KAJIMA CORPORATION | Annual Report 2008

Kajima’s real estate development business has amassed considerable know-how as a result of extensive experience. We have created a number of development projects of high quality as a general contractor-developer (GC-developer) through effective cooperation with construction, design, and other business divisions. We are pursuing further growth of the real estate development business as our second core business segment.

Effective cooperation
among construction, design and other business divisions results in high-quality
projects.

Our comprehensive
in-house capabilities differentiate us from other real estate
developers.

We are creating value in the real estate development
business by making
optimum use of our scale, technology and ability to innovate.

We offer expertise
ranging from construction and project management to project finance and property management.

Turning Ideas into Reality Based on Sophisticated Comprehensive Capabilities

A major feature of our real estate development business, and one of its greatest strengths, is that our construction division, real estate development division, design division, and other key divisions are all in-house. This is why we call ourselves a GC-developer. In order to succeed in the real estate development business, a developer must be able to orchestrate a wide range of activities to execute projects. Developers need leading-edge capabilities, ranging from formulating basic concepts, building business schemes, and other planning; obtaining various permits; effective cost and schedule control as a design-build project; to arranging optimal financing schemes in accordance with business needs and property management after completion of the project. As a GC-developer, we deploy sophisticated design-build and other comprehensive capabilities to meet these complex requirements.

Projects that Maximize the Potential of City Centers

Our real estate development business in Japan centers on office building and condominium development for lease or sale, and also other types of development such as shopping malls and hotels, by employing a variety of development and financing methods. Our activities also encompass fee-based businesses. We enjoy a high reputation in areas such as redevelopment projects in central Tokyo that maximize the potential of city centers, and our track record in such projects is increasing. With the opening of GranTokyo South Tower in November 2007, our three major real estate development projects for lease, including Akihabara UDX and Toranomon Towers Office, have all moved into an operation stage. Recognized for their prime location and supreme quality, these projects are expected to generate stable income that will underpin our financial performance for the current fiscal year and beyond. In addition, we are executing a redevelopment project on the site of our former head office building in Akasaka, Tokyo, which will be a large-scale property for lease once construction is completed.

In the residential market, there is an increasing trend among potential buyers to take a wait-and-see attitude, following a sharp increase in condominium prices, driven mainly by rising land prices. Yet, the demand for high-grade properties in central Tokyo remains strong, resulting in a polarization of the residential market. Our condominium development projects are concentrated in upscale residential districts in Tokyo, where demand remains unchanged. Masterview Residence (completed during the fiscal year ended March 31, 2008) and Kaga Residence (due for completion during the fiscal year ending March 31, 2009) are two examples in which we fully deployed our technological and project planning capabilities.

Reinforcing a Second Core Business

We aim to keep evolving by seeking new business opportunities in central Tokyo and transportation hubs where we can utilize our comprehensive capabilities. We are also working to enhance the Kajima brand as a GC-developer based on product development, highlighting our sophisticated technological capabilities and reliability. While continuously working to manage risks and improve investment efficiency through the use of non-recourse loans and off-balance-sheet financing, we will seek to expand business opportunities for the further growth of real estate development as our second core business.

Akihabara UDX, the center building in the photo at left, is part of a major redevelopment that has revitalized the Akihabara area. Kajima developed two and built all three of the buildings, and maintains an ownership interest in Akihabara UDX.

Kajima played a central role in this major development project that demonstrates its
comprehensive capabilities as a GC-developer.

Akihabara Crossfield grew out of a Tokyo Metropolitan Government policy promoting the redevelopment of Akihabara as a major IT hub that brings together leading-edge companies and universities. We formed a joint venture with NTT Urban Development Co. and Daibiru Corporation to develop this new town. Akihabara UDX, a multi-purpose office building that serves the core of Akihabara Crossfield, opened in March 2006.

We smoothly and successfully managed every phase of the development with our expertise in the respective fields. The phases ranged from purchase of the land from the Tokyo Metropolitan Government, formulation of the basic concept, structuring of a financing scheme for the special purpose company, acquisitions of permits and licenses, and the construction of the building. Now that operation has begun, we are providing property management service and that is earning high praise for its professionalism. Akihabara UDX is one of the major development projects that demonstrates our sophisticated, comprehensive capabilities as a GC-developer.

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In terms of earnings, we sold a portion of our holdings in UDX SPC during the fiscal year ended March 31, 2008, making a considerable contribution to financial results for the fiscal year. Despite the smaller stake after the partial sale, the project will continue to produce stable income for the current year and going forward.

Advanced construction technologies give residents the freedom to arrange their homes according to their lifestyle needs.

Innovative and earthquake-resistant Hi Smart Wall technology, detailed in the structural photo on the left, enables the sweeping panoramas in the photo on the right by eliminating the need for interior columns.

Kaga Residence is representative of properties that embody Kajima’s vision of creating timeless value and beautiful, luxurious living environments.

Our Hi Smart Wall box-frame base-isolation technology (patent pending), one of our new technologies with comprehensive engineering capabilities, has been key to the success of this development project. This technology allows replacement of beams and columns above the base-isolated foundation with box-frame units that form the walls and floor slabs. In addition, the installation of core walls through high-rise technology allows features that would have been difficult with conventional box-frame construction, such as a height of 14 floors and no columns or other supports within the rooms. The result—box-shaped rooms that are completely open and provide residential space with outstanding freedom to fit any lifestyle. The openness, stylish appearance created by the new frame construction technology, and secure earthquake-resistant design are advances in residential complexes.

In the polarized residential market, sales are progressing well as our brand-new concepts and innovative technologies have earned high praise from customers.