In yet another effort by Sony to diversify its income, the 68-year old Japanese corporation has announced plans to move into property sales and consulting services starting this August. Sony Real Estate Corp is being created with a capital of ¥250m ($2.4m / €1.7m) and will involve brokering property sales and providing consulting services in real estate asset management to companies. This comes at a time when Sony has just leveraged the value of its Japanese and US headquarters in the past year, selling them off. Active asset management is now a more prominent part of their activies in-house too. Sony real estate envisages ¥50bn ($491m / €362m) annual sales in five years and list its shares for trading within 3 years. This latest move is the result of in-house inspiration, coming from CEO Kaz Hirai’s plan to source new investment opportunities from within the corporation.
Read on for more details.
Sony Real Estate Corp was sourced as part of a new plan by CEO Kaz Hirai to identify investment opportunities from amongst staff. Every three months, employees will have the opportunity to put forward proposals for unique, profitable moves for the corp. The selection process is headed by the senior vice president for corporate planning as well as the key executive involved in the setting up of Sony Bank, Hiroki Totoki. The idea is pitched to Hiroki Totoki who then evaluates and selects the best ones for the CEO to choose from. It’s likely that the new investment will operate solely in Japan, similar to Sony Financial Holdings.
The immediate market reaction wasn’t positive however. The Tokyo Stock Exchange fell by as much as 4.1%. Despite the rejection by the market, a fund manager for Shinkin Asset Management believes that the financial services that Sony is involved in could be combined effectively with this new venture into real estate.
The financial and real estate businesses are intricately linked and there isn’t a high risk if Sony focuses on the brokerage services,
Naoki Fujiwara, fund manager at Shinkin Asset Management
Hiroki Totoki is considered a well-respected executive in Japan and is a forerunning ally of the CEO, along with the new chief financial officer Kenichiro Yoshida.
The imperative is that Sony is likely overly reliant on consumer electronics, with Game, Mobile and Imaging leading the way. Changes in the consumer goods market have threatened the viability of the TV and PC business, leaving investors wondering where new growth leads are going to come from.
In the past two years, Sony has pitched its tent in the medical sector and is achieving the majority of the entire corporation’s profit from its financial services arm which includes insurance and consumer deposits at Sony Bank.
Discuss:
Is this a good move for Sony?
Image credits: Wally Gobetz, Nishi-Shinjuku, Japan.
[Via Japan Retail News]