The 2020 Tokyo Olympic and Paralympic games will commence about two years from today, on July 24th, 2020, and construction of competition venues and the Athletes’ Village is proceeding at a feverish pace.
Among the questions being asked about the “Olympic effect” on the Tokyo real estate market is the impact of the development plans for the Athletes’ Village, which will take up a massive 13.39 hectare area (about the size of 13 international rugby fields) on the western edge of the Harumi 5-Chome neighborhood in Chuo Ward, Tokyo.
Competition venues will be divided into two themed areas, the “Heritage” and the “Tokyo Bay” zones. The two zones intersect to form an infinity symbol with the Athletes’ Village at that point.
Apartments will be sold and rented to the public after the Games
The project will include 21 residential buildings ranging from 14 to 18 stories, as well as retail facilities. The 2nd to 14th floors in the buildings will be used to provide temporary accommodation for 17,000 athletes and guests, who will occupy the facilities for at most a month.
A group of developers, led by some of the country’s premiere real estate companies, including Nomura, Mitsui Fudosan, Mitsubishi Jisho, Sumitomo, and Tokyu Land are developing the site, with construction costs for the apartment buildings estimated to be about ¥300,000 per sqm. The total floor area is expected to be about 690,000-sqm, which means the total cost of the buildings could reach ¥207 billion (or about 2 billlion USD).
After the games, the apartments will be made available for sale and rent to the public. In line with plans developed by the Tokyo Metropolitan Government, the consortium will also build two 50-story residential skyscrapers after the Olympics are over. By 2024, there will be a total of 23 buildings with a total 5,650 residential units.
Plans for the Olympic Village site also include residential facilities with support services for the elderly, share houses for young people, and serviced apartments for foreigners.
Observers have pointed out a number of potential issues in the development of the future Olympic Village for residential sale (or lease) after the end of the Games.
As they are originally being designed to temporarily house athletes the units will likely require major renovation to make them suitable for sale as condominiums to private individuals and families. There will be three types of apartments: 60-sqm apartments meant to house four athletes, 104-sqm apartments meant for seven people, and 135-sqm apartments (with three bathrooms) meant for eight people. The dimensions and layouts are said to incompatible with what Tokyo residential buyers expect, so it is unlikely that the apartments will be able to sold as-is.
The second issue has to do with the sheer number of units that will come online as a result of the post-Olympic development. As mentioned above, plans call for a a total of 5,650 apartments by 2024, which would be equal to about 30% of the annual supply of new apartments in all of Tokyo’s 23 wards. Even though 1,000 of these units are slated to be leased out, there are concerns that the 4,600+ units that will be offered for sale may be more than the market can absorb.
A related issue is that the apartments will have to marketed as pre-owned (not new) properties because once they have been occupied, even for a brief time, they can no longer be command the premium price levels of newly constructed properties. However, it would seem that this may work to the benefit of buyers.
Access to the city center has also been pointed out as a potential problem in attracting buyers. Currently, the Harumi 5-Chome neighborhood does not have direct rail access to the city center. A Bus Rapid Transit (BRT) system is in the works to shuttle athletes (and in the future, commuters) back and forth from the mainland, but delays in construction (and whether the BRT will operate as efficiently as planned) could detract from the desirability of Harumi 5-Chome as a residential area.
Residential Model Plan for Post-Olympic Games (Japanese), Tokyo Metropolitan Government
Tokyo 2020 Olympic Games Athletes’ Village – Post-Games Planning (Japanese), Tokyo Metropolitan Government
Nikkei Shinbun, August 2, 2016