requirements for smart building systems. The new regulations require that all networked building management systems must use end-to-end encryption, conduct regular security audits, and develop contingency plans for cyber attacks. Large commercial complexes also need to establish a dedicated network security response team.

The Japanese government also issued the “Virtual Commercial Space Management Guidelines” (バーチル Commercial Space Managementガイドライン), which provides a legal framework for the application of AR/VR technology in commercial real estate. The Guidelines stipulate operating license conditions for virtual commercial spaces, user rights protection specifications, virtual asset trading rules, etc., providing clear legal guidance for the development of digital business models.

These new regulations reflect the profound impact of digitalization on the commercial real estate industry. Enterprises need to pay attention to data security and user privacy protection while improving their digitalization level. At the same time, this has also created new opportunities for cooperation between technology companies and traditional real estate, which is expected to promote a wave of transformation, upgrading and innovative services.

Overview of Japan’s commercial real estate legal system

2.1 Basic principles of land law

Japan’s land law system is based on the Civil Code, supplemented by a number of specialized laws, which together form a legal framework that regulates land ownership, use rights and transactions. Its core principles include private ownership of land, social limits on land ownership, and the public nature of land use. The Basic Land Law (Basic Land Law) clearly stipulates that land is a common resource of the people, and its use must take into account public interests and private rights and interests.

In the field of commercial real estate, these principles are reflected in the following specific policies: First, land ownership is strictly controlled by use, and the development of commercial land must comply with local land use planning. Secondly, the Land Utilization Planning Law (Land Utilization Planning Law) requires that large-scale land transactions (more than 2,000 square meters in urban areas and more than 5,000 square meters in non-urban areas) must be reported in advance, and the government has the right to intervene in transactions that are not in the public interest. Thirdly, the “Land Income Heavy Taxation System” levies a higher tax rate on income from short-term land sales to curb speculation.

The purpose of these laws and policies is to ensure that commercial property is developed and utilized in a manner that promotes economic development while maintaining social equity and environmental sustainability. For commercial property investors, a solid understanding of these principles is critical to developing a legal and sustainable development strategy.

2.2 Core points of the Building Standards Act

The Building Standards Act (Construction Standards Act) is the basic law that regulates construction activities in Japan and has comprehensive regulations on the design, construction and use of commercial real estate. Core elements of the law include building safety, hygiene and urban planning consistency.

In terms of safety, the law has detailed requirements for building structures, fire protection facilities and escape routes. For example, for high-rise commercial buildings exceeding 60 meters, fire-resistant structures must be adopted, and special earthquake-proof and wind-proof structures must be installed. In terms of hygiene, the law stipulates standards for facilities such as ventilation, lighting, water supply and drainage. For example, the main use space of a commercial building must ensure that the natural lighting area is not less than 1/10 of the indoor area.

The consistency of urban planning is reflected in building height, floor area ratio and built-in coverage ratio. For example, in commercial areas, the general upper floor area ratio is 400%, but it can be increased to 1,300% under certain conditions. A 2019 revision of the law introduced an “area planning system” that allows local governments to relax building restrictions in specific areas to promote innovative commercial development.

In addition, the latest revision in 2024 strengthens the seismic requirements for buildings, extending the “Seismic Resistance Level 3” standard to all new commercial buildings. At the same time, new regulations require large commercial facilities to be equipped with emergency power and water systems that can last 72 hours to improve disaster response capabilities.

For commercial real estate developers, strict compliance with the Building Standards Act is not only a legal obligation, but also key to ensuring the long-term value and competitiveness of projects. It is recommended to fully consider these requirements at the early stage of project planning and maintain close communication with the local construction department.

2.3 Urban Planning Law and Commercial Real Estate Development

The Urban Planning Law (Urban Planning Law) is the basic law for planning urban spatial layout and functional zoning in Japan, and has a decisive influence on the location and development of commercial real estate. This law divides the city into different use areas, such as residential areas, commercial areas, industrial areas, etc., and stipulates the land use conditions for each area.

In commercial real estate development, the most relevant are the regulations on commercial zones and adjacent commercial zones. Commercial areas allow higher floor area ratios (usually 400%-800%) and coverage ratios (80%), making them suitable for the development of large-scale commercial complexes and office buildings. The adjacent commercial area is mainly used for community-type commercial facilities, with slightly lower floor area ratio and built-in coverage ratio.

Amendments to the law in 2024 introduce the concept of “mixed-use development areas”, allowing a flexible mix of commercial, residential and office functions within designated areas. This provides a legal basis for innovative complex commercial projects. For example, in such areas, the upper floors of shopping malls are allowed to be converted into apartments or offices, and the floor area ratio can be increased by 20%.

The Urban Planning Act also regulates the development approval process for large-scale commercial facilities. For large commercial facilities with a construction area of ​​more than 10,000 square meters, an urban impact assessment is required, including traffic impact, environmental impact and impact on the existing commercial pattern.

In addition, the law encourages the promotion of commercial real estate renewal through the “Urban Regeneration Special Areas” system. In these special zones, significant relaxations in plot ratio restrictions are allowed, but developers are required in return to provide public space or participate in the construction of public facilities.

Understanding the provisions of the Urban Planning Act is essential for commercial property development. It is recommended that developers communicate closely with local urban planning departments during the project planning stage to make full use of the flexibility provided by the law while ensuring that the project is in line with the city’s overall development strategy.

2.4 Analysis of Real Estate Registration Law

The Real Estate Registration Act (Real Estate Registration Act) is the basic law regulating the registration of real estate rights in Japan and is crucial to ensuring the security and transparency of commercial real estate transactions. This law stipulates the registration procedures, registration matters and the legal effect of registration of real estate rights.

According to this law, rights such as ownership, mortgage rights, and lease rights of commercial real estate must be registered to protect against third parties. The registration content includes the physical characteristics of the real estate (such as area, location), rights holder information, rights content, etc. The 2024 legal revision introduced an electronic registration system, greatly improving registration efficiency and information accessibility.

For commercial real estate investors, several key points of this law are worth noting: First, the registration information of the target property must be verified in detail during due diligence to confirm the seller’s true rights status and potential encumbrances. Secondly, after the transaction is completed, the buyer should immediately register the ownership transfer to protect its own rights and interests.

The newly revised law also adds a “historical register” system, which allows the query of ownership change records of real estate in the past 30 years, helping to assess the historical risks of the property. In addition, for complex commercial real estate projects, such as complex developments, the law allows the use of “batch registration”, simplifying the registration process.

Although Japan’s real estate registration system is relatively complete, registration itself does not produce rights effects, but only publicizes the status of rights. Therefore, in major transactions, it is still necessary to hire a professional judicial scrivener to conduct a detailed rights investigation.

2.5 The regulation of commercial leasing by the land-borrowing law

The “Land and Home Leasing Act” (Land and Home Leasing Act) is a specialized law that regulates real estate leasing relationships in Japan and has comprehensive regulations on leasing activities of commercial real estate. The core principle of this law is to protect the rights and interests of lessees, which reflects the special protection of vulnerable parties under Japanese law.

In terms of commercial leasing, several key provisions of the law are worth noting: First, after the commercial lease contract expires, if the lessee requests to renew the lease, the lessor must agree to renew the lease unless there is a legitimate reason. This provision greatly enhances the operational stability of commercial lessees. Secondly, the law limits the lessor’s right to unilaterally raise rents, and rent adjustments must be based on objective changes in market conditions and property conditions.

The 2024 legal revision introduces more flexibility, allowing parties to contractually exclude automatic renewal rights, which provides a legal basis for short-term or special-purpose commercial leases. At the same time, the new law also clarifies the “periodic commercial lease” system, allowing leases to be signed for a fixed period and automatically terminated upon expiration, increasing the certainty of the leasing relationship.

For developers of large commercial facilities, the Act’s “commercial building leasehold” provisions are particularly important. This clause allows the main tenant who leases the entire commercial building to sublet part of the space without obtaining individual consent from the owner, which is conducive to the flexible operation of large commercial complexes.

However, the law also provides for several rights protection measures for lessors. For example, if the tenant is in serious default (such as long-term rent arrears), the lessor can request to terminate the contract. The new revision also adds expedited eviction procedures for “problem tenants”, balancing the rights and interests of commercial property owners to a certain extent.

The Land Lender Law provides a relatively balanced legal framework for commercial leasing relationships. Commercial real estate investors and operators need to fully understand these regulations and make corresponding adjustments in leasing strategies and contract management.

2.6 Application of environmental impact assessment method in commercial real estate

The Environmental Impact Assessment Law (Environmental Impact Assessment Law) requires that large-scale development projects must undergo a comprehensive environmental impact assessment before implementation. This law has important implications for large-scale commercial real estate development projects and aims to ensure that development activities are coordinated with environmental protection and sustainable development.

The law stipulates that large commercial facilities with a construction area of ​​more than 100,000 square meters must undergo an environmental impact assessment. The evaluation content includes the impact on air quality, water quality, noise, ecosystem, landscape, etc. The 2024 revision expands the scope of the assessment and adds carbon emissions impact and climate adaptability assessments.

The assessment procedure usually includes the following steps: First, the developer needs to prepare an environmental impact assessment plan and announce it to the public; second, conduct a detailed environmental investigation and impact prediction; then, formulate environmental protection measures; finally, prepare an environmental impact assessment and submit it Submit to relevant departments for review. The entire process may take 1-2 years, which needs to be fully considered in project planning.

