Japan has crowned a new top real estate developer for the first time in 30 years, thanks to a post-Covid tourism boost and work-from-home habits that have altered investors’ views of properties like hotels and offices.

The market value of Mitsui Fudosan Co. reached 2.63 trillion yen ($18.7 billion) on Tuesday, giving the Tokyo-based firm a solid lead as the most valuable real estate developer in Japan over its competitor Mitsubishi Estate Co., which for decades was the island nation’s top property company.

Mitsui Fudosan’s lead has been boosted by its portfolio of shopping malls, leisure facilities and hotels that have benefited from a rebound in tourism, analysts said. Among its sizable hotel holdings, Mitsui has a major stake in the operating company for the luxury Imperial Hotel. It also owns baseball stadium Tokyo Dome.

“These are segments that fell during the pandemic. Now they’re recovering, and Mitsui has a higher weight in these leisure and shopping sectors than Mitsubishi,” said Kouki Ozawa, a senior analyst at SBI Securities Co. “Mitsui has more growth potential now.”

Mitsubishi Estate, which bought the Rockefeller Center during Japan’s asset-inflated bubble economy in the 1980s, had been the country’s most valuable listed real estate company for years partly due to its ownership of a cluster of office buildings in Tokyo’s prime business district by the Imperial Palace.

But a glut of new office supply, with a slew of buildings opening in the capital over the next two years, might pressure the value of holdings of top-grade office space, analysts said.

Tokyo’s vacancy rate for offices in its main business areas rose to a nine-month high of 6.48% in June, while rents have fallen every month since August 2020, according to real estate broker Miki Shoji Co. Globally, investors are also shying away from offices due to historically high vacancy rates in major cities.

Lower Tokyo Office Vacancies Give Relief to Market After Covid

A representative for Mitsubishi Estate declined to comment. A Mitsui Fudosan spokesperson said revenue from many of its commercial properties had risen above 2019 levels.

Mitsui’s market capitalization was 361.6 billion yen higher than Mitsubishi on Tuesday. The gap between the value of the two companies has widened since January — shortly after Japan began loosening Covid-era border restrictions on tourism — to the highest levels since data compiled by Bloomberg was available in 1992.

--With assistance from Lisa Du.