“Comfortable living and community. A new value in Japanese real estate.” What is the new way of living that Mitsubishi Estate is going after?

New lifestyles that emphasize the formation of communities among residents are expanding overseas. “Hmlet,” a startup that provides co-living services in Singapore, has already expanded to Hong Kong and Sydney, and, in 2019, it expanded to Tokyo with Mitsubishi Estate as a partner. The first property was opened in Shinsencho, Shibuya ward. The residents therein are deepening their friendship.

We interviewed Kenichi Sasaki, CEO of Hmlet Japan (conducted on March 17, 2020), who proposed the collaboration with Hmlet as a new business for Mitsubishi Estate. We will delve deeper into how a new way of living called “co-living,” which is not commonly known in Japan, will develop and why Mr. Sasaki, a former mid-career employee, started his own business.

INDEX

・ “Comfortable living and community” in the Japanese real estate business
・Forming a community that is not restricted by a building and providing services with a dedicated app
・The reason why entrepreneurship is recommended for mid-career employees of major companies
・Key points

Kenichi Sasaki
He joined Mitsubishi Estate Co., Ltd. in 2006. He worked in corporate sales, participated in the Marunouchi redevelopment project, and built systems for recruitment, training, and human resources. Then, he was involved in real estate development around Southeast Asia, in Singapore. In 2018, he initiated discussions with the founder of Hmlet in Singapore about creating a joint venture (JV) in Japan, and started working at Hmlet Japan Co., Ltd. in October 2019.

“Comfortable living and community” in the Japanese real estate business

Mr. Sasaki was stationed in Singapore from 2017 to 2019. He formed a JV with a real estate developer in Southeast Asia and was engaged in transmitting know-how on the housing business of Mitsubishi Estate. The encounter with Hmlet was triggered by the efforts of Mr. Sasaki.

Sasaki: “After I got used to working in Singapore and had time to spare, I went to check local startups and talk to CEOs directly. Although this was partially a hobby, when I found an interesting company, I introduced it to the New Business Creation Department of Mitsubishi Estate, and I thought it would be a chance to create a new business.

Many managers of startups in Southeast Asia were interested in Japan, which has a large market in Asia, as a stepping-stone from which to expand globally. However, Japan has a unique culture, which causes difficulties for localization, and it is not easy to take the challenge. Therefore, I thought that, if we could leverage the strengths of Mitsubishi Estate, a major company, to support their expansion into Japan, it would be a win–win situation.”

Sasaki explains why he chose Hmlet among a number of Singapore startups.

Sasaki: “I thought that the idea of housing that has a community while utilizing digital technology was interesting. The housing business in Japan is simple, and “distance from the station” and the “age of the building” determine nearly 90% of the price per unit in an area. Although it may fluctuate slightly depending on the specifications of the building, it will not deviate significantly from the market price.

Then, how cheaply you can purchase from the owner of the land or building, and how aggressively you can set the rent become the simple criteria of the housing business. If we could create new value by providing community and housing-related services, we would be able to develop an unprecedented housing business.”

What is the new value created by communities? Mr. Sasaki says that when he saw Hmlet’s business, he formed a mental picture based on his own life.

Sasaki: “For example, both my wife and I work, and we have a two-year-old child. When either one of us works overtime, the other has to take care of our child alone, and if one has to work on a Saturday or Sunday, the other has to take care of the child all day long. The number of times that I go out for drinks has decreased to less than one-tenth of what it was before my child was born.
Suppose that a couple of retirees in their 60s, who are enjoying the remainder of their lives, lived next to us. I would think that this couple has money and time, but they feel lonely after raising their children and want to connect with society. I think that if they could take care of our child from time to time, we could help fulfill each other’s lives.

Parenting is fun, but there are times when it is difficult for a working couple. It would be very reassuring to have neighbors with whom you could mutually cooperate in your busy daily life, and the couple next door could also have contact with society. I thought that there would always be people who would like to live in the type of housing where they could satisfy their needs and find a match, even if the rent is a little higher than the market price.”

Forming a community that is not restricted by a building and providing services through a dedicated app

Mr. Sasaki wants to create a community with a higher proportion of Japanese residents, but it seems that 80% of the current users are foreigners. Mr. Sasaki says it is very popular with expatriates from foreign companies.

Sasaki: “Many expatriates who have to stay in Japan for a long period of time because of their work have a hard time renting an apartment. Until now, they had no choice but to live in a hotel or service apartment. However, that makes it difficult to make Japanese friends, and the opportunities to come into contact with Japanese culture are limited.

With Hmlet, not only can you get a fulfilling community, but foreigners can easily handle utilities and internet contracts and cancellations, which are usually complicated. It is possible to sign a contract from a minimum of 1 month, so long-term business travelers are also pleased.”

Sasaki says that increasing the number of foreign users will provide new value to Japanese people.

