Back to business as usual for condominium developers?
Last month a model room opened for a new condominium complex in Osaka with the revealing name Owner’s Tower. Part of the new Grand Front development project situated in the huge tract of land near Osaka Station that once was home to the Japan National Railways Umeda North Yard cargo terminal, the new residence is a forthrightly upscale facility that targets high-income buyers, in particular foreigners who are looking for a second home in Japan’s second biggest city. The building is 48 stories comprising 525 units, the smallest of which is 90 sq. meters. Prices start at ¥3 million per tsubo (3.3 sq. meters). In the first sales phase, apartments on floors 40 through 48 will be made available at prices ranging from ¥83.5 million to ¥415 million. The projection is that residents will be able to start moving in in August 2013.
The developer Sekisui House emphasizes that Owners Tower is very different from the “family-type” condos that tend to dominate the urban housing market, but in fact central Osaka will soon see a lot of new family-type tower condos going on sale in the coming months. Several buildings are now going up in Kita Ward offering a total of 400 units, and in Tennoji Ward, which is considered the heart of Osaka’s business district, about 260 units are under construction. The average prices are slightly less than ¥2 million per tsubo, or about 30 percent higher than prices in areas outside the city center.
Why are families moving to the center of the city? The main reason seems to be that while these condos are expensive, they are still much cheaper than they were, say, four years ago. Ever since the so-called Lehman shock of 2008, real estate in all the major cities has dropped in value as large companies unloaded properties to raise cash. Those developers that managed to stay in business cut back on new projects, but now they’re taking advantage of the lower land prices and building again.
The Grand Front project is especially important in this regard since the old North Yard was considered a prime location. After JNR went private in 1987 and became JR, cargo operations were moved elsewhere, but in the drawn out privatization turmoil it was difficult to change the land over to other uses. JR East managed to do it sooner, selling the cargo yards of Shinagawa in Tokyo at a relatively early date. They’re now the Shiodome City Center residential and business complex. It wasn’t until after 2000 that Osaka manged to start renovating the North Yards, but now that it has it should prove to be very popular for residential housing, since Osaka Station is a main transportation hub and hosts many established retail outlets, including all the major department stores.
Usually, Osakans are more cautious about buying property, and if they seem to be leading the charge in reviving the new condo market it’s probably because the city was relatively unaffected by the March earthquake. Nevertheless, Tokyo’s new condo market may be picking up as well. Though sales of high-rise apartments slowed after the earthquake, especially in the landfill areas of the Tokyo waterfront, developers have quickly made adjustments to lure buyers back. On Jan. 12, a planned 49-story residence called Park House Harumi containing 883 units will start selling apartments. The appeal will be the building’s self-contained emergency generator, which means elevators will be able to start up almost immediately following an earthquake.
The structure utilizes state-of-the-art quake-proof technology, but what’s new is that each floor is also equipped with special storage facilities for emergency food rations and portable toilets. The developers have received more than 2,000 inquiries since the condos were first publicized in September. Obviously, developers and construction companies are happy that people are starting to look at new condos again, though present condominium owners may wonder how it will affect the value of their own properties. For every new condo that’s bought it means one less customer for an older one, and thus a bigger used condominium glut.