If you happen to have passed through the Harumi waterfront area of Tokyo's Chuo Ward recently, the construction activities would have been hard to miss. By the summer of 2020, 23 buildings incorporating a total of 5,632 residential apartments will be completed, to serve as the Olympic Village for athletes, coaches and other persons involved in the Summer Olympics and Paralympics Games.
The overall land area they occupy, says Spa! (Dec 25) will be equivalent to the size of three Tokyo Domes. Once the games are over, 4,145 units are slated to be put on sale to individual owners, with another 1,487 units to be rented out, and while plans have not been finalized, it is supposed the rentals will be apportioned between service apartments for elderly people, share houses for the younger set, and also for foreign residents.
The new neighborhood, which has been named "Harumi Flag," is eventually expected to boast a resident population of approximately 12,000 people and will also include commercial businesses, medical facilities, nurseries, and so on.
Why is Spa! reporting this now? Because from May 2019, advance sales on the units will commence. And, as property maven Arito Oki puts it, "The price range is expected to be a bit lower than other residential units in the same part of Tokyo."
It seems that the 11 major real estate developers that the Tokyo government assigned to build the Athletes' Village in 2016 concluded a contract to purchase the land for 12.9 billion yen. On a tsubo basis this comes to less than 330,000 yen, as opposed to the assessed value of commercial land in the surrounding district of 3.3 million yen -- in other words, less than 10% of the going rate.
Spa! pulls out its calculator and figures that if the total cost of 12.9 billion yen is divided by 5,650 units, the subdivided land apportioned to each apartment unit will be sold for approximately 2.3 million yen, which at current land prices is lower by some 20 million yen.
Unfortunately after the athletes vacate, the units will undergo "reform" (generally taken to mean renovation), which will add an estimated 50 billion yen to the total price tag -- raising the cost of each unit by 12 million yen.
A journalist covering the real estate market pointed out that the Tokyo government will remove gas water heaters, air conditions, unit bathrooms and so on, and replace the wallpaper. Seeing that the athletes will have only occupied the units for about two months, that seems like an awful amount of expenditure. Is that really necessary?
"Still," he added, "you're looking at a reduction off the market rate of about 8 million yen."
Noting that most of the units will be laid out as 3 or 4LDK (number of rooms plus living/dining/kitchen) -- measuring around 85 square meters total -- a broker tells the magazine he expects many will be priced in the 70 million yen range. "Some smaller 3LDK units may go for around 58 million," he estimates.
Naturally there are certain downsides to consider.
"It's at least 17 minutes' walk from the closest subway station, which is a bit far," the source says. "It's located close to a waste processing facility, and there may be damage from salt due to the proximity to the ocean. And to finance a mortgage a buyer will need to have annual income of between 7 and 10 million yen."
Should the new neighborhood fail to meet the residents' expectations, the magazine cautions, some buyers may forfeit on their loans, leading to overall drop in market values. Which could, in a worst-case scenario, even lead to lawsuits by the residents against Tokyo Gov Yuriko Koike.
Buying a home in Tokyo certainly isn't an easy proposition.© Japan Today