Renovation work on the Tokyo Olympics Athletes Village that will turn the apartments into condominiums-for-sale won’t commence until after the Paralympics end in September, but already business media are exploring the future of the Harumi Flag residential complex, as it’s been dubbed by lead developer Mitsui Fudosan Residential. In the end, the various buildings will comprise about 4,800 units, and so far a bit less than one-third of those have already been sold. Since the Olympics was postponed in the spring of 2020, the date for moving into the complex has been moved back by at least a year to spring 2023, and there was talk that some buyers were angry because that means considerable added expense for them. Whether they have been offered a refund and an escape for their contracts isn’t clear, but, for sure, matters such as mortgage terms for the new condos and leases on rentals that the buyers may have to extend in the meantime could be serious hits to their bank accounts, especially given the current pandemic-affected economy.
However, those who have already signed contracts should be happy in one regard: the value of their condo seems to have gone up in the meantime, which means they got even more of a bargain than those who will sign contracts in the future. Condo prices in Tokyo have been steadily going up in recent months after dipping a bit last year, and it’s likely these increases will be reflected in the prices of the condos that will be put on sale starting in September. After the pandemic struck, sales activities for Harumi Flag were halted, which now seems like a good decision since Mitsui will likely be able to charge more. According to various real estate web sites, Mitsui will not put all the remaining units on sale at the same time, which would flood the market and bring the prices down. Though nobody seems worried right now that prices will drop over the coming months as more units are put on sale, the idea is to maximize demand as much as possible. As it stands, the units were already cheaper than comparable new condos on the waterfront by 30-40 percent, a situation that reportedly upset neighbors who paid premium prices for their apartments. The reason for the lower prices is that they are being repurposed and that the nearest train station is at least 20 minutes on foot (not counting the time it takes to get from one’s apartment to the ground floor), but also because Tokyo sold the land, which is reclaimed, to Mitsui and its partners at a 10 percent discount just because of the Olympics, a move that has also been criticized since Tokyo can’t really afford such largesse considering the larger-than-expected bill for the Games.
Originally, Mitsui was nervous because they weren’t sure if the so-called Olympics legacy would hurt sales, but according to tabloid Nikkan Gendai the image and, by extension, the value of Harumi Flag seems to have been enhanced by the worldwide publicity afforded it by the Olympic athletes, many of whom were impressed by the residences and posted photos of the spectacular views on their Instagram and other social media accounts. As one realtor told Gendai, it was kind of a miracle since now they don’t really have to do anything to promote the complex; it’s already up there on the Internet. All they have to do is take advantage of it. And while they still think there will probably be some unsold units in the end, they don’t anticipate any difficulties in moving the bulk of the condos and fully expect the prices to remain stable, if not increase in the short term. In addition, a year ago realtors were afraid that any COVID clusters that broke out in the village during the games would taint the complex and make it more difficult to sell, but apparently that’s no longer a worry.
For sure, prices of used condos across the board in Tokyo are rising, and have been for the last year. For a 70-square-meter apartment in the Tokyo metropolitan area, prices rose by 1.7 percent in only the last month, averaging ¥41.14 million. Since July 2020, prices have risen a whopping 10 percent. In Tokyo prefecture, the increase was 0.7 percent in the last month, to an average price of ¥57.11 million, or a 12.6 percent rise in the past year. For the 23 wards? A 0.4 percent increase to ¥63.29 million.
And things are no different in other metro areas. The Kansai area has seen a 0.6% increase in the last month to ¥25.79 million, and Osaka prefecture 2.1 percent up to ¥28.29 million. In the Chubu region, 1.3 percent increase to ¥20.73 million and in Aichi prefecture a 0.4% increase to ¥21.7 million. According to various real estate portals, demand is outstripping supply at the moment, mainly due to a lag in new construction owing to the pandemic. However, the demand is being spurred by high end buyers–foreign investors, the 1 percent, and so-called power couples–meaning people with money on whom the pandemic has had no real effect. It will, of course, be interesting to see what happens once things get back to “normal” and construction resumes apace, but right now, if you own a condo in one of the major cities in Japan, the market value is higher than it was a year ago.