Harumi Pre-flag

While searching for any news about the current state of the Harumi Flag condo complex in Tokyo’s Chuo Ward, we came across an older related article with detailed information we weren’t aware of. As we’ve written here before, Harumi Flag was originally the athletes village for the 2020 Olympics, after which the apartments were renovated into condo units, many of which had already been sold. Because of the one-year delay for the Games, people who had put down deposits and made plans to move in had to put off those plans for at least an extra year, thus causing a lot of grumbling among the buyers. 

According to a special report that appeared in July 2019 on the Min-IREN website, a consumer advocacy and social justice concern, people who already lived in the Harumi area of Chuo Ward on the waterfront had filed a lawsuit against the Tokyo prefectural government. The reporter was Nobuyuki Kitaoka, who often writes for the muckraking weekly Kinyobi, and he makes the point that the lawsuit had/has similarities to the 2017 scandal surrounding Moritomo Gakuen, the educational company that bought land in Osaka from the central government for a fraction of its assessed value, thus setting off speculation that this special deal was due to the fact that the wife of then prime minister Shinzo Abe was an honorary principal of the elementary school that Moritomo planned to build on the property. Apparently, the developers who would build the athletes village for the Olympics and then redevelop the complex into luxury condominiums also got the land at a fraction of its worth, and existing residents wanted to know why. According to Kitaoka, Moritomo paid only 20 percent of what the land it bought from the central government was worth, while the developers of Harumi Flag paid only 10 percent of the value to the Tokyo prefectural government, which owned it. Located only 3 kilometers from Ginza, the market value of the Harumi land was ¥959,000 per square meter, but Tokyo sold it to a consortium of 11 developers, including Mitsui Fudosan Residential, for only ¥97,000 per square meter. This consortium ended up paying a total of ¥12.96 billion for 133,900 square meters. 

Nowhere in Tokyo’s 23 wards, especially Chuo Ward, can you buy any piece of land that cheaply. The closest to central Tokyo where Kitaoka could find land at that price was the Tama area in western Tokyo Prefecture. After local residents learned about the deal in 2016, they tried to apply for a public audit in May 2017 to find out the process for selling the land, but the auditors, who work for Tokyo, rejected the application. Three months later, a group of 33 residents filed a lawsuit against Tokyo governor Yuriko Koike, who had signed the land sale, which they called a “giveaway.” 

The plaintiffs disputed Tokyo’s explanation for the deal, which was that construction of the athletes’ village would be deemed a government urban development project in which densely situated older structures would be removed, the land cleaned up, and new infrastructure and streets constructed. The local government was selling the land at a low price to facilitate urban renewal, but the plaintiffs argued this didn’t make sense because the land in question had been vacant since 2000 and, according to applicable laws, didn’t qualify as a redevelopment project. Also, redevelopment projects almost never involved land that was already owned by the local government. One of the plaintiffs, in fact, was a retired Tokyo civil servant. He carried out research at the land ministry and found no such precedent anywhere else in Japan for such a redevelopment project, where the agency that grants permission to develop a piece of land and the landowner are one and the same. In addition, article 237 of the Local Government Law states that when public assets owned by a local government entity are sold for any reason, the appropriate market value must be paid. (Moritomo’s case doesn’t apply here because the land was owned by the central government.)

In response, Tokyo authorities pointed to a loophole in the Urban Redevelopment Law, which says that if the owner of the land is also the builder, the price determination does not have to be approved by the usual assessment panel, and in the case of the athletes’ village, the 11 developers were essentially contracted as “agents” to carry out the redevelopment project on behalf of Tokyo Prefecture. At this point, the plaintiffs demanded to see how the agents were selected, suspecting that there had been some sort of under-the-table bidding process. The plaintiffs hired their own real estate assessor, who determined that the land designated for the ahtletes’ village was worth a total of ¥161.118 billion. Tokyo said it based its valuation on the idea that the athletes village was a vital asset for the prefecture—but at a difference of more than ¥148 billion, which is three times the budget earmarked for daycare services in all of Tokyo. 

In any event, Tokyo could never properly explain why it had assessed the land so low, even if it could show the need for the athletes village. In the end, of course, the developers would reap the revenue stolen from the taxpayers of Tokyo, because they could charge market value for the residential units they were building. But there was even more that outraged the residents. The sale wouldn’t be completed until all the buildings were constructed, so until then the developers didn’t have to pay property taxes. And yet Tokyo would pay rent on the land to developers from the time construction was completed until the end of the Games themselves, which would amount to a total of ¥3.8 billion (not counting the extension due to COVID). And to add insult to injury, Tokyo paid for the post-Olympic renovation to turn the athletes’ village into Harumi Flag. 

Kitaoka says that the only political party who objected to this rank theft of public assets was the Japanese Communist Party, and that the major media, which receives lots of advertising money from the real estate industry, has ignored the issue. Given that Tokyo is way behind in the building of public housing, or, for that matter, new affordable housing, this giveaway was more than a scandal. The plaintiffs, who still seem to be in court (they’ve since been joined by other residents in neighboring Koto Ward), call it a crime. 

One comment

  1. Lee · 27 Days Ago

    Hi,

    Interesting article.

    So in other words: “Nothing to see here folks, move along.”

    I was wondering if in the future you could do an article on the cost of living in Japan and how it has changed over the recent past and maybe compared to say 5 years ago. How prices have gone up for things not only related to housing (taxes, electricity, natural gas, repairs), but others such as food, clothing, transport, etc.

    Like

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