Today’s Real Estate: Interim financial results for the four major real estate companies are in! Mitsubishi Estate’s operating profit is up 74%, so why are real estate stocks still sluggish?
The financial results for the April-September period of fiscal year 2026 are in, and the performance of major real estate companies is a mix of highs and lows. While Mitsubishi Estate saw a significant increase in operating profit of approximately 74% compared to the same period last year, Mitsui Fudosan and Tokyu Fudosan Holdings saw declines in both revenue and profit. Despite tailwinds in the real estate market, such as rising office rents in the city center and expanding hotel demand, there is a large disparity in the performance of each company. Furthermore, looking at the stock market, major real estate stocks have all fallen significantly from their year-to-date highs. A strong real estate market and sluggish stock prices. What is behind this seemingly contradictory movement? In this issue, we will consider the current state and future of the real estate industry based on the interim financial results and stock price trends of the four major companies.
Reference and introduction of news
Comparing the April-September 2026 interim financial results of the four major companies announced in November, clear differences in performance can be seen among the companies.
The most prominent is Mitsubishi Estate. Sales were 880.6 billion yen, and operating profit was 187.1 billion yen, a 73.9% increase compared to the same period last year. Net profit also increased by 122.4% to 129.1 billion yen, both of which were record highs for an interim period. In addition to a significant increase in gains from the sale of properties in overseas businesses, office leasing and commercial facilities centered on Marunouchi were also strong. Furthermore, the full-year operating profit forecast has been revised upward to 380 billion yen.
Sumitomo Realty & Development is also solid. Sales were 528 billion yen, a slight decrease, but operating profit was 181.5 billion yen, an 8.4% increase compared to the same period last year. It is characterized by the profitability of office leasing and a high profit margin, with an operating profit margin reaching approximately 34%. It can be said that these financial results demonstrate the strength of a business structure centered on continuous rental income.
On the other hand, Mitsui Fudosan had sales of 1.2155 trillion yen and operating profit of 176.1 billion yen, a 19.5% decrease compared to the same period last year. However, the reaction to the property sales gains recorded in the same period last year was significant, and the leasing and hotel businesses have remained firm. Tokyu Fudosan Holdings also saw a 14.2% decrease in profit, with sales of 542.5 billion yen and operating profit of 67.7 billion yen. This was affected by a decrease in property sales to investors and lower profitability in the condominium business.
Common tailwinds for each company and the business structures that divide performance
A common point that emerges from these financial results is the profitability of high-quality rental real estate. Demand for offices in the city center is firm, and profit improvement through rent revisions is progressing. Hotels and commercial facilities are also supporting earnings. On the other hand, rising construction costs, labor costs, and increased interest burdens are common challenges for all companies.
What differs significantly is how they generate profit. For Mitsubishi Estate, gains from the sale of domestic and international real estate drove the profit increase. Sumitomo Realty & Development secures high profitability centered on office leasing. Mitsui Fudosan has a wide range of businesses including offices, commercial facilities, housing, logistics facilities, and hotels, while Tokyu Fudosan Holdings develops diverse businesses in addition to urban development, such as management and operation, brokerage, and renewable energy.
What we should be careful about here is that the six-month performance fluctuates significantly depending on when property sales gains are recorded. Mitsubishi Estate’s significant profit increase is not entirely due to an increase in continuous rental income. Conversely, the profit declines of Mitsui Fudosan and Tokyu Fudosan Holdings do not immediately mean a decline in business competitiveness. To judge the true strength of a real estate company, it is important to evaluate sales gains and continuous earnings separately.
Strong real estate market, yet stock prices are falling
Meanwhile, the stock market continues to face a difficult situation. Comparing the closing prices on November 13, 2026, with the year-to-date highs, all four companies are significantly lower.
Mitsui Fudosan’s closing price on November 13 was 1,623 yen against a year-to-date high of 2,158 yen, a decline of approximately 24.8% from the high. Mitsubishi Estate also fell approximately 23.8% from a high of 5,407 yen to 4,122 yen. Sumitomo Realty & Development fell 33.0% from 5,358 yen to 3,591 yen, the largest decline among the four companies. Tokyu Fudosan Holdings also fell 23.5% from 1,598 yen to 1,222 yen.
The biggest concern is rising interest rates. Since real estate companies use large amounts of debt for development and ownership, rising interest rates lead to an increase in interest payments. Also, if the yield required for real estate investment rises, it will affect the valuation of held assets. Furthermore, rising mortgage interest rates may suppress demand for purchasing condominiums.
However, this stock price decline cannot be explained solely by interest rates. Investors are also evaluating future profit growth, efficiency of held assets, and shareholder returns. Even if performance is strong, if expectations for future growth decline, stock prices will not rise.
What will happen to real estate stocks in the future?
When considering future real estate stocks, there are three elements to pay attention to. First is the pace of interest rate hikes. Rapid interest rate hikes are a headwind, but if profit improvements from rent increases exceed the increase in interest burdens, there is a possibility of maintaining and improving corporate value. Second is the improvement of asset efficiency. How efficiently assets can be turned into profits, such as through the sale and reinvestment of held real estate and the improvement of ROE, will be important. Third is shareholder returns. Mitsubishi Estate has completed a 50 billion yen share buyback, and Mitsui Fudosan has also announced additional share buybacks.
Going forward, rather than real estate stocks rising uniformly, it is expected that evaluations will diverge depending on each company’s revenue structure and financial strategy. In particular, companies that own high-quality real estate in the city center and can realize rent increases have a certain amount of room for growth. On the other hand, a difficult environment may continue for companies with heavy interest burdens that cannot pass on rising development costs to sales prices.
These interim financial results have once again shown that the strength of the real estate market and the stock prices of real estate companies do not necessarily move in tandem. In evaluating real estate stocks from now on, it is important to look comprehensively not only at simple revenue and profit growth, but also at the quality of held assets, the growth potential of continuous earnings, resistance to interest rates, and shareholder returns. In an era where the value of real estate is increasing, how that value can be connected to corporate profits and shareholder value is key. It seems to be a phase where the management capabilities of each company will be questioned more than ever.
Thank you for reading to the end!
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