For commercial real estate developers, environmental impact assessment is not only a legal requirement, but also a reflection of project sustainability and social responsibility. Proactive environmental protection measures can enhance a project’s brand image and long-term value. For example, some innovative commercial complex projects not only passed the environmental impact assessment, but also obtained additional development rights by introducing measures such as roof greening and rainwater recycling systems.

The newly revised law also introduces the concept of “strategic environmental assessment”, requiring environmental factors to be considered at the regional planning stage. This means commercial property developers need to incorporate environmental considerations into the site selection and planning process earlier.

In addition, the law encourages public participation in the environmental impact assessment process. For large-scale commercial projects that may arouse community concern, it is recommended that developers proactively communicate with local communities and listen to their opinions, which will help increase project recognition and smooth implementation.

Complying with the Environmental Impact Assessment Law is not only a legal obligation, but also an important way to achieve sustainable development of commercial real estate. Developers should view environmental impact assessments as opportunities for project optimization, not just obstacles to overcome. Through innovative design and advanced technology, it is possible to create commercial spaces with environmentally friendly features while meeting legal requirements.

Analysis of industry-specific regulations

3.1 Retail industry: interpretation of local laws for large-scale retail stores

The Large-Scale Retail Store Site Act (Large-scale Small Shopping Store Site Act, referred to as the Large-scale Retail Store Site Act) is the core law regulating the development of large-scale retail commercial facilities in Japan. This law aims to balance the economic benefits of large-scale retail stores with the harmony of the surrounding environment, and has an important impact on commercial real estate developers.

The law stipulates that when a retail store with a construction area of ​​more than 1,000 square meters is opened or renovated, a detailed planning report must be submitted to the local government. The report includes traffic impact assessment, noise control measures, waste treatment plans, etc. It is particularly worth noting that the 2024 revision strengthens the control of store operating hours and requires large supermarkets operating 24 hours to provide additional noise control and traffic diversion plans.

The law also introduces a “community coordination” mechanism that requires developers to communicate with surrounding residents and small retailers during the planning stage, listen to their opinions, and adjust plans appropriately. This mechanism aims to reduce potential conflicts between large-scale retail stores and the community and promote harmonious coexistence.

For commercial real estate developers, complying with the “Big Store Site Law” is not only a legal obligation, but also the key to ensuring smooth project implementation and long-term successful operation. It is recommended that legal requirements be fully considered at the early stage of the project and environmental friendliness and community harmony be incorporated into the design concept. For example, some successful cases have not only met legal requirements but also enhanced the social value of the project by setting up green buffer zones, using low-noise equipment, and providing community service facilities.

3.2 Office buildings: regulatory requirements related to workplace environment

Office building development and operation must comply with a series of regulations related to the workplace environment, the most important of which are the Occupational Safety and Health Law (労卍Safety and Health Law) and the Building Sanitation Law (Building における hygienic environment のENSURE に关するlaw). These regulations are designed to ensure the safety, health and comfort of office environments and impose specific requirements on commercial property developers and operators.

The Industrial Safety and Health Law stipulates basic safety standards for workplaces, including lighting, ventilation, temperature control, etc. The 2024 revision places special emphasis on epidemic prevention requirements, requiring large office buildings to be equipped with adequate hand-washing facilities and air purification systems. In addition, the law also imposes ergonomic requirements on office layout, such as the distance between workstations and the relative positions of computer screens and seats.

The Building Sanitation Law focuses more on the sanitation management of the building itself. The law requires office buildings with a floor area of ​​more than 3,000 square meters to conduct regular air quality, water quality and daylight testing and keep records. The new revision also introduces a “healthy building certification” system to encourage developers to adopt advanced construction technologies and management methods to improve the quality of the office environment.

For the development of smart office buildings, the requirements of the Personal Information Protection Act (Personal Information Protection Act) also need to be considered. For example, when using facial recognition to enter systems or IoT devices to monitor office environments, you must ensure that data collection and use comply with privacy protection regulations.

Commercial real estate developers should view these requirements as opportunities rather than limitations. Through innovative design and advanced technology, it is possible to create high-quality office spaces that are both regulatory compliant and market-appealing. For example, some leading projects have not only met legal requirements but also significantly improved tenant satisfaction and asset value by introducing natural lighting systems, smart temperature control, and flexible office space design.

3.3 Logistics and warehousing: dual regulations of warehousing industry law and fire protection law

The development and operation of logistics warehousing facilities are regulated by the Warehousing Industry Act (Warehouse Industry Act) and the Fire Protection Act (Fire Protection Act). These two laws set strict standards for logistics and warehousing facilities from different perspectives, posing important challenges to commercial real estate developers.

The Warehousing Industry Law mainly regulates the business behavior and facility standards of the warehousing industry. Warehousing facilities are legally required to have adequate temperature and humidity controls, anti-theft measures and cargo tracking systems. The 2024 revision places special emphasis on the management of dangerous goods storage, requiring the establishment of special isolation areas and monitoring systems. In addition, the law also stipulates the qualification requirements and training system for warehousing employees.

The Fire Protection Law imposes strict requirements on storage facilities from a safety perspective. For large warehouses with an area of ​​more than 1,000 square meters, automatic sprinkler systems, fire alarms and fire partitions must be installed. The new revision also introduces the concept of “intelligent fire protection” and encourages the use of AI technology to optimize fire warning and evacuation systems. It is particularly worth noting that for warehouses storing flammable and explosive items, the fire protection design standards are more stringent and require special approval procedures.

In addition, with the development of e-commerce, many warehousing facilities have also assumed order processing and sorting functions. Such facilities also need to consider the relevant provisions of the Labor Standards Act (労卍Standard Act), such as working environment, working hours, etc.

For developers of logistics and warehousing properties, meeting these regulatory requirements simultaneously presents both a challenge and an opportunity. Through innovative design and advanced technology, modern logistics facilities can be created that are both safe, efficient, environmentally friendly and energy-saving. For example, some leading projects not only meet regulatory requirements but also significantly improve operational efficiency and sustainability by adopting technologies such as automated storage systems, smart lighting and HVAC systems, and renewable energy, thus increasing the long-term value of assets.

3.4 Hotel Industry: Core Requirements of Hotel Industry Law and Food Hygiene Law

Hotel development and operations are mainly regulated by the Hotel Industry Act (Hotel Business Act) and the Food Sanitation Act (Food Sanitation Act). These two laws together constitute the basic legal framework for the Japanese hotel industry and set forth specific requirements for commercial real estate developers in the design and operation of hotel projects.

The Hotel Industry Law stipulates the basic standards and operating requirements for hotel facilities. The law divides accommodation facilities into three categories: hostels, hotels and bed and breakfasts, with each category having specific facility standards. For example, the hotel category requires that the room size be no less than 9 square meters and must be equipped with an independent bathroom. The 2024 revision adds regulations for unmanned hotels, requiring 24-hour remote monitoring and emergency response systems. In addition, the law also stipulates requirements for fire safety, health management and guest registration.

The Food Hygiene Law mainly involves the hygiene standards of catering facilities in hotels. Hotel restaurants and kitchens are required by law to obtain a food hygiene license and undergo regular hygiene inspections. The new revisions strengthen the requirements for food traceability systems, and hotels must be able to trace the origin of all ingredients. In addition, the law also stipulates specific details such as material standards for kitchen equipment and food storage conditions.

As Japan promotes its tourism-based national strategy, the government has launched a series of incentive measures. For example, the National Strategic Zone Law allows for relaxation of restrictions on foreigners opening hotels in specific areas, which provides opportunities for international hotel brands to enter the Japanese market.

For hotel real estate developers, complying with these regulations is not only a compliance requirement, but also the basis for creating high-quality hotel products. It is recommended that these requirements be fully considered at the early stage of project planning and integrated into the design concept. For example, some innovative hotel projects not only meet regulatory requirements but also improve customer experience and operational efficiency by introducing intelligent guest room management systems, energy-efficient HVAC systems, advanced food safety management systems, etc., thereby enhancing the project’s marketability competitiveness.

3.5 Medical facilities: special requirements for site selection under medical law

The development and operation of medical facilities are primarily regulated by the Medical Act (Medical Act). The law sets out detailed requirements for the establishment, facility standards and operational management of medical institutions, and has an important impact on the site selection and design of medical projects by commercial real estate developers.

The “Medical Law” has special requirements for the site selection of medical institutions. First, the law stipulates that medical facilities must be located in an appropriate environment, away from sources of pollution and noise areas. Specifically, general hospitals are usually required to be located in areas with convenient transportation and concentrated population, but at the same time, appropriate distance from residential areas must be considered. The 2024 revision places special emphasis on the seismic performance of medical institutions, requiring new medical facilities to meet the highest level of seismic standards.

The law also imposes specific requirements on the internal facilities of medical institutions. For example, general hospitals must set up functional areas such as emergency departments, operating rooms, and examination rooms, and each area has minimum area and equipment standards. Of particular note is that the new revision adds requirements for infection control, requiring the establishment of independent infection wards and air purification systems.

In addition, the “Medical Law” also stipulates the parking configuration standards for medical institutions. Generally speaking, hospitals need to allocate parking spaces according to 20-30% of the number of beds, which places higher requirements on the land area of ​​the site.

In recent years, with the development of an aging society, the Japanese government has encouraged the development of “comprehensive medical and welfare facilities” that integrate medical, nursing and rehabilitation functions. This provides new opportunities for commercial real estate developers, but it also creates more complex regulatory compliance requirements, as such projects also need to consider the relevant provisions of the Nursing Care Insurance Act (Nursing Care Insurance Act).

