When the key project takes a tumble ?
The Tokyo Olympics and Paralympics will be held in 2020 summer.
The athlete’s village will be actually renovated and sold as condominiums, rental apartments, and commercial facilities after the Olympics approximately four years after the games.
The development project after the Olympics was named “HARUMI FLAG”.
It is a massive project.
In light of very defensive movement of the new condos in last several months,
many industry figures are bracing for the outcome of the sales.
Total of 4145 condos units will be for sale and 1487 units of rental property (rental units) will be entering the rental market.
It is the biggest condominium development project by far in the industry history.
By the way, the consortium already announced that two high rise condo buildings will be also built in the site but the details are not
released yet. (the above 4145 units do not include two high rises)
The development area (Harumi Flag) will be accommodating about 12,000 residents.
The development is a very rare joint project by the consortium of Mitsui Fudosan Residential, Mitsubishi Jisho Residence, Nomura Real Estate, Sumitomo Real Estate,
and other 10 major developers will be engaged.
It is not surprising that pricing influences the market in surrounding areas as well as the whole residential market.
In a sense, completely new town town be born over night.
The project is in very center of Tokyo (Harumi bay area) which is very close to the busiest upscale shopping zone in Tokyo ,’Ginza’.
It will be the size of about 4 times of Tokyo dome base ball stadium.
(About 18 HA)
And it will have the full amenities such as schools, shopping facilities, care houses for the aged people.
The sales office “HARUMI FLAG pavilion” for condominiums was opened on April 27th, 2019.
Pre-sale viewing has already started.
You can see so-called ‘model rooms’ now.
For those who are not familiar with Japanese new condo market, it is very common
consumers buy a newly built condo unit before the construction is completed.
The consortium will start accepting the first phase booking in late July 2019.
The pre-sales meeting at the sales center is fully booked up until the middle of June.
It is estimated that the first phase is expected to sell 500-600 units out of 4125 units.
The initial sales price range of 50 million yen (U$500,000) to over 100 million yen (U$1 million)
was announced in late April.
* Japanese developers historically put units for sale over the several phases.
（Photo of Harumi area)
The number of visitors to have a pre-sale registration in the golden week in May has reached more than 1,200.
Young couples occupied the majority of the participants.
There were a few senior couples who seemed to be after retirement.
The nursery room set up in the model room was full early in the morning.
Harumi Flag is a project that utilizes the urban area, and the location condition is about 20 minutes on foot from the nearest station.
It will have a multi-mobility station that will be a hub of various transportation means such as the community cycle, as well as Tokyo BRT, the next-generation bus system,
and a city bus.
Looking at the price range of Phase 1 sales, Building B of SEA VILLAGE will be at 102 million yen (for 115m2),130 million yen(for 127m2) and 82 million yen(for 90m2).
PORT VILLAGE is a building for rent with 15 to 17 floors above the ground with 4 buildings and 1487 units.
The buildings will have the feature of the compact layout of 1K(studio), 1 LDK (one bedroom with one dining/living room) and also 3 LDK(3 bed rooms with 1 dining/living room).
This is likely to affect the Tokyo Bay rental housing market.
Depending on the setting of the rent, there will be cases where the existing rental housing will be more expensive.
It is expected that the yield of the investment will be in the 5% range.
Some industry critics are expressing the following major issues about the project.
1.Poor access to the public transportation
This is the time required from the station. It takes about 20 minutes to Kachidoki Station.
Chuo-ku is a upscale area but 20 mins walk to the nearest station is a palpable weak point.
2. Price is high
The new condo market is already slowing down.
The prices which were indicated were just too high.
the following two properties become benchmarks.
Harumi residence / square meter unit price: 810,000 yen (2.67 million yen per tsubo)
Harumi terrace / square meter unit price: 880,000 yen (2.9 nillion yen per tsubo)
3.Too long lead time
The residence (buyer) can move into the new homes only after the Olympics as late as 2023 because
the developers need to refresh all the units.
The buyers will have to wait for four years. The market could see a lot of movements during the course of four years.
I would hate to wait in the uncertainty.
4. Zoning is not that good
Harumi Flag area is primarily in semi-industrial zone and also small commercial zone
There are many cases where health problems are reported in areas adjacent to a cleaning plants.
Do you want to raise your kids in such zone ?
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Real estate investing consultant and author.
Founder of Yamamoto Property Advisory in Tokyo.
International property Investment consultant and licensed
real estate broker (Japan).
He serves the foreign companies and individuals to buy and sell
the real estates in Japan as well as own homes.
He holds a Bachelor’s degree in Economics from
Osaka Prefecture University in Japan
and an MBA from Bond University in Australia
Toshihiko’s book, “The Savvy Foreign Investor’s Guide to Japanese Properties: How to Expertly Buy, Manage and Sell Real Estate in Japan”is now out on Amazon, iBooks (iTunes, Apple) and Google Play.
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