This may appear like a pretty simple question to answer. One could easily argue that a normal reply would follow the lines of most normal selection and establishment of a working relationship processes. Select a contractor , go along and check out some of the real estate projects finished by said contractor, ensure the selected contractor has actual experience in the type of structure you wish to put up, accept contractor quotes , enter an agreement and get going. Following along this fairly simple process one would then normally expect that the selected contractor complete the task contracted. However it seems that this may not always be the case is not in Japan these days. Take care you know who is building your real estate investment. Be sure that the contractor you employed is the contractor who does your work.

The Japanese Government under Construction business law has required for some time now that principal building contractors may not farm out to subcontractors all of the work from any given project. This law however has not covered the private sector which has it seems led to the practice of farming out to subcontractors all of the work on many real estate investment projects. We can speculate that this occurs due to one of two or more pressures, a) the primary contractor is cutting corners to save money by sub contracting to less professional (cheaper) contractors, b) the contractor is weighed down with a sudden inflow of work and can not keep up using his own people. The concern here is clear, a real estate investor who is attracted to a contractor on the grounds of reputation, advertising or even word of mouth would expect that that contractor does the work he is paid for and not farm it out to some unknown contractor. This concern was realized in the recent real estate scandal involving 22 buildings designed by the now disgraced architect Hidetsugu Aneha and Kimura Construction. Now to be fair even the private sector must gain approval from the client before subcontracting but then again does this mean that private clients do read every bit of small print? Or do they go along trusting the real estate developer?

The Japanese government has asked the real estate industry to tighten up on this subcontracting concern and as a result new guidelines have been set. Under the new plan set down by the Federation of Fair Trade, the principal contractor of a building will be required to disclose all contractors working on the site. This plan will be supported by the government's Fair Trade Commission's right to order violators to recall misleading advertising. We may also see violators facing fines and even punitive damages.

From my point of view whilst I see these moves as very positive I still wonder how effective they will be. After all, those 22 scandalous buildings mentioned earlier were accepted by a government planning department and then put up as sub standard projects. Moreover as 2005 and 2006  escalation in new real estate project start continues we may expect the number of incidences of sub contracting attempts to increase as contractors try to keep up with demand. The faster the business escalates the deeper down the pile they will need to seek after available building contractors. We may therefore perhaps a) expect that this problem will not go away over night, c) thank the government for issuing this warning and c) take it upon ourselves to protect ourselves. 

In my case I always use a real estate consultant that I know and trust to stand between myself and the, real estate agents, banks, architects and contractors. I strongly recommend anyone wishing to enter real estate investment in Japan to work directly with a reputable building consultant who can check the details for you. My experience here in Japan is that having a  having an real estate investment consultant working directly for you will maximize the chances that your building project is built correctly, meets your investments criteria and finishes on time.  From planning phase right on through to having occupants move in the consultant will watch your architect, builders and city planners. These folk cost a little but they really are worth it. You may find consultants in most major cities. Look them up in the directory and then go and see them. Be sure to have them take you to actual projects they have managed. I trust this method and feel sure I will never be looking at taking down a building that has been put up incorrectly.

Real estate investment in Japan is a safe job if you work with safe people.  Read more on this topic