For developers of healthcare facility properties, a thorough understanding of the requirements of the Healthcare Act is key to project success. It is recommended to communicate closely with medical professionals and local health departments at the early stage of the project to ensure that the design solution not only meets regulatory requirements but also adapts to future medical development trends. For example, some innovative medical facility projects not only meet current regulatory requirements but also reserve space for future expansion and upgrades by adopting modular designs, smart medical systems, green building technologies, etc., thereby increasing the long-term value of the project.

3.6 Educational Institutions: Provisions on School Buildings in the School Education Law

The development and operation of educational facilities are mainly regulated by the School Education Act (School Education Act) and the School Establishment Standards (School Establishment Standards). These regulations put forward specific requirements for school site selection, architectural design and facility configuration, and have an important impact on the planning and implementation of educational projects by commercial real estate developers.

The School Education Law has basic requirements for school site selection. The law stipulates that schools must be located in a safe, hygienic and educational environment, away from dangerous facilities and pollution sources. Specifically, primary schools and middle schools are usually required to be located in central areas of the community to facilitate students’ access to school; while universities and vocational schools can choose more suburban locations, but are required to have convenient public transportation.

The “School Setting Standards” stipulates in detail the specific standards for school facilities. For example, for primary schools, the number of students in each class shall not exceed 40, and the area of ​​each classroom shall not be less than 64 square meters. Schools must also be equipped with functional places such as libraries, gymnasiums, and laboratories. The 2024 revision places special emphasis on the requirements for digital teaching facilities, stipulating that schools must be equipped with high-speed Internet and sufficient electronic equipment.

In addition, regulations also impose requirements on schools’ outdoor activity venues. Generally speaking, primary schools and middle schools need to configure enough sports venues according to the number of students, which places higher requirements on the land area of ​​the site.

In recent years, with the development of educational concepts, the Japanese government has encouraged the development of “comprehensive educational facilities” that combine school education with community service functions. This provides new opportunities for commercial real estate developers, but it also brings more complex design challenges, because such projects need to consider community openness and safety management while ensuring the quality of teaching.

For developers of educational facilities real estate, an in-depth understanding of relevant regulatory requirements is the basis for project success. It is recommended to communicate closely with education experts and local education departments in the early stages of project planning to ensure that the design scheme not only meets current regulatory requirements but also adapts to future education development trends. For example, some innovative school projects not only meet basic teaching needs, but also create an environment conducive to innovative education models by adopting flexible space design, intelligent management systems, sustainable building technologies, etc., thereby improving the social impact of the project. value and long-term competitiveness.

Case analysis

4.1 Tokyo commercial complex development case: regulatory response from planning to completion

The “Tokyo Midtown” project in Tokyo’s Marunouchi area is a model for dealing with complex regulations in commercial real estate development in Japan. The development of this large-scale complex covering approximately 5.7 hectares of office, commercial, hotel and cultural facilities demonstrates how innovation and sustainability can be achieved within a strict regulatory framework.

The main challenge in the early stages of the project was meeting the requirements of the Urban Regeneration Special Measures Act. Through close cooperation with the Tokyo Metropolitan Government, the developer Mitsubishi Estate successfully included the project in the “Urban Regeneration Emergency Development Area” and obtained preferential policies such as an increase in floor area ratio. This not only increases the economic feasibility of the project, but also creates conditions for the introduction of more public spaces and green areas.

During the architectural design phase, the project team carefully balanced the height restrictions of the Building Standards Act with the visual coordination requirements of the Landscape Act. By adopting a stepped design, the project maintains harmony with the surrounding historic buildings while maximizing usable space. It is particularly worth mentioning that the project is the first large-scale application of a double-layer exterior wall system in Japan, which not only improves energy efficiency, but also cleverly circumvents the fire protection performance limitations of traditional curtain walls.

In order to meet the requirements of the “Law on the Site of Large-scale Small Shopping Malls”, the development team conducted a detailed traffic impact assessment. By optimizing the design of the underground parking lot and introducing an intelligent traffic management system, the project successfully alleviated the pressure on surrounding roads. In addition, the project proactively adopted noise control measures that went beyond regulatory requirements, such as setting up green buffer zones and using high-performance sound insulation materials, which won widespread support from the community.

In terms of environmental protection, the project not only meets the requirements of the Tokyo Metropolitan Environmental Security Ordinance, but also proactively adopts higher standards. By introducing a rainwater recycling system, an efficient energy management system and large-area roof greening, the project obtained LEED Platinum certification and became a model of sustainable commercial development in Japan.

The success of the “Tokyo Midtown” project proves that a deep understanding and innovative application of regulatory requirements can become a project’s competitive advantage. Through forward-looking planning and flexible design strategies, the developers not only met complex regulatory requirements but also created an iconic project with economic, social and environmental value.

4.2 Commercial case of renovation of historical buildings in Osaka: balance between cultural protection and commercial development

The “Osaka Merchant Marine Building” renovation project in Chuo-ku, Osaka City is an example of balancing historical preservation and commercial development. This neoclassical building built in 1927 was successfully transformed into a high-end commercial complex after renovation. The process fully demonstrated how to achieve improvement of commercial value under strict cultural heritage protection regulations.

The biggest challenge for the project comes from the provisions of the Cultural Properties Protection Act. As a registered tangible cultural property, the appearance and main structure of the building must be strictly preserved. The development team worked closely with the Osaka City Cultural Properties Preservation Committee to develop a detailed restoration and renovation plan. By using a combination of traditional craftsmanship and modern technology, the characteristic masonry structure and decorative details of the building’s exterior walls were successfully restored, while the seismic performance of the building was improved.

The renovation of internal spaces faces dual challenges from the Building Standards Act and the Fire Protection Act. In order to meet the needs of modern commercial use and safety standards, the project adopts an innovative approach of “building within a building”. While retaining the original building shell, a new structure to modern standards was built inside. This approach not only preserves the integrity of the historic building, but also provides flexible, modern commercial space.

In order to meet the requirements of the “Law on the Site of Large-scale Small Shopping Malls”, the project team carefully designed the passenger flow lines and equipment layout. Through clever use of the building’s underground space and roof, the project increases commercial area while minimizing impact on the historic structure. It is particularly worth mentioning that the project innovatively transformed the original freight elevator into a special sightseeing elevator, which not only retains historical elements, but also creates a unique visitor experience.

In terms of energy efficiency, the project faces challenges under the Building Energy Saving Act. Through the use of intelligent building management systems and efficient HVAC equipment, the project has significantly improved energy efficiency while retaining the character of the historic building. The introduction of the roof garden not only provides green space, but also effectively improves the thermal insulation performance of the building.

The success of the “Osaka Merchant Marine Building” renovation project proves that cultural preservation and commercial development are not antagonistic. Through innovative design methods and technology applications, developers can create commercial spaces that respect history while meeting modern needs within strict conservation regulations. This approach not only protects the city’s cultural heritage, but also injects new vitality into historical buildings and creates unique commercial value.

4.3 Fukuoka Logistics Park Development Case: Innovative Solutions to Address Environmental Regulations

Fukuoka’s “Hakata Green Logistics Park” project is a model for Japan’s logistics real estate development to respond to strict environmental regulations. This modern logistics park covering an area of ​​approximately 20 hectares not only meets the rapidly growing needs of e-commerce, but also successfully responds to complex environmental protection requirements through innovative design.

The biggest challenges for the project came from the Environmental Impact Assessment Law and Fukuoka Prefecture’s local environmental regulations. Because the project is located close to the agricultural areas and wetlands of the Chikushi Plains, the development team needed to prove that the project would not have a significant impact on the surrounding ecosystem. To this end, the team worked with environmental experts to design a comprehensive ecological protection plan.

The project adopts an innovative “distributed development” model. By dispersing logistics facilities and retaining large areas of green space and water systems in between, the project successfully protected the existing ecological corridors. This design not only meets environmental protection requirements, but also creates a unique park landscape and improves the overall environmental quality.

In terms of architectural design, the project fully considered the requirements of the Ministry of Buildings and Construction Law. All warehouse buildings feature high-performance facade systems and intelligent lighting controls, significantly reducing energy consumption. What is particularly worth mentioning is that the project has applied a “natural cooling system” on a large scale for the first time in Japan, using low-temperature air at night to cool the warehouse, significantly reducing air conditioning electricity consumption.

In order to meet the requirements of the Daji Pollution Prevention Act, the project uses all-electric forklifts and automatic guided vehicles (AGV) systems to minimize exhaust emissions in the park. At the same time, the project also established an intelligent traffic management system to optimize the entry and exit routes of trucks and effectively reduce the impact on surrounding roads.

In terms of water resources management, the project has designed a complex rainwater collection and treatment system, which not only meets the requirements of the Water Pollution Prevention Act, but also achieves 90% self-sufficiency of non-potable water in the park. By introducing artificial wetlands and ecological detention ponds, the project successfully combines rainwater management with landscape design, creating unique park features.

The success of the “Hakata Green Logistics Park” project shows that strict environmental regulations can be a driving force for innovation. Through forward-looking planning and technological innovation, the developer not only met environmental protection requirements, but also created a modern logistics park that is efficient, sustainable and has significant market competitiveness. This method of combining environmental protection with commercial benefits provides a valuable reference for future logistics real estate development.

