Butcher Laments Tokyo Bay Bygone Era on Olympics RenaissanceKathleen Chu and Katsuyo Kuwako
Mitsuyoshi Fukuhara, the 73-year-old owner of a butcher shop on a man-made island in Tokyo Bay, remembers when he used to recognize faces in his neighborhood.
Now, as Fukuhara strolls the streets once dominated by mom-and-pop shops, he encounters high-rise apartments and a half-dozen cranes towering above construction sites for about half of the sports venues for the 2020 Olympics. He rarely sees a familiar face.
“I barely know anyone these days,” said Fukuhara, who is the second generation to run his family business that was started by his father in 1936 in Kachidoki. “The conversations with customers have turned cold and business-like.”
Tokyo Bay is in the midst of a building boom as the Tokyo Metropolitan Government plans to use the 2020 Olympics to fulfill its ambitions to develop areas on the fringe of the bay and fan out on a string of low-density reclaimed islands. At least 26,000 residential units will be completed ahead of the the competition, 34 percent more than in the past seven years, according to according Real Estate Economic Institute Co.
“Tokyo is going through an urban renaissance at the moment,” said Seth Sulkin, chief executive officer of Pacifica Capital K.K., a Tokyo-based real estate asset manager. “All available large development sites are going to be filled out in the next 10 years and the waterfront will see extraordinary growth.”
The Tokyo Bay area, which spreads out on about 25,000 hectares (62,000 acres) of reclaimed land, became popular in the last decade because of its proximity to central Tokyo. Kachidoki, one of the first districts to be developed in the area, is linked by a 200-meter (656-foot) bridge to the Ginza shopping district, which boasts the most-expensive piece of land in Japan.
The number of apartments in buildings 20 stories or higher in Chuo, Minato, Koto, Shinagawa and Edogawa wards in Tokyo Bay more than doubled to 4,753 units last year from 2012, according to Real Estate Economic Institute.
On top of that, the government plans to ask developers to convert the 10,860 units in the 44-hectare athletes’ village in Harumi, also on a man-made island, into apartments for sale or rental, according to the 2020 Olympics bid documents. If those are all occupied, it would boost the area’s population by 39 percent to 43,000 after the games, Tokyo government data showed.
Komazawa, which was designated as a second competition site for the 1964 Olympic Games, is now a high-end residential area in Setagaya ward, west of central Tokyo.
“If infrastructure is in place in Harumi just like Komazawa Olympic Park, then Harumi has the potential to become like Komazawa,” Takeo Omura, a managing director at Daiwa Institute of Research Ltd., said. Omura and Eishi Harada, a director at Daiwa, published a report in February about the past four Olympics and Tokyo first hosting the summer games in 1964.
New units in the Tokyo Bay area cost 56.8 million yen ($560,000) on average, according to a report by Mercury Inc., a Tokyo-based real estate data provider. The average price of a three-bedroom apartment in Tokyo rose 8.5 percent in March from a year earlier to 52.2 million yen, according to the latest report by Real Estate Economic Institute.
Among the high-rise developments going up in Tokyo Bay is the 53-story Kachidoki The Tower, a 1,420-apartment complex that is going to be Japan’s biggest when it is completed in 2016, according to its developers and builders, including Kajima Corp., Mitsui Fudosan Co. and Mitsubishi Estate Co. An unit will cost as much as 125 million yen, the companies said on the website.
Mitsubishi Estate, Japan’s biggest developer by market value, has sold one of two apartment buildings, with 1,744 units, to be completed in 2016 in Harumi, near where the athletes’ village will be located. Sumitomo Realty & Development Co., the nation’s third-biggest developer, has started selling Deux Tours Canali & Spa, a twin-tower project of 1,450 units in nearby Kachidoki this month.
International investors have taken notice of the area. Third Point LLC, the New York-based activist hedge fund founded by Daniel Loeb, disclosed a stake in IHI Corp. in a May 1 letter to investors, highlighting the aircraft engine maker’s “valuable” real estate, especially its large land bank in Toyosu, near the 2020 Olympic village.
Shares of IHI, which have risen 16 percent since the report, closed 0.2 percent higher at 475 yen in Tokyo.
Property prices around Tokyo Bay fell after the March 2011 earthquake, shattered pipes and severed water supplies. Average apartment prices dropped 18 percent in 2011 from a year earlier, according to Mercury.
Seven of the top 10 biggest gains in land prices nationwide as of Jan. 1 were in Tokyo Bay neighborhoods, with increases of as much as 11 percent, according to a government survey.
Kimikazu Murakami, who owns a bakery and is a long-time friend of Fukuhara the butcher, said he can sense a bubble is forming.
“I can feel it,” said Murakami, 79. “There are companies that have offered unbelievable prices to ask us to sell our land.”
An estimated 383.1 billion yen will be spent on building sporting facilities, including the Olympic Stadium, and other venues for the event, according to the bid document. Of the 39 Olympics-related venues, 23 will be in the Tokyo Bay area, including the athletes’ village and the broadcast and media center, as well as the Olympic Aquatics Center.
“The infrastructure will help drive population growth in the longer term, as well as a shift to higher-value land uses,” said Will Johnson, head of research and consultancy at broker Savills Plc in Tokyo. “The Olympic Games will help the government to bring about the long-term plan for the area.”
The Olympics will further aid the development of Waterfront City, 442 hectares of reclaimed land that the Tokyo Metropolitan Government has been trying to build up since 1986, the Bureau of Port and Harbor said on its website. The development stagnated after the asset bubble burst in Japan in the late 1980s.
The population of Waterfront City is expected to quadruple to 47,000 in 2016 from 11,030 in 2010, while the working population will double to 90,000 from 47,000 in the same period, according to an estimate by Macquarie Group Ltd. and the Tokyo government.
Koto ward is proposing the extension of a subway line to deal with the increasing number of people moving into the area, according to the ward’s website. The proposal would need the national government’s approval and it tends to take at least 10 years to complete such an extension, Takaaki Yamazaki, the mayor of Koto ward said.
“It’s hard to convince the government about the plan,” said Yamazaki, who as a 20-year-old college student worked in a dinning room that served Eastern European cuisine to athletes from Czechoslovakia, Hungary and East Germany during the Olympics in 1964. “They don’t seem to understand.”
Without adding a new subway line, the congestion on two of the three existing train lines in the ward will approach 200 percent by 2020, which means passengers will have to cram into trains pressed against other commuters during the rush hour, according to presentation material on Koto ward’s website.
Fisheries and trade started to bring merchants to Tokyo Bay in the 19th century. After the Great Kanto earthquake in 1923 destroyed railways and roads, the government decided to build a port and Tokyo Bay became one of Japan’s major shipping hubs following World War II as the country’s economy took off. Warehouses, factories and small shops sprung up in the area.
“Our town is changing rapidly,” said Fukuhara, the butcher, who lives in a 52-story apartment building completed in 2010 after exchanging his land with the developer. “It will be problematic if we seek to host the Olympic Games without a vision. We must think ahead and beyond.”