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The development will have stunning views of the Tokyo skyline Photo: AFP
2020 tokyo olympics

Olympic delay leaves athletes village in limbo

14 Comments
By Richard Carter and Shingo Ito

Hundreds of luxury apartments overlooking Tokyo Bay that were due to be converted from the athletes village have already been sold -- just one of the many headaches caused by the historic postponement of the Tokyo Olympics.

Touted by developers as a "flagship neighborhood for urban lifestyles", the buildings housing the 11,000 competitors were to be hastily repurposed into more than 4,000 condos with stunning city views, some carrying a price tag of 170 million yen ($1.5 million).

The decision to postpone the Games by up to a year has pitched buyers into uncertainty, according to Zoe Ward, director of Tokyo Property Central, with close to 900 units already snapped up.

"Even if it's not a financial hit, it's going to be a big inconvenience to them," Ward told AFP.

She added that buyers would now be scouring the small print of their contracts to see if they can pull out without losing their deposits -- usually around five percent.

"The wording they put in the contract is pretty vague. It normally says natural disasters or anything outside the sellers' control, so it might fall under that category," said the property expert.

One buyer, a man in his 30s, had been planning to move into the apartment in March 2023 with his wife and children. He said there were "many, many scenarios" that could now arise.

However, he was relatively zen about the delay given the unprecedented coronavirus situation.

"I'm not so stupid as to see the coronavirus effect as being a problem on the same level as a construction defect. I would say it can't be helped. I'm sure the selling side is facing a hard time," said the man, who declined to be named.

Tomohiro Makino, CEO of consulting firm Oraga Research and an expert on Japanese real estate, told AFP that developers faced a "double whammy" of a falling market generally and image problems with the Olympic Village project.

"There is a concern prices could drop. If excitement and anticipation (about the Olympics) fades away, the situation will be severe for the selling side. For now, cancellations are a critical problem for them," said Makino.

One of the biggest draws -- being part of the Olympic legacy -- could now be tarnished, he added.

He said developers should have legal cover from a force majeure clause but given the high profile of the project, they may be inclined to show flexibility -- especially as only a quarter of the units have been put up for sale.

"The selling side has been forced into making a tough decision," he said.

Sellers had marketed the development, which comprises 23 tower blocks capable of housing up to 12,000 people, as "the city complex where everything begins" with views of the ocean, Tokyo Tower and the metropolis' glittering skyline.

The 18-hectare plot would also feature schools, a playground, swimming pool and gym. As the apartments are renovated from elite athletes' accommodation, they are also slightly bigger than average Tokyo flats, which tend to be on the small side.

"Looking from the sky, the new neighborhood appears like a large flag right in the middle of Tokyo. It has limitless potential as a new flagship model for urban lifestyles," according to the promotional material.

The development is a joint-venture bringing together 11 of Japan's top real estate firms.

A spokeswoman for one of the firms, Mitsui Fudosan Co, told AFP: "We will assess the impact of the postponement of the Olympics with companies and officials involved in the project as quickly as we can."

The sale of the second batch of units has been delayed from March to June or later, said another official at the company, insisting this was "due to the effect of the new coronavirus. It's nothing to do with a possible postponement of the Olympics".

Ward said that while uncertainty hung over both buyers and developers, the situation was better than the limbo they faced before the International Olympic Committee and Japan's unprecedented decision.

"Once the government gets a clear schedule (for the Games to go ahead), then the project will start doing active sales again. Up until (the night before the decision), I think it was worse for buyers because no one knew what they were doing," she said.

"I feel like it's good news because a cancellation would be far worse for everyone's attitude and general feeling. I think an extension is the best thing we could have. Going through with it would be terrible and cancelling it would be worse."

© 2020 AFP

©2020 GPlusMedia Inc.


14 Comments
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My pity for the developers is as large as my Rolls Royce... which I don't have.

13 ( +14 / -1 )

Have the govt lease the unsold units and prep it as an emergency hospital.

7 ( +8 / -1 )

It doesn't have to be this way.

-11 ( +1 / -12 )

Sellers had marketed the development, which comprises 23 tower blocks capable of housing up to 12,000 people, as "the city complex where everything begins" with views of the ocean, Tokyo Tower and the metropolis' glittering skyline.

No thanks. Can't see what people see in this. Japan, you have a severely falling population and almost 15 percent of your housing stock is empty. Most places outside of Tokyo are in a deep sense of decay, and it's only accelerating. Mitigating and eventually solving this issue should made urgent national policy, with a focus on encouraging people to move back into the regions and implementing plans of revitalisation.

-1 ( +3 / -4 )

Oops!

2 ( +3 / -1 )

"There is a concern prices could drop. If excitement and anticipation (about the Olympics) fades away, the situation will be severe for the selling side. For now, cancellations are a critical problem for them," said Makino.

There might be short term bargains to be had here. Especially, if the value has dropped over 30% and is short term let for 5 years then sold on.

Land values decline slowly in Tokyo/Japan due to declining population and regular demolition and rebuilding within 30 as there are earthquakes.

"The wording they put in the contract is pretty vague. It normally says natural disasters or anything outside the sellers' control, so it might fall under that category," said the property expert.

The reality is the worse case scenario of the Olympics getting cancelled in the end is still on the table. Which is likely to mean 50% or more drop in value and reduced long term tourism to Japan due to COVID-19.

As the contract is too vague for pulling out and not losing your deposit, the only buyers will be ones that want to live long term and enjoy their lifestyle in the Tokyo Bay area which is the only USP left. Very risky at premium prices even for rich locals.

1 ( +2 / -1 )

One buyer, a man in his 30s, had been planning to move into the apartment in March 2023 with his wife and children.

The Olympics were scheduled to end in August 2020 and people have to wait almost 3 years to move in? I don't get it.

3 ( +3 / -0 )

 dbsaiyaToday 07:15 am JST

 Have the govt lease the unsold units and prep it as an emergency hospital.

That's an excellent idea. It would ease crowding in Tokyo hospitals and show that the developers care about something other than money.

The former Manchester United players Gary Neville and Ryan Giggs own a couple of hotels in Manchester. They've been closed to guests but are allowing health care workers to stay there for free. It's a terrific gesture. Pep Guardiola, manager of Manchester City, has donated 1m Euros to fight coronavirus.

https://www.bbc.com/sport/football/51953883

Given the vast profits being made by property developers in Tokyo it's the least they can do.

4 ( +5 / -1 )

House Tokyo homeless there. This summer will be record heat, at least they can enjoy Aircon.

3 ( +4 / -1 )

Use it to quarantine the people with symptoms, make the thing useful for something atleast.

2 ( +2 / -0 )

The J-real estate selling era, as we know it, is over and done with. Dealt a bad hand?...Man-up and take the loses. This COVID-19 is a rock-solid reason for buyers to cancel and get your deposit back! Welcome to the Gran Awakening!

3 ( +3 / -0 )

I predict many Japanese will realize if lockdown happens, that living like a rabbit in a cage is something you really don't ever want to live again (same effect as a large main cities, like in Paris where hunxredd of thousands fled to country because of tiny yet very costly flats they own.

1 ( +1 / -0 )

some carrying a price tag of 170 million yen ($1.5 million).

Hmmm, that means one must have been pretty well off to afford one of these places, huh?

That sucks for people who invested in these properties, I guess?

Oh well, don't mind me. I'll just keep on eating my one rice ball and small 1oo yen coffee for lunch.......

0 ( +0 / -0 )

Nice Skyline though.... last big Earthquake we had here, left many wondering about the Liquefaction issue upon which their household had been built upon.

0 ( +0 / -0 )

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