4.4 Yokohama Commercial District Renovation Case: Regulatory Challenges in Urban Renewal

Yokohama’s “Minato Mirai 21” project is an example of how to deal with complex regulatory challenges in urban renewal in Japan. This 18-hectare coastal business district renovation project has successfully transformed an old port area into a vibrant and modern commercial, cultural and residential complex. The process fully demonstrates how innovative urban renewal can be achieved within a strict regulatory framework. .

The biggest challenge for the project comes from the dual regulations of the “Urban Regeneration Special Measures Law” and the “Port Law”. In order to obtain greater development flexibility, the project team worked closely with the Yokohama City Government and successfully included the area into the “Urban Regeneration Emergency Preparation Area”. This not only allows for higher floor area ratios, but also creates the conditions for the introduction of innovative mixed-use developments.

During the planning stage, the project faced strict requirements of the Landscape Act. In order to protect the iconic view of Yokohama Port, the development team adopted a “stepped skyline” design. Through careful planning of building heights and layout, the project maintains visual connections to the harbor while maximizing developable space. It is particularly worth mentioning that the project innovatively designed some buildings as “floating island” structures, which not only created a unique landscape effect, but also cleverly dealt with the long-term risks of rising sea levels.

In order to meet the requirements of the “Law on the Site of Large-scale Small Shopping Malls”, the project conducted a detailed traffic impact assessment. By introducing an intelligent traffic management system and developing water transportation, the project has successfully alleviated pressure on surrounding roads. At the same time, the project also proactively adopted public space designs that exceeded regulatory requirements, such as waterfront promenades and large squares, which not only enhanced the public value of the project but also gained widespread support from the community.

In terms of environmental protection, the project not only meets the requirements of the Yokohama City Environmental Creation Ordinance, but also proactively adopts higher standards. By introducing a seawater heat exchange system, large-scale roof greening and a rainwater recycling system, the project significantly reduces energy and water consumption. In particular, the project innovatively transformed part of the pier into an artificial ecological island, which not only improved the water quality, but also provided citizens with a unique natural experience space.

In order to meet the requirements of the Ministry of Buildings and Construction Law, the project applied a district energy management system on a large scale for the first time in Japan. By centrally managing heating, cooling and electricity needs within the area, the project optimizes energy use and significantly reduces carbon emissions.

The success of the “Port Mirae 21” project proves that a complex regulatory environment can become a catalyst for innovation. Through forward-looking planning and innovative technology applications, the developer not only met regulatory requirements but also created a new urban landmark with economic, social and environmental values. This approach, which combines regulatory compliance with innovative design, provides valuable lessons for future urban renewal projects.

4.5 The case of commercialization of traditional machiya houses in Kyoto: legal difficulties in the development of historical protected areas

The “Machiya Regeneration Shopping Street” project in the Gion area of ​​Kyoto is an example of commercial development under strict historical preservation regulations. This project, which involved the renovation of multiple traditional machiya houses, successfully transformed endangered historical buildings into vibrant boutique shops and cultural spaces. The process fully demonstrated how to realize commercial value while protecting cultural heritage.

The biggest challenge for the project comes from the strict regulations of the Cultural Properties Protection Act and the Kyoto City Historic Building Preservation and Utilization Ordinance (Kyoto City Historic Building Preservation and Utilization Ordinance). As part of an important preservation area for traditional buildings, the appearance, structure, and main interior features of these machiya must be strictly preserved. The development team worked closely with the Kyoto City Cultural Properties Protection Department to develop a detailed restoration and renovation plan.

In terms of building renovation, the project faces the dual challenges of the Building Standards Act and the Fire Protection Act. In order to meet the needs of modern commercial use and safety standards while protecting the historical architectural features, the project adopted a “minimally invasive surgical” renovation method. For example, by installing lightweight steel reinforcements underneath the roof, the building’s seismic performance is improved while retaining the appearance of a traditional wooden structure. The fire protection system is cleverly hidden in traditional architectural elements, such as sprinklers designed to look like traditional light fixtures.

In order to adapt to the requirements of the “Law on the Location of Large-scale Small Shopping Malls”, the project team innovatively proposed the concept of “distributed commercial clusters”. By combining multiple small shops into a whole, the project not only retains the original scale of the machiya, but also achieves the scale effect of modern commercial operations. It is particularly worth mentioning that the project uses traditional inner courtyard space to create a unique shopping experience, which not only complies with cultural relic protection requirements, but also increases commercial appeal.

In terms of energy efficiency, the project faces challenges under the Ministry of Buildings and Construction Act. By using traditional “Usaki” (splashing water for cooling) technology combined with a modern micro-climate control system, the project significantly improves energy efficiency without changing the appearance of the building. In addition, the project innovatively utilizes the deep well structure of the machiya and transforms it into a natural ventilation system, which not only retains the historical features but also improves indoor comfort.

In order to cope with the “Landscape Law” and Kyoto City’s strict landscape management requirements, the project put great effort into the design of store signboards, lighting and street furniture. By using traditional materials and craftsmanship, combined with modern design concepts, the project successfully creates a neighborhood landscape that respects history while being contemporary.

The success of the “Machiya Regeneration Commercial Street” project proves that strict historical preservation regulations are not an obstacle to commercial development, but can become a source of creating unique value. By deeply understanding the spirit of regulations and combining innovative design and technology applications, developers can create spaces with high cultural and commercial value while protecting cultural heritage. This method of combining cultural preservation with business innovation provides new ideas for the sustainable development of historic urban areas.

Regulatory Compliance Guide

5.1 Commercial Real Estate Compliance Checklist for SMEs

For small and medium-sized enterprises in Japan, commercial real estate compliance is a complex but crucial subject. First, businesses need to ensure that their commercial land complies with the zoning regulations of the Urban Planning Act. This involves confirming whether the chosen location allows for the intended commercial activities and whether special permits need to be applied for. Secondly, the building itself must comply with various requirements of the Building Standards Act, including structural safety, fire resistance, barrier-free facilities, etc. In the case of retrofitting old buildings, special attention needs to be paid to whether seismic upgrades are required.

Environmental compliance is also an aspect that cannot be ignored. Businesses are required to comply with the provisions of the Basic Environmental Law and local environmental regulations, particularly regarding waste disposal, noise control and energy efficiency. For enterprises involved in the sale of food or special commodities, they also need to pay attention to the requirements of the Food Hygiene Law or other relevant product regulations. In addition, if the area of ​​the commercial premises exceeds 1,000 square meters, it needs to comply with the provisions of the “Law on the Site of Large-scale Small Shopping Malls”, including submitting an opening plan and conducting an environmental impact assessment.

In terms of labor laws, even small commercial establishments need to comply with the provisions of the Labor Standards Act and the Occupational Safety and Health Act to ensure a safe and healthy working environment for employees. Finally, do not ignore the requirements of the Fire Protection Act, including having adequate firefighting equipment and conducting regular firefighting training.

By complying with these key regulations, small and medium-sized enterprises can carry out business activities safely and stably on the basis of legal compliance and lay a solid foundation for long-term development.

5.2 Regulations and guidelines for large multinational companies to establish their headquarters in Japan

Large multinational companies need to face a complex set of regulatory requirements when setting up their headquarters in Japan. First, the company needs to choose an appropriate company form according to the Companies Act, usually a corporation (company limited by shares). During the registration process, you need to comply with the relevant provisions of the Foreign Exchange and Foreign Trade Act (Foreign Exchange and Foreign Trade Act), especially when specific industries are involved, prior approval may be required.

In terms of site selection, in addition to considering the use zoning regulations of the Urban Planning Act, special attention needs to be paid to the preferential policies that may be brought about by the National Strategic Zone Act. For example, setting up a headquarters in central Tokyo or the Rinko area may enjoy special tax incentives or relaxed regulations. In terms of construction, in addition to complying with the basic “Building Standards Act”, large office buildings also need to pay special attention to the “Fire Protection Regulations for High-rise Buildings” and “Energy Saving Standards”.

As a large enterprise, environmental responsibility is particularly important. It is necessary to comply with regulations such as the Basic Environmental Law and the Global Warming Countermeasures Promotion Act, and formulate clear plans for environmental protection, energy conservation and emission reduction. In terms of employee management, in addition to complying with the basic Labor Standards Act, special attention needs to be paid to the requirements of the Equal Employment Opportunity Act and the Work Style Reform Act to ensure a diverse working environment and a work-life balance for employees.

Data protection is another important challenge for multinational companies. It is necessary to strictly abide by the “Personal Information Protection Act” and the soon-to-be-implemented “Corrected Personal Information Protection Act” and establish a sound data management and protection mechanism. For situations involving cross-border data transmission, special attention needs to be paid to relevant restrictions.

As a multinational company, you need to pay special attention to the provisions of the Anti-Monopoly Law and the Unfair Competition Prevention Law to ensure the fairness and legality of business practices. By fully complying with these regulations, multinational companies can establish a solid business foundation in Japan and achieve long-term sustainable development.

5.3 Special considerations for foreign-funded enterprises’ commercial real estate investment

When foreign-funded enterprises invest in commercial real estate in Japan, they need to pay special attention to some unique legal and policy requirements. First, according to the Foreign Trade Act, real estate investments in certain specific areas may require prior reporting or approval to the Ministry of Finance or relevant departments. In particular, properties involving national security or public interest, such as those located near military installations or critical infrastructure, may face heightened scrutiny.

In terms of land acquisition, foreign-invested enterprises need to pay special attention to the provisions of the Land Utilization Planning Act. For large-scale land transactions (more than 2,000 square meters in urban areas and more than 5,000 square meters in non-urban areas), a prior report needs to be submitted to the local government. Certain areas, such as agricultural land or forests, may also be subject to special provisions under the Agricultural Land Act or the Forest Act.

