Japan's Mid-Tier Real Estate Firms Q2 FY2026: Rental gains; Nomura Real Estate lags

Property sales and the pace of home deliveries shaped results across the four companies. Four common themes stood out:

• Property sales drove revenue growth. Revenue rose 38.8% at Hulic and 30.1% at Tosei. Leasing income and property disposals both supported the gains.
• Demand for value-added properties remained firm. Tosei's sales of properties it had upgraded were strong, helping it post its best-ever interim results.
• Used homes benefited from a price advantage. Katitas increased sales by 20.5% as high new-home prices steered buyers toward more affordable existing homes.
• Delivery timing swung quarterly results. Nomura Real Estate's revenue fell 13.7%, partly because fewer homes were handed over. Differences in the timing of property deliveries and sales showed up in each company's figures.

Hulic and Tosei reported interim results, while Nomura Real Estate and Katitas reported first-quarter results. The figures are best read as an indication of direction, rather than as a direct comparison.

Hulic led in both scale and revenue growth. Revenue reached ¥416.6 billion, up 38.8%, while operating profit rose 7.0% to ¥80.3 billion, the highest among the four. Stable leasing income was supplemented by sales of properties held for sale.

Tosei stood out for profitability. Its operating margin of 24.7% topped Hulic's 19.3%. Revenue increased 30.1% and operating profit climbed 20.5%, reflecting its strength in adding value to properties before selling them.

Nomura Real Estate had the toughest period. Revenue fell 13.7% to ¥191.1 billion, and operating profit dropped 30.6% to ¥25.5 billion. Fewer home deliveries, shifted timing for urban-development property sales and losses in overseas operations all weighed on results. The company left its full-year forecast unchanged, so it is too early to judge the year on one weak quarter alone.

Because reporting periods differ, the companies' business mix and progress against their plans matter more than a simple ranking.

The four companies differ in how they turn properties into earnings.

• Hulic expanded sales of properties held for sale on top of its leasing income base. Operating profit grew 7.0%, slower than revenue, making the impact of higher property sales on margins a key focus. Its full-year operating profit forecast is ¥210 billion.
• Nomura Real Estate has a broad portfolio spanning residential sales and urban development. Fewer deliveries weighed on first-quarter results, but it kept its full-year forecasts of ¥1.08 trillion in revenue and ¥140 billion in operating profit.
• Tosei focuses on property revitalization, renovating assets to increase their value before sale. Its 24.7% operating margin was the highest of the four. It had already recorded ¥21.2 billion in operating profit for the interim period, against a full-year forecast of ¥24.6 billion.
• Katitas buys, renovates and sells existing homes. First-quarter sales rose 20.5% to 2,381 homes. It also increased purchases by 25.8%, building inventory for future sales. Its full-year operating profit forecast is ¥21 billion.

While conditions remain supportive, the companies need to prepare for changes in financing costs and property prices.

• Higher interest rates could raise borrowing costs and erode the economics of acquisitions and development.
• A correction in property prices could reduce disposal gains and the value of assets held. Higher acquisition prices also make it harder to secure profits when properties are sold.
• Rising construction, renovation and labor costs could squeeze margins on refurbished properties and homes. For Katitas, protecting gross profit as it expands purchases is a key challenge.
• Shifts in the timing of sales and deliveries can make quarterly results volatile. Timing effects were among the factors behind Nomura Real Estate's profit decline.
• Uneven demand is another concern. A slowdown in inbound tourism or investment flows could change conditions for central-city and refurbished properties.
• Volatility in overseas earnings also poses a risk. Overseas operations made a loss at Nomura Real Estate, showing that geographic diversification alone does not guarantee stable results.

Hulic ranked first in both revenue and operating profit this time. Tosei led in operating margin, highlighting differences in profitability that revenue scale alone does not reveal. Katitas's operating profit growth of 28.4% also outpaced Hulic's 7.0%.

There is no single path to growth. Companies with leasing income benefit from a stable base, while those focused on property revitalization and sales rely on their ability to acquire and sell assets. The test ahead is which business models can best withstand changes in interest rates and acquisition prices.

Real estate work goes beyond developing properties. Roles that generate income include leasing operations, property revitalization, home sales and disposals to investors.

Hulic offers exposure to both leasing and property sales, while Tosei focuses on revitalization and sales, and Katitas covers the process from acquiring existing homes to selling them. Nomura Real Estate offers opportunities across a range of businesses, including housing and urban development. When choosing an employer, consider not only the company's size but also which stage of the business you want to work in.