Japan’s Sumitomo Forestry has warned that Australia’s foreign investment rules, its current stamp duty regime and slow approvals process are deterring capital just as the country struggles to lift its housing supply. Speaking at the Australia‑Japan Joint Business Conference in Perth last week, Yasuhiro Odagane, managing director of Sumitomo Forestry Australia, warned that administrative slowdowns and restrictive policy settings make Australia less attractive compared with other markets.
“Slow administrative approval process for development compared to North America, the approval process for land development is extremely slow,” he said. “As a result, only large developers can hold development land. They can own and develop, and they control the supply and pricing,” he said through a translator. “Japanese investors are interested, but most want to have lower risk to invest, so that’s slowing down the investment.”
In recent years, Sumitomo Forestry has moved aggressively to muscle into Australia’s residential market, taking a controlling stake in Metricon, the country’s largest home builder, and joining a venture to develop a $1.2 billion build‑to‑rent apartment portfolio – slated to be built out of mass timber. It comes as the related group company, Sumitomo Corporation, entered a joint venture with ASX‑listed Mirvac last December to develop a major housing project in north‑western Sydney.
Those investments form part of a broader wave of Japanese capital targeting Australia’s housing sector as domestic growth in Japan slows and overseas returns look comparatively attractive. Odagane singled out several specific policy obstacles that he said are dampening foreign interest. “Foreign capital companies need to apply to FIRB for land acquisition, and not only are FIRB application fees very high, but it’s not cheap, it’s rather high,” he said.
He added that foreign investors are effectively barred from acquiring established homes for redevelopment: “We are banned from acquiring land with existing houses,” he said, noting the prohibition prevents buyers from purchasing, demolishing and then redeveloping sites at higher density. “Medium‑density housing supply … this is not possible to do that. I hope this will be improved by the government of Australia.”
Industry figures and developers say those constraints lie at the heart of Australia’s supply crisis, along with slow rezoning, planning delays and high construction costs. CBRE chief economist Sameer Chopra told the Perth forum that the shortfall is particularly severe in the apartment sector. “The forward supply for the next few years is just 60,000, and in 2026, there’s a big dip. So the situation will get far worse this year, and then slowly start to sort of stabilise,” he said. “Vacancy will drop every year. Vacancy is already really tight; it’s one of the lowest in the world. The earliest you can turn the curve is just after 2030.”
In recent years, Japan has emerged as one of the power players in Australia’s homebuilding industry. Last month, Wood Central revealed that Japanese‑controlled companies account for about 30 per cent of homes built by Australia’s top 20 builders, with Sumitomo Forestry responsible for 18 per cent of those starts alone. Sumitomo’s message to the government is clear. Without reforms to approvals, foreign investment settings and transaction costs, Australia risks losing scarce global capital and prolonging a supply crunch that is tightening vacancy rates and putting upward pressure on housing costs.