In terms of financing, foreign-invested enterprises need to pay attention to the provisions of the Real Estate Specified Joint Enterprise Act, especially when it comes to real estate securitization or co-investment plans. At the same time, the “Financial Resolution Law” also has special requirements for large-amount fund transfers, which require careful operation to avoid violating anti-money laundering regulations.

For commercial real estate investments involving historical buildings or cultural heritage, special attention needs to be paid to the provisions of the Cultural Properties Protection Act. Certain areas, such as historic districts in Kyoto or Nara, may have additional local regulations restricting development activities.

In terms of taxation, foreign-invested enterprises need to fully understand relevant regulations such as the “Corporate Tax Law”, “Real Estate Acquisition Tax” and “Fixed Assets Tax”. Especially when investing using offshore structures, you need to be aware of Japan’s strict attitude towards international tax avoidance in recent years.

During project development and operation, foreign-invested enterprises also need to pay special attention to the requirements of environmental laws and regulations such as the Building Energy Conservation Act and the Air Pollution Prevention Act, as well as social inclusion laws and regulations such as the Disability Discrimination Elimination Act. By comprehensively considering these special requirements, foreign-invested enterprises can develop steadily in the Japanese commercial real estate market and avoid legal risks.

5.4 Legal risk prevention throughout the entire commercial real estate development process

Commercial real estate development is a complex process, with legal risks lurking at every stage. During the project planning stage, the first priority was to ensure that the project complied with the zoning regulations of the Urban Planning Act. Developers need to carefully study local city plans to assess whether they need to apply for a change of use or special permit. At the same time, the Environmental Impact Assessment Law requires environmental impact assessments for large projects. This process may take months or even years and needs to be included in the project schedule in advance.

During the land acquisition stage, in addition to routine property rights investigations, special attention needs to be paid to the requirements of the Soil Pollution Countermeasures Act. If soil contamination is discovered, cleanup costs can significantly increase project costs. For larger projects involving multiple parcels, the application of the Land Zoning and Consolidation Act may also need to be considered to optimize land use.

The design and construction phases are the periods when legal risks are most concentrated. First of all, the design must strictly comply with various provisions of the Building Standards Act, including structural safety, fire resistance, barrier-free facilities, etc. For high-rise buildings, additional safety requirements need to be met. During the construction process, the Construction Industry Law and the Occupational Safety and Health Law must be strictly observed to ensure project quality and construction safety. At the same time, the Noise Regulation Act and the Vibration Regulation Act require measures to be taken to reduce the impact of construction on the surrounding environment.

During the project financing stage, developers need to pay attention to the provisions of the Financial Instruments and Exchange Act and the Real Estate Specific Joint Enterprise Act, especially when it comes to complex financing structures or the introduction of external investors. At the same time, a sound anti-money laundering mechanism should be established to comply with the requirements of the Act on the Prevention of Transfer of Criminal Proceeds.

The main legal risks faced during the commercial operation stage come from the “Law on the Location of Large-scale Small Shopping Malls”, the “Fire Protection Law” and various environmental regulations. Developers need to develop detailed operational management plans, including traffic management, noise control, waste disposal, etc. At the same time, you also need to pay attention to the requirements of the Personal Information Protection Law in terms of customer data management.

Maintaining good communication with the local community throughout the development process is crucial. Complying with the provisions on public participation in the Basic Environmental Law and local regulations can effectively reduce the social risks and legal challenges faced by the project. By fully identifying and addressing legal risks at every stage, developers can ensure the smooth progress and long-term success of their projects.

5.5 Legal points in signing a commercial lease contract

The commercial lease contract is the core legal document for commercial real estate operations. The following legal points need to be paid special attention to during its signing process. First of all, the contract must comply with the basic provisions of the Civil Law on lease contracts, and clearly stipulate core elements such as the leased object, rent amount, and lease period. It is particularly important to note that according to the Land and Home Lending Law, the statutory renewal right of a commercial lease contract gives the lessee strong protection. Therefore, if the lessor wants to limit this right, it needs to clearly stipulate special terms in the contract.

Rent adjustments are an important issue in commercial leasing. The contract should clearly stipulate the time, method and extent of rent adjustment. According to Supreme Court jurisprudence, rent adjustment clauses must be specific and clear, otherwise they may be deemed invalid. At the same time, attention should be paid to the provisions on the right to claim for rent reduction in the Land and Home Lending Law, and relevant provisions should be reasonably set to balance the interests of both parties.

Purpose of use and subletting are two other key points in a commercial lease. The contract should clearly stipulate the types of operations allowed, and detail whether subletting is allowed and the conditions and procedures for subletting. This is not only about the management of the property, but may also involve compliance issues with the Urban Planning Act and industry-specific regulations.

The allocation of maintenance responsibilities also needs to be clearly agreed in the contract. Although the Civil Code stipulates that large-scale repairs are the responsibility of the lessor, in practice it is common to shift the responsibility for routine maintenance to the lessee. Such an agreement needs to be clear, reasonable and take into account the possible application of the Consumer Contracts Act.

Termination and rescission clauses require special care. Although both parties can agree on special reasons for termination, these terms must comply with the spirit of the Land and Home Lending Law and cannot be unduly biased in favor of the lessor. At the same time, the lessee’s obligation to return to the original status should be clearly stipulated, including scope, standards and time limits.

The handling of margin (deposit) is also an important part. The contract should clearly stipulate the purpose, return conditions and time of the deposit. In recent years, courts have become stricter on lessors’ deductions from security deposits, so the relevant provisions require special caution.

Don’t forget the requirements of the Personal Information Protection Act. If the lease involves the collection of personal information from the lessee or its employees, the scope and purpose of data collection and use need to be made clear in the contract.

By carefully considering these legal points and signing a comprehensive, fair, and legal commercial lease contract, you can lay a solid legal foundation for long-term cooperation between the two parties and effectively prevent potential disputes.

5.6 Regulatory considerations in commercial real estate transfers and mergers and acquisitions

The transfer and merger of commercial real estate are complex legal processes involving considerations in multiple legal fields. First, the choice of transaction structure is crucial. You can choose between an asset transaction (direct transfer of real estate) or an equity transaction (transfer of equity in a company holding real estate). These two methods have different treatments in terms of Company Law, Commercial Law and Tax Law, and the pros and cons need to be weighed according to the specific circumstances.

Due diligence is a critical part of a transaction. In addition to routine property rights investigations, special attention needs to be paid to the following points: First, land use restrictions require checking the zoning regulations of the Urban Planning Act and possible administrative restrictions. The second is environmental risks. According to the Soil Pollution Countermeasures Act, soil pollution surveys may be required. The third is building compliance. It is necessary to check whether there are any violations of the “Building Standards Act”. Especially for old buildings, there may be a risk of requiring seismic upgrades.

In the preparation of transaction documents, the Real Estate Registration Law requires the provision of detailed documentation proving title. If a lease is involved, special attention needs to be paid to the provisions of the Land and Home Ownership Act regarding lease succession, which may require renegotiation with existing tenants. For large-scale transactions, it may also be necessary to consider the impact of the Anti-Monopoly Law and evaluate whether prior notification is required.

Tax planning is an important consideration during the merger and acquisition process. Different transaction structures can result in significantly different tax outcomes. The impact of relevant tax laws such as the Corporate Tax Act, Consumption Tax Act, and Real Estate Acquisition Tax needs to be carefully evaluated. Especially for cross-border transactions, the application of international tax treaties also needs to be considered.

If the transaction involves a listed company, it also needs to comply with the information disclosure requirements of the Financial Instruments and Exchange Act. For real estate in specific industries (e.g., hotels, medical facilities), the impact of industry-specific regulations may also need to be considered.

During the delivery process, fund transfers need to comply with the provisions of the Fund Determination Law. In particular, large-value transactions may require special anti-money laundering review. At the same time, don’t forget to update various licenses and contracts to ensure business continuity.

For cross-border mergers and acquisitions, special attention needs to be paid to the provisions of the Foreign Substitution and Foreign Trade Act. Real estate transactions in certain areas may require prior filing or approval.

By comprehensively considering these regulatory requirements, both parties to the merger and acquisition can effectively manage legal risks, successfully complete commercial real estate transfers and mergers and acquisitions, and achieve win-win results.

Analysis of regional differences

6.1 Characteristics of commercial real estate regulations in Tokyo Special Districts

As the political and economic center of Japan, the Tokyo Metropolitan Special District has a complex and unique commercial real estate regulatory system. First of all, the environmental protection requirements for commercial buildings under the Tokyo Metropolitan Environmental Security Ordinance are much higher than national standards, especially in terms of energy conservation and emission reduction. The regulations require large buildings to develop and implement greenhouse gas emission reduction plans, which directly affects the design and operation of commercial properties.

The “Safety Review System for High-Rise Buildings” implemented by the Tokyo Metropolitan Government is more stringent than national standards. For buildings exceeding 60 meters, in addition to meeting the requirements of the Building Standards Act, they also need to pass a special review by the Tokyo Metropolitan Construction Safety Commission, which increases the development cycle but improves building safety.

In terms of land use, the “Tokyo Urban Planning Area Division” is far more detailed than other areas. For example, in core commercial areas such as Marunouchi and Nihonbashi, ultra-high floor area ratio development is allowed, but developers are required to provide public spaces or facilities in return. This “feedback” development model has become a feature of Tokyo’s commercial real estate.