Sasaki: “I think that many people who work for companies in Japan work from morning until night and go out for drinks with their bosses and colleagues after work, and that was the case when I was in my twenties. If you continue to live like that for many years, and don’t pay attention, you will tend to narrow your horizons, and it will be difficult to incorporate new values and ideas. However, if we can make friends with people who work in startups or expatriates in the community through housing, it will be inspiring to come into contact with a completely different culture, and it may change the way people live.”

For Mr. Sasaki, who used to work and go home every day, it would have been very exciting to be stationed overseas and talk to non-Japanese people. He says that having a community with people who have different values and backgrounds is of great value.

Sasaki: “Japanese people already have friends at work and from their school days, so I think that at first, many people don’t value a community like Hmlet. However, for example, Westerners who work for Google and other companies live in Hmlet Shibuya Shoto, would be compatible with Japanese people who want to work overseas in the future or who want to get an MBA.”

The selling point of Hmlet is the community, but when you think of a community, you might think of a share house. Mr. Sasaki talks about the difference between a conventional share house and Hmlet.

Sasaki: “First, at Hmlet, each private room has a kitchen, a toilet, and a bath, just like ordinary rental apartments. Residents can relax in their own room and come to the community lounge when they like. Also, the Hmlet community is not limited to one building; communities are formed for each area in order to promote information dissemination and interaction among residents through the resident-only app. There is also a common space in the first property in Shibuya, but if there are vacant rooms in the surrounding rental condominiums, you can increase the number of rooms one by one. The share house community is complete inside the building, but we are planning to create a community for each area, not only for the buildings.

Recently, the number of inquiries from hotels about collaboration has been increasing. Hotels are full during the high season, but other than that, there may be vacancies. We will rent part of the unused rooms for a few months and provide this service as Hmlet. Hotels also have a dining room, but it is mostly used for breakfast and dinner. I think it would be beneficial to use the idle time of such cafeterias to form communities.”

Currently, it is limited to condominium types, but it may become possible to live in various types of rooms, such as hotels. Another big difference is that we have also introduced our own app.

Sasaki: “There is an app that only residents can download, and it is possible to see the profiles of the kind of people who live in the building. It is also possible to announce events using the app, and also plan various events for each area. As mentioned, in a conventional share house, you can connect only with the people who live in the same building. However, with Hmlet, you can easily create a community with other Hmlet residents who live nearby.
Besides, you can easily arrange a cleaning service through the app. You can also chat with community managers and other tenants, request 24-hour non-specific support, and perform various other procedures. Thus, it will enrich your daily life.”

There are plans to launch a special service and increase the number of Japanese users, and it seems that there are issues related to the COVID-19 crisis.

Sasaki: “Up until now, it was mainly Western expatriates who moved in, but due to the global coronavirus pandemic since March, cross-border movement has ceased, and therefore, we are in the process of further localization.

For example, we also feel the need to devise ways to set the price. Currently, we are setting the price by including utilities and Internet charges, but it looks relatively expensive compared to a normal rental apartment. We would like to provide flexible services that meet the needs of each individual by setting out utilities and other expenses as an extra charge and offering the furniture provided as an option.”

The reason why entrepreneurship is recommended for mid-career employees of major companies

Mr. Sasaki started a business while working for a major company. We would like to focus on the aspect of entrepreneurship. Mr. Sasaki, who saw various startups in Singapore, chose Hmlet as a collaborator because it was easy to understand within the Mitsubishi Estate Group.

Sasaki: “When I started the new business, I was conscious of how many fans I could create within the group. If I stayed close to the main business, people in the company would also be interested. For example, I thought that we might get introductions of potential customers and property information. It would have been a waste not to utilize the personal connections that I have built within the company, because I had been working there for more than 10 years.
In that sense, Hmlet’s business is close to the main business of the housing business division at Mitsubishi Estate, so I am very grateful for the support of many people, and I am also receiving more support from people outside the company than I had anticipated.

Also, I hope that the partnership with Hmlet will lead to the branding of Mitsubishi Estate. Many people have the image that Mitsubishi Estate is not active in open innovation, but in reality, we are actively working with startups. By increasing the number of open innovations, such as Hmlet, I would like to take on new challenges and move forward with the business while having a sense of speed even though it is a large company.”

Mr. Sasaki emphasized that various new businesses are being created one after another at Mitsubishi Estate. At the end of the interview, Mr. Sasaki said that mid-career employees of major companies are suitable for becoming entrepreneurs.

Sasaki: “It is difficult to take on the challenge if you are in an environment where you will lose your job if the business fails. However, if you are an in-house entrepreneur whose living expenses are guaranteed, it will be easy to take on the challenge, even if it is possible that the business will fail.”

Currently, Hmlet has properties only in Shoto and Sasazuka, but he said that he plans to open five new properties in Iwamotocho, Sengoku, Harajuku, Takadanobaba, and Sangenjaya this summer, and will continue to actively provide properties in the future. The future of co-living, which is not commonly known in Japan, may not be far away. We are looking forward to seeing this new lifestyle based on community spread throughout Japan.

Click here for details on properties operated by Hmlet Japan.