Sony is set to enter the property business. The company has announced plans to launch a real estate unit – including brokerage, consulting and property management services – in August this year.
The new business, to be called Sony Real Estate Corp, will be based in the trendy Ginza area in Sony’s home town of Tokyo. The company is making an initial investment of 250 million yen ($2.4 million USD) to get its property unit off the ground, according to an official statement.
So why is one of the world’s leading electronics companies diversifying into property? The answer lies in the current global tech climate.
Once the go-to source for electronics, Sony’s popularity has been waning in recent years as consumers have embraced mobile products from tech giants Apple and Samsung. At the same time, consumer demand for some of Sony’s main revenue spinners – such as televisions and personal consumers – is declining.
This has led Chief Executive Officer Kazuo Hirai to forecast a $1.1 billion USD loss in the year to March 31, leading to the announcement that the company would cut 5000 more jobs and reduce expenses. The company has also been progressively downsizing its property portfolio, including selling its Tokyo premises in what was Japan’s most expensive office property deal in four years.
“Sony has accumulated personal information through its Vaio and PlayStation businesses, so the company may be able to use the consumer database in the real estate business,” Deutsche Bank AG analyst Yasuo Nakane told Bloomberg’s Business Week. “It’s more about asset optimization, rather than a strategic move,” Nakane said.
Sony’s new real estate business is expected to go public within three years, but the company’s foray into property may just be the beginning. The Nikkei reported that the company planned to develop 10 new businesses over three years, including in the toys industry.