In addition, the “Tokyo Metropolitan Landscape Ordinance” has strict regulations on building appearance, billboards, etc., especially in historical districts such as Asakusa and Jinrouzaka, where building heights and styles are strictly limited to protect traditional landscapes.

The “Building Energy Performance Indication System” pioneered by the Tokyo Metropolitan Government requires all new commercial buildings to disclose their energy efficiency ratings, which directly affects the market value and rental level of the building.

6.2 Differences in regulations in the Kansai region (Osaka, Kyoto, Kobe)

Commercial real estate regulations in the Kansai region show obvious local characteristics. As an economic center, Osaka City’s “Osaka City Urban Planning Ordinance” allows the implementation of a “comprehensive design system” in specific areas. Developers can obtain floor area ratio incentives by providing public benefit facilities, which promotes urban renewal and the increase of public space.

Due to its unique historical and cultural status, Kyoto City has implemented the strictest landscape protection policy in the country. The “Kyoto City Landscape Ordinance” and the “Kyoto City Historic Terroir Preservation Area Ordinance” strictly limit the height and appearance of buildings, especially in historical districts such as Higashiyama District, and even stipulate the shape and materials of roofs. Although these regulations limit the freedom of development, they also maintain the cultural value of Kyoto and increase the scarcity and value of commercial real estate.

Kobe City has passed the “Kobe City Urban Landscape Ordinance” and the “Kobe City Greening Agreement System”, requiring new commercial facilities to include a certain proportion of green area and encouraging three-dimensional greening, forming a unique landscape of a “harbor city”. At the same time, Kobe City has also implemented the “Disaster Prevention Building Certification System” to provide tax incentives for buildings that meet specific earthquake resistance standards. This is a special policy after the 1995 Great Hanshin Earthquake.

The entire Kansai region faces the challenge of an aging population, so cities have introduced policies to encourage the development of barrier-free facilities. For example, Osaka Prefecture’s “Welfare City Development Ordinance” (Welfare City Construction Ordinance) sets forth requirements for accessibility standards for commercial facilities that are higher than national standards.

6.3 Commercial real estate policies in the Chubu region (centered on Nagoya)

As the core of the Chubu region, Nagoya City’s commercial real estate policy reflects the characteristics of a “manufacturing city”. The “Nagoya City Urban Planning Master Plan” (Nagoya City Urban Planning Master Plan) clearly proposes to support industrial upgrading and encourage the development of R&D centers and high-tech industrial parks in specific areas. This directly affects the layout and functional positioning of commercial real estate.

Particularly worth mentioning is Nagoya City’s “Nagoya City Cultural Exchange Point Preparation Project” (Manufacturing Cultural Exchange Base Preparation Project), which encourages the transformation of old industrial heritage into commercial and cultural facilities, which provides new opportunities for commercial real estate development. At the same time, the “Nagoya City Regional Cooling and Heating Facilities Promotion Promotion Ordinance” (Nagoya City Regional Cooling and Heating Facilities Promotion Promotion Ordinance) encourages the development of centralized energy supply systems, which affects the energy planning of large commercial complexes.

In terms of environmental protection, the “Low Carbon Urban Strategy Implementation Plan” (Nagoya Low Carbon City Strategy Implementation Plan) implemented by Nagoya City requires that new commercial facilities must meet specific energy efficiency standards and encourages the use of renewable energy.

Taking into account the frequent seismic activity in the central region, the “Aichi Prefecture Building Earthquake Resistant Renovation Promotion Plan” (Aichi Prefecture Building Earthquake Resistant Renovation Promotion Plan) puts forward requirements for seismic standards for commercial buildings that are higher than national standards, which increases the cost of renovation but Improved building safety.

In addition, in order to deal with the problems caused by urban expansion, Nagoya City has also implemented the “Nagoya Intensive Joint Urban Construction Plan” (Nagoya Intensive Joint Urban Construction Plan) to encourage high-density development around public transportation hubs, which directly affects business Real estate location strategies.

6.4 Regulations and preferential policies in the Kyushu region (represented by Fukuoka)

As the economic center of the Kyushu region, Fukuoka City has implemented a series of innovative commercial real estate policies in recent years. The “Fukuoka City National Strategic Zone” (Fukuoka City National Strategic Zone) policy allows for the relaxation of land use restrictions and floor area ratio restrictions in specific areas, which creates favorable conditions for the development of large-scale complex commercial projects. Particularly in terms of entrepreneurship support, the “Startup Corporate Tax Reduction” (Startup Enterprise Tax Reduction) policy provides tax incentives for new ventures that settle in specific business parks, which increases the attractiveness of related commercial real estate.

In terms of urban renewal, the “Fukuoka City Urban Center Functional Renewal Guidance Plan” (Fukuoka City Center Functional Renewal Guidance Plan) encourages the renovation of old buildings and provides subsidies and floor area ratio rewards for renovation projects that meet specific conditions. This policy has effectively promoted the revitalization of the city’s old business districts.

Fukuoka City has also implemented the “Waterfront Redevelopment Plan” (Waterfront Redevelopment Plan) to encourage the development of new commercial facilities along Hakata Bay, such as convention and exhibition centers, hotels, etc., and provide corresponding infrastructure support. This plan provides new growth points for commercial real estate development.

Taking into account the geographical location of the Kyushu region, the “Asian Business Promotion Policy” provides special support for commercial facilities targeting the Asian market, such as simplifying the entry procedures for foreign companies and providing multi-lingual services. This increases the competitiveness of Fukuoka commercial real estate in the international market.

In terms of environmental protection, the Fukuoka City Biodiversity Strategy (Fukuoka City Biodiversity Strategy) requires that large commercial facilities must contain a certain proportion of green space or ecological space, which affects the design and layout of commercial real estate.

6.5 Special regulations for commercial real estate development in Hokkaido

Commercial real estate development in Hokkaido presents unique challenges and opportunities. The “Hokkaido Provincial Energy-saving Building Promotion Ordinance” (Hokkaido Energy-saving Building Promotion Ordinance) sets the highest national standards for the thermal insulation performance of commercial buildings, which directly affects building design and material selection. At the same time, the Snow Countermeasures Basic Plan (Snow Countermeasures Basic Plan) requires commercial facilities to consider snow removal and snow storage space, which is a rare requirement in other regions.

In terms of land use, the Hokkaido Basic Land Use Plan (Hokkaido Basic Land Use Plan) emphasizes the protection of agricultural land and the natural environment, which limits commercial development around the city. However, the Hokkaido Regional Development Ordinance (Hokkaido Resort Development Ordinance) facilitates the development of large-scale resorts and commercial complexes in specific areas, which has become a major feature of Hokkaido commercial real estate.

Taking into account the special needs of winter, the “Hokkaido Public Building Maintenance Guidelines” (Hokkaido Universal Design Public Building Maintenance Guidelines) puts forward higher requirements for the barrier-free design of commercial facilities, such as indoor heating passages, anti-skid facilities, etc.

In order to promote regional economic development, the Hokkaido Small and Medium Enterprises Promotion Ordinance (Hokkaido Small and Medium Enterprises Promotion Ordinance) provides rent subsidies and tax benefits to small and medium-sized enterprises, which has affected the rental market of commercial real estate. At the same time, the “Hokkaido Regional Industrial Resources Utilization Business Promotion Ordinance” (Hokkaido Regional Industrial Resource Utilization Business Promotion Ordinance) encourages the development of commercial facilities that utilize local characteristic resources, such as hot spring resorts, specialty product direct sales centers, etc.

The “Hokkaido Natural Environment Protection Ordinance” (Hokkaido Natural Environment Protection Ordinance) requires that commercial development around natural scenic areas must conduct strict environmental impact assessments, which increases development costs but also protects Hokkaido’s natural charm.

6.6 Okinawa special regulations and their impact on commercial real estate

As Japan’s only subtropical region, Okinawa’s commercial real estate regulations reflect unique geographical and historical characteristics. The Okinawa Revitalization Special Measures Act (Okinawa Revitalization Special Measures Act) provides a number of preferential policies for commercial real estate development. For example, investments in hotels, shopping malls and other facilities in specific areas can enjoy investment tax credits of up to 35%, which has greatly stimulated Okinawa’s commercial real estate market.

The “Okinawa Prefecture Tourism Promotion Basic Plan” (Okinawa Prefecture Tourism Promotion Basic Plan) focuses on supporting the development of tourism-related commercial facilities, such as duty-free shops, cultural experience centers, etc. The program also encouraged the development of architectural styles characteristic of Okinawa, which directly influenced the design of commercial buildings.

In terms of land use, the “Okinawa Prefecture Basic Land Use Plan” (Okinawa Prefecture Basic Land Use Plan) emphasizes the protection of coastlines and natural resources, restricting large-scale commercial development in coastal areas. However, the “International Logistics Point Industry Cluster Area” (International Logistics Base Industry Cluster Area) policy provides preferential conditions for the development of logistics centers and bonded areas in specific areas, which has become a new growth point for Okinawa’s commercial real estate.

Taking into account the threat of natural disasters such as typhoons, the “Okinawa Wind Resistance Standards for Buildings” (Okinawa Prefecture Wind Resistance Standards for Buildings) puts forward requirements for the wind resistance of commercial buildings that are higher than national standards. At the same time, the “Okinawa Prefecture Red Soil and Other Outflow Prevention Ordinance” (Okinawa Prefecture Red Soil and Other Outflow Prevention Ordinance) requires development projects to adopt strict soil and water conservation measures, which increases development costs but protects the marine environment.

