When Buddhism was introduced to Japan in the sixth century, extensive temple construction using highly accomplished woodworking skills got underway.

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Horyu-Ji is Japan’s first UNESCO World Heritage site _©Wikimedia

1945; for some, it may be the end, but for Japan, it was the new beginning.

The area of construction is one indication of how ideas have historically been assimilated into Japanese culture. Japan has a significant focus on R&D and has produced several innovations. Since the beginning of the 20th century, Japan has incorporated western ideas into various inventive forms. This might be seen in the context of the events that followed the Great Kanto Earthquake of 1923, which had catastrophic consequences for Tokyo and its surroundings. Japan began developing concepts based on earthquake-resistant building design. Japan was parallel to the western nations years before the Second World War broke out.

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From the ruins of an urban landscape _©The Guardian

As the Second World War ended in 1945, bombings in Japan wreaked havoc on the country’s industrial infrastructure and mostly decimated its urban centres. Resettlement was necessary for those urban areas that had been devastated, and many housing units were needed for that. Many building firms that had survived the war sprang forward to fill this gap. And this served as a stepping stone for developing the construction sector in Japan’s recovering economy.

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The Nippon Budokan, an indoor arena constructed for the 1964 Olympics_ ©Wikimedia

Japan’s economy had to be rebuilt, and it did so over nearly fifteen years, beginning in the 1960s. The building industry prospered while addressing housing needs and the need for land associated with national development initiatives along with the expanding economy. One such marvel of the construction sector created as highways and harbours were built, the Shinkansen super express railway—Which debuted in time for the first Tokyo Olympics.

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The Shinkansen super express railway’s Hayabusa high-speed train_ ©Nanashinodensyaku

As a result, the national economy of Japan was impacted by the extensive construction drive in Japan, vital construction research and development, and construction projects targeting socio-economic development goals of infrastructure, employment, and housing. With millions of unskilled, semi-skilled, and skilled employees employed, the construction industry in Japan has emerged as a prominent employer in terms of employment prospects.

Construction as an economy indicator

When a government begins to invest a sizable portion of its GDP in public works projects, it is another indicator of the importance of the construction industry. But first, let’s think about the construction industry and how it affects the economy. The beginning phase may be acquiring raw resources and turning them into building materials used on construction sites. Before employing labour to perform the actual work on the site, the second step entails designing and planning construction projects. The later stages, which cover everything from scheduling to carrying out the job, are often the ones on which the building industry focuses.

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Urban Morphology of a Japanese City Exemplifying Real Estate _©The Japan Times / REUTERS

All facets of housing, infrastructure development, construction of industrial and commercial facilities, and repair and maintenance are included in the construction business. Infrastructure, a part of the construction sector, is frequently referred to as the foundation of an economy and is therefore referred to as economic infrastructure. The World Bank divides this economic infrastructure into three sub-groups: public utilities, public works, and other transport sectors.

Real estate developed during construction contributes significantly to the nation’s wealth as nonfinancial production assets. Fixed assets make up a sizable component of non-financial industrial assets. The building industry, founded by real estate in the form of fixed assets, is the cornerstone for the continued growth of sectors producing goods and services.

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Multipurpose Testing Laboratory, Shimizu Corporation Institute of Technology _©Shimizu

Japan has research labs and institutions focused on the advancement of construction technology. Japan has excelled in developing its construction industry beyond many developed economies. Japan has done admirable work building underground tunnels, offshore constructions, and high-speed rail systems.

Recent developments in the Construction industry

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The devastation that Japan experienced in March 2011 as a result of a tsunami and an earthquake_ ©The Japan Times

After growing by 1.2% in 2016, the Japanese construction industry resumed its upward trend in 2017, with actual output increasing by 2.6%. Government investments in repairing damaged civil engineering facilities and a booming tourism industry contributed to this increase. 

The government boosted its spending for repairing damaged civil engineering facilities from JPY109.3 billion ($1.0 billion) in 2016 to JPY290.7 billion ($2.6 billion) in 2017 because of the extra cash. The building sector enjoyed its best ten years since the bubble between 2012 and 2022. Sales and profitability peaked in 2019, and the only thing that even slightly inhibited growth in 2020 and 2021 was COVID-19.

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Japan National Stadium in Tokyo, built for the 2020 Tokyo Olympics_ ©Arne Müseler

In 2018, the construction industry in Japan contributed 28.4 trillion Yen to the country’s GDP. The sector’s growth in the ensuing years was impacted by occasions like the 2019 Rugby World Cup, the 2020 Summer Olympics, stimulus spending, and disaster relief programs. During this time, capital spending surged, exceeding spending growth in other industries by a wide margin.

In 2018, 3.5 million individuals in Japan worked in the construction industry. In this industry, there were 451,000 companies, five of which are significant vertically integrated corporations with sizable domestic and international operations. The top five local and worldwide operations companies are Kajima, Obayashi, Shimizu, Takenaka, and Taisei.

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Obayashi’s central technical research Institute_ ©Obayashi

Before the Coronavirus (COVID-19) epidemic, the construction sector in Japan’s actual output rose by 0.5% in 2019 after declining by 1.1% in 2018. This unfortunate outcome is attributed to the weakening world economy, a strong typhoon, low consumer and business confidence spurred on by the consumption tax rise, and the failing global economy. 

Even if investments in residential construction remained modest, spending on non-residential structures and civil engineering increased the construction industry’s output. The government unveiled an economic stimulus package in December 2019 that includes an allocation of about JPY6 trillion (US$55 billion) for public investments in response to a string of natural disasters that seriously damaged the country’s infrastructure.

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Japan National Stadium, Tokyo_ ©CNN

The 2020 Summer Olympics in Tokyo, Japan, scheduled to take place from July 24 to August 9 of that year, were postponed due to the COVID-19 virus and instead took place from July 23 to August 8 of the following year.

Future Ahead

Japanese construction company Shimizu Corporation’s display of construction robot doing the welding work _©Koji Sasahara

The construction industry is looking to robots and artificial intelligence to fill the labour gap and prepare for the future by scurrying around job sites day and night, setting up tools and moving supplies for upcoming construction. The machines’ sophisticated AI, cameras, and sensors will allow them to carry out any operation, including lifting and transporting building materials and welding steel.


Leussink, D. and Nakagawa, I. (2019) Japan’s ageing, labour-starved construction industry gives the economy a Capex Boost, Reuters. Thomson Reuters. Available at: https://www.reuters.com/article/us-japan-economy-robots-idUSKBN1XF0MB  (Accessed: November 18, 2022).

Ltd, R.and M. (no date) Construction in Japan – key trends and opportunities to 2024, Research and Markets – Market Research Reports – Welcome. Available at: https://www.researchandmarkets.com/reports/5212188/construction-in-japan-key-trends-and?utm_source=BW&utm_medium=PressRelease&utm_code=x7ng9l&utm_campaign=1268360%2B-%2BConstruction%2Bin%2BJapan%3A%2BKey%2BTrends%2B%26%2BOpportunities%2Bto%2B2022&utm_exec=joca220prd   (Accessed: November 18, 2022).

Construction in Japan: Key trends & opportunities to 2022 (2019) Business Wire. Available at: https://www.businesswire.com/news/home/20190621005295/en/Construction-Japan-Key-Trends-Opportunities-2022–  (Accessed: November 17, 2022).


Sadiq Zafar is a practicing architect, urban policy researcher, and planner who previously worked for a national research institute and held the position of assistant professor at the Jamia Millia Islamia in New Delhi. He researched urban poor housing neighborhoods while working as a sustainability planner in Gonda, Uttar Pradesh.