In order to protect Okinawa’s unique cultural heritage, the “Okinawa Prefecture Cultural Properties Protection Ordinance” (Okinawa Prefecture Cultural Properties Protection Ordinance) imposes strict restrictions on commercial development near historical districts or cultural sites, which affects the layout of commercial real estate in certain areas. .

The “Okinawa Prefecture Renewable Energy Promotion Basic Plan” (Okinawa Renewable Energy Promotion Basic Plan) encourages commercial facilities to use clean energy such as solar energy and provides subsidies for buildings that meet certain standards, which promotes the development of green commercial buildings. Through these special regulations, Okinawa has formed a unique commercial real estate ecosystem that not only focuses on economic development, but also takes into account environmental protection and cultural heritage.

Answers to common legal questions

7.1 Legal comparison of commercial land acquisition methods: leasing vs. purchasing

In the Japanese commercial real estate market, leasing and purchasing are the two main methods of acquiring land, each with its own legal characteristics and applicable circumstances. Leases are governed by the Land and Home Lease Act, which provides strong protection to lessees. Commercial leases usually take the form of fixed-term land rights, with a term of up to 50 years. During the lease period, the lessee enjoys ownership-like rights. The advantages of leasing are low initial capital requirements and high flexibility, but long-term costs may be higher.

The purchase is governed by the Real Estate Registration Act and the Civil Code. Purchase provides full ownership, allowing freer use and disposal, but requires a large initial investment. It is worth noting that Japanese law allows land and buildings to be owned separately, which is more common in commercial real estate transactions. Purchases also need to take into account land acquisition reporting obligations under the Land Utilization Planning Act, and for large-area land transactions, prior approval may be required.

From the perspective of legal risks, the main risk faced by leasing is the issue of renewal after the contract expires, although the Land and Home Lending Law provides certain protection for the lessee. When purchasing, you need to be aware of issues such as land use restrictions and earthquake risks, which can affect property values. Which method to choose needs to be comprehensively considered based on the company’s financial status, business strategy and risk tolerance.

7.2 Seismic standards and update requirements for commercial buildings

As an earthquake-prone country, Japan has extremely strict seismic standards for commercial buildings. The “Building Standards Act” is the main law regulating the earthquake resistance of buildings. Article 20 of it stipulates the earthquake resistance properties that buildings should have. The 1981 legal revision introduced “new earthquake resistance standards”, which significantly increased earthquake resistance requirements. For commercial buildings built before 1981, the Law on the Promotion of Seismic Renovation of Buildings (Law on the Promotion of Seismic Renovation of Buildings) requires seismic diagnosis and necessary modifications.

Seismic standards vary depending on building use and size. For large commercial facilities, it is usually required to be able to withstand earthquakes with a magnitude of 7. Specifically, buildings need to meet the standard of “not being damaged by small to medium earthquakes and not collapsing by large earthquakes.” In addition, the Periodic Investigation and Reporting System for Specific Buildings (Periodic Investigation and Reporting System for Specific Buildings) requires commercial buildings to undergo safety inspections, including seismic performance assessments, every 2-3 years.

As technology advances, seismic standards are constantly updated. The “limited endurance calculation method” introduced in 2000 and the “performance design” concept in 2005 provide new methods for the seismic design of high-rise commercial buildings. For existing buildings, the 2013 revision of the Seismic Renovation Promotion Law listed large commercial facilities as subjects of mandatory seismic renovation.

But seismic retrofitting is not only a legal requirement, it also affects the market value of commercial properties. Many tenants and investors will consider a building’s seismic performance as an important consideration in their selection. Therefore, timely updates and transformations are not only required to comply with the law, but also necessary measures to maintain competitiveness.

7.3 Legal risks and prevention of commercial real estate financing

Commercial real estate financing is regulated by a number of laws in Japan, mainly including the Banking Law, the Financial Instruments Introduction Law and the Real Estate Specified Joint Enterprise Law. These laws together create a complex financing regulatory system, and investors need to fully understand the relevant regulations to prevent legal risks.

A major legal risk comes from the strict regulations on real estate securitization products under the Financial Products Introduction Law. The law requires issuers to fully disclose risk information, and violation may result in serious legal consequences. On the other hand, the Real Estate Specified Common Enterprises Act has detailed regulations on the establishment and operation of real estate investment funds. Failure to comply may result in administrative penalties.

For bank loans, the “Banking Law Enforcement Rules” have specific requirements for risk management of real estate mortgage loans, including restrictions on loan-to-value ratios (LTV). Excessively high LTV may lead to regulatory risks. In addition, the Financial Instruments Extraction Law requires financial institutions to perform explanation obligations when providing financing services. Failure to provide adequate explanations may face claims from investors.

The key to preventing these risks is: first, hire professional legal counsel to ensure that the financing structure complies with relevant legal regulations. Secondly, establish a complete risk disclosure mechanism, especially for public fundraising methods such as REITs. Third, we must strictly abide by the “Mainland Security Fund Supply and Management Policy” (Guidelines for Anti-Money Laundering and Counter-Terrorism Financing) to prevent risks in the source of funds. Finally, establish an internal compliance system and conduct regular legal risk assessments and updates.

7.4 Access conditions for foreign-funded enterprises to participate in commercial real estate development in Japan

Japan is generally open to foreign investment in commercial real estate development, but there are still some special regulations that need to be paid attention to. The primary legal basis is the Foreign Exchange and Foreign Trade Act (Foreign Exchange and Foreign Trade Law), referred to as the “Foreign Exchange Act”. Article 27 of the Law stipulates that foreign investors are required to declare in advance when investing in specific industries. Although general commercial real estate development does not fall within the scope that requires declaration, if it involves national security-related areas or large-scale land transactions, declaration is still required.

Article 23 of the “Land Utilization Planning Act” stipulates that prior notification is required to acquire land above a certain area (municipal land use plan). This provision also applies to foreign-invested enterprises. In addition, the Real Estate Specified Joint Enterprise Act allows foreign investors to participate in real estate investment funds, but requires permission from the Japan Financial Services Agency.

Foreign-invested enterprises also need to pay attention to the provisions of the “Residential Land and Buildings Extraction and Industry Act”. If you plan to engage in real estate agency business directly, you need to obtain the qualification of “Residential Land and Building Procurement Business”. For foreign companies, it is usually required to establish a subsidiary or branch in Japan to apply for this qualification.

In terms of taxation, foreign-invested enterprises need to pay special attention to the provisions on overseas investors in the “Law on Special Tax Measures”. For example, Article 41-4-3 of the Act makes special provisions on the taxation method for non-resident investors investing in Japanese real estate through a TK (anonymous combination) structure, which may affect the choice of investment structure.

To sum up, the entry threshold for foreign-funded enterprises to participate in Japanese commercial real estate development is not high, but they need to fully understand the relevant laws, especially in aspects such as investment structure design and tax planning. It is recommended to hire local Japanese professional consultants to provide assistance.

7.5 Commercial real estate dispute resolution mechanism: mediation, arbitration and litigation

Japan’s commercial real estate dispute resolution mechanism mainly includes three methods: mediation, arbitration and litigation. Each method has its own characteristics and applicable situations.

Conciliation (mediation) is a softer form of dispute resolution and is governed by the Civil Mediation Act. For tenancy disputes, you can apply to the Summary Tribunal for mediation. The advantages of mediation include simple procedures, low cost, strong confidentiality, and it does not affect the commercial relationship between the parties. However, the mediation results are not enforceable and require voluntary performance by both parties.

Arbitration (Arbitration) is conducted based on the Arbitration Law. In line with international practice, Japanese arbitration must be based on the arbitration agreement between the parties. Arbitration is final and the arbitral award has the same effect as a court judgment. For cross-border commercial real estate transactions, arbitration is favored for its flexibility and confidentiality. The Japan Commercial Arbitration Association (JCAA) is one of the leading institutions handling commercial real estate arbitration.

Litigation is the last resort to resolve commercial real estate disputes and is governed by the Civil Procedure Law. Depending on the amount in dispute, the case may be before the Summary Court, the District Court or the High Court. It is worth noting that litigation procedures in Japan are relatively time-consuming, and public trials may affect trade secrets.

There are also specialized resolution mechanisms for certain types of disputes. For example, for land acquisition disputes, an application can be made to the Acquisition Commission for a ruling under the Land Acquisition Act. For lease disputes, the mediation system stipulated in the Land and Home Leasing Law can be used.

When choosing a dispute resolution method, you need to consider the nature, amount, time requirements and whether transnational factors are involved. For complex commercial real estate disputes, it is recommended to clearly stipulate dispute resolution clauses in the contract so that disputes can be resolved quickly and effectively when they occur.

7.6 Interpretation and optimization strategies of commercial real estate tax policies

The tax policies for commercial real estate in Japan are complex and diverse, mainly involving taxation in three stages: acquisition, holding and disposal. Understanding these policies and developing a sound tax strategy is crucial to reducing overall costs.

In the acquisition stage, it mainly involves the registration license tax and the “real estate acquisition tax” (real estate acquisition tax) stipulated in the “Registration Tax Exemption Law”. Registration license tax rates vary depending on the type of registration, ranging from 2% for the purchase of land to 0.4% for buildings. The standard rate of real estate acquisition tax is 4%, but local governments may have reduction or exemption policies.

The holding stage mainly involves fixed assets tax and urban planning tax. The “Local Tax Law” stipulates that the standard fixed asset tax rate is 1.4% and the maximum urban planning tax rate is 0.3%. Both are levied based on the assessed value of real estate. It is worth noting that commercial land often does not have the same tax benefits as residential land, so the tax burden is relatively heavy.

In the disposal stage, income tax or corporate tax is mainly considered. For legal persons, income from the transfer of real estate is incorporated into corporate income and taxed at the tax rate stipulated in the Corporate Tax Law. Individuals selling commercial real estate are required to pay transfer income tax stipulated in the Income Tax Law. Long-term holdings (more than 5 years) can enjoy preferential tax rates.

To optimize your tax burden, consider the following strategies:

• Take advantage of the special provisions in the Special Tax Treatment Law, such as tax incentives for renewal and reconstruction projects.
• The rational use of real estate securitization tools, such as J-REIT, can optimize the tax burden structure to a certain extent.
• For cross-border investment, make full use of the tax treaty between Japan and the country where the investor is located to avoid double taxation.
• Carry out tax planning during the project planning stage, such as arranging the acquisition time appropriately to take advantage of periodic tax reduction policies.
• Assess the value of real estate regularly and file for review of fixed asset tax assessments at the appropriate time to avoid excessive taxation.

It is important to emphasize that tax optimization strategies must be carried out within a legal framework. The National Taxation General Principles Law has clear anti-tax avoidance provisions on abusive tax planning. Therefore, when formulating a tax strategy, it is recommended to consult a professional tax advisor to ensure compliance while maximizing tax benefits.

Forecast of regulatory change trends

8.1 Potential Impact of Population Decline on Commercial Real Estate Regulations

Japan faces severe population decline, which will have a profound impact on commercial real estate regulations. Future regulations are expected to focus more on urban shrinkage and the reuse of vacant properties. The “Urban Regeneration Special Measures Act” may be revised to increase support for the rezoning of commercial areas. The “Special Measures Act for the Promotion of Vacant House Countermeasures” (Special Measures Act for the Promotion of Vacant House Countermeasures) may expand its scope of application to include commercial real estate.

In order to cope with the shrinking tax base caused by population decline, local governments may adjust the taxation methods of commercial real estate by amending the Local Tax Law. For example, differentiated tax rates based on occupancy rather than simply area could be introduced. In addition, the Urban Planning Act may increase flexibility, allowing land use to be changed more easily to accommodate shifts in demand brought about by changing demographics.

The Building Standards Act may also loosen restrictions on commercial building renovations, encouraging the conversion of excess commercial space into other uses, such as senior care facilities or mixed-use developments. At the same time, in order to maintain urban vitality, new regulations may be introduced to encourage the development of small, multi-functional commercial facilities in densely populated areas.

8.2 Prospects for new commercial real estate regulations under the development of smart cities

As the concept of smart cities advances, commercial real estate regulations will face new challenges and opportunities. The National Strategic Special Area Law may be further revised to provide legal support for pilot projects in smart business districts. New regulations may focus on data collection and use, balancing commercial interests with the protection of personal privacy.

The Building Standards Act and the Urban Planning Act may add definitions and standards for smart buildings. For example, new commercial facilities may be required to have a certain level of intelligent functions, such as energy management systems, smart parking systems, etc. The Real Estate Specified Common Enterprises Act may be revised to encourage investment in smart commercial real estate projects.

In addition, new regulations may be enacted to regulate the operation of smart commercial facilities. This may include security standards for IoT devices, specifications for data storage and transmission, etc. The application of the Personal Information Protection Act (Personal Information Protection Act) in the commercial real estate sector may also be strengthened, particularly in the processing of customer behavior data.

To promote the development of smart cities, the government may amend the Special Tax Treatment Law to provide tax incentives to commercial real estate owners who invest in smart transformation. At the same time, the Electricity and Communications Business Law (Telecommunications Business Law) may need to be revised to support the widespread application of next-generation communication technologies such as 5G in commercial real estate.

8.3 The role of sustainable development concepts in promoting commercial real estate regulations

The concept of sustainable development will continue to influence commercial real estate regulations in Japan. The “Building Energy Consumption Performance Improvement Law” may be further strengthened to require commercial buildings to meet higher energy efficiency standards. The Global Warming Countermeasures Promotion Law (Law for Promotion of Global Warming Countermeasures) may add specific requirements for commercial real estate, such as mandatory carbon emissions reporting and emission reduction targets.

The “Building Standards Act” may increase requirements for the use of green building materials and encourage the application of circular economy in the construction field. The “Urban Green Space Law” (Urban Green Space Law) may be revised to increase the requirements for the greening rate of commercial areas and promote the construction of an eco-friendly business environment. At the same time, the Basic Law on Water Cycle (Basic Law on Water Cycle) may impose higher requirements on water resources management in commercial facilities.

To encourage the development of sustainable commercial real estate, the Real Estate Specific Common Utility Act may be revised to provide more support for green commercial real estate investment. The Special Tax Measures Law may introduce new provisions to provide tax incentives for commercial properties that meet certain sustainability standards. In addition, new regulations may be enacted to regulate and encourage energy self-sufficiency in commercial properties, such as solar power generation, geothermal utilization, etc.

8.4 The internationalization trend of Japanese commercial real estate regulations in the context of globalization

In the context of globalization, Japanese commercial real estate regulations will show a more obvious trend of internationalization. The Foreign Exchange and Foreign Trade Law (Foreign Exchange and Foreign Trade Law) may further relax restrictions on foreign investment in commercial real estate while strengthening the national security review mechanism. The Real Estate Specified Common Enterprises Act may be revised to provide a clearer legal framework for cross-border real estate investments.

The Companies Act and the Financial Instruments Introduction Act may be adjusted to better meet the needs of international commercial real estate investors, such as simplifying the process for foreign companies to establish special purpose companies (SPCs) in Japan. The tax treaty (tax treaty) network may be further expanded to provide a more favorable tax environment for cross-border commercial real estate investment.

The section of the Civil Code relating to real estate transactions may be modernized to adapt to international business practices. The Arbitration Law may be revised to strengthen Japan’s position as an international center for commercial real estate dispute resolution. In addition, new regulations may be formulated to regulate cross-border digital commercial real estate transactions, such as real estate registration systems based on blockchain technology.

In order to improve international competitiveness, the National Strategic Special Area Law may expand its scope of application and provide more policy support for large-scale commercial real estate development projects with foreign investment. At the same time, the Building Standards Act may further align with international standards, especially in the fields of smart buildings and green buildings.

8.5 Challenges to the definition of commercial space caused by technological innovation (such as VR/AR) and possible regulatory adjustments

With the development of technologies such as VR/AR, the definition of commercial space will face challenges, which may lead to a series of regulatory adjustments. The Urban Planning Act and the Building Standards Act may need to be revised to adapt to the new form of mixed use of virtual commercial space and physical space. For example, new zoning standards may be needed for VR business districts.

The Real Estate Specified Common Enterprises Act may expand the definition of “real estate” to include certain forms of virtual commercial spaces within the scope of regulation. The Trademark Law (Trademark Law) and the Unfair Competition Prevention Act (Anti-Unfair Competition Law) may need to be revised to protect intellectual property rights in virtual business spaces.

The Consumer Contract Law (Consumer Contract Law) may need to be adjusted to cope with new business transaction models in the VR/AR environment. The Personal Information Protection Act (Personal Information Protection Act) may need to be strengthened to deal with new privacy risks brought by VR/AR technology. At the same time, the Electricity and Communications Business Act (Telecommunications Business Act) may need to be revised to regulate the operation of VR/AR commercial platforms.

In order to encourage innovation, the Industrial Competitiveness Strengthening Act (Industrial Competitiveness Strengthening Act) may add provisions to support VR/AR commercial technology research and development. The “Special Tax Treatment Law” may introduce new preferential policies to encourage the transformation of traditional commercial real estate into VR/AR compatible spaces. In addition, new regulations may be formulated to regulate issues such as transaction security and consumer rights protection in virtual commercial spaces.

8.6 The potential impact of flexible working on commercial real estate regulations in the post-epidemic era

In the post-epidemic era, the popularity of flexible office models will have a profound impact on commercial real estate regulations. The Building Standards Act may need to be revised to set new safety and health standards for mixed-use spaces such as office, retail, and residential complexes. The Urban Planning Act may need to be adjusted to adapt to the new urban pattern in which office and commercial functions are more dispersed.

The Labor Standards Act and the Industrial Safety and Health Act may need to be revised to clearly define employer responsibilities and employee rights in flexible workplaces. Provisions for short-term, flexible leasing may need to be added to the Lease and Lending Law (Lease Law) to accommodate changes in business needs for office space.

The Real Estate Specific Common Utilities Act may need to be revised to provide a clearer legal framework for investing in flexible office space projects. The “Remote Work Promotion Act” (Remote Work Promotion Act, which has not yet been formally enacted) may be accelerated and may include relevant provisions on the transformation and utilization of commercial real estate.

Local tax laws may need to be adjusted to account for changes in the use and value of commercial property. For example, new tax rates may be needed for mixed-use properties that combine office and commercial functions. The Land Utilization Planning Act may need to be revised to provide guidance for the planning of new office areas.

In order to encourage commercial real estate to transform into flexible office models, the “Special Tax Treatment Law” may introduce new preferential policies. At the same time, the “Energy Usage Rationalization Etc. Law” (Energy Usage Rationalization Law) may need to be revised to adapt to the energy management needs in the distributed office model. In addition, new regulations may be enacted to regulate issues such as management, security and data protection of shared office spaces.