Bakery owner Kimikazu Murakami, referring to the surge in property prices in the Tokyo Bay area. (Bloomberg)
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There are companies that have offered unbelievable prices to ask us to sell our land.
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semperfi
Well, as they say - the 3 most important aspects effecting the value of a property are : (1) location, (2) location, (3) location.
M3M3M3
In Japan the 3 aspects are (1) Bubbles, (2) Bubbles, (3) Bubbles.
Also, I guess the prices weren't all that unbelievable if they didn't sell.
paulinusa
The emphasis has always been on industry and more lately hotels but I've always thought the land around Tokyo Bay was underutilized for entertainment such as bar/restaurants waterside. Think about cities around the world who take advantage of drinks and dinner right on the water. Tokyo? There are very, very few in that category.
TravelingSales
Tokyo real estate prices are now back, in real terms, to 1972 levels. You have to be pretty brain dead to call that a bubble. Maybe this guy used to work for the Ministry of Finance?
M3M3M3
@TravelingSales
All bubbles are relative. You can't compare prices in 1972 to the past few years of virtually free money. I could also say property prices have doubled or tripled since 1940, but it's a pretty meaningless comparison.
I recently bought a second apartment (Yes, I am fuelling the bubble) and my interest rate for the next 10 years is only 0.315%. The bank is essentially handing me money for free. At that low rate, I would willingly buy the entire building and every other building on the street, as long as I could fill them with rent paying tenants and the bank would actually lend me that much money. When the money is almost free, you can't make a bad property investment even if you try. And that's precisely what these companies are doing when they go around buying land and buildings. They have access to huge amounts of cheap loans and they can't see a time in the near future when rates will rise, to be honest I don't see it either. This is a bubble and your taxes are helping to subsidize my second mortgage. Thank you by the way.
@paulinusa
Yes, it's unfortunate that there is no real enjoyable waterfront in Tokyo but I think part of the problem might be that nobody has actually decided how much land they want to reclaim in the future, so construction on a waterfront can only happen once we know where the land ends and the waterfront begins. I hope it happens in our lifetimes. A big marina would be nice.
semperfi
What have you been smokin' - Tokyo is prime real estate, esp. since the 2020 Games will e held there . . . .
M3M3M3
@semperfi
Yes sure, but I think the olympics is just another overhyped bubble. London for example had only about 500,000 foreign visitors to the games with an average spend of about $2000. It's peanuts really, and it only lasts for a few weeks. I suspect the only effect the olympics will have is that developers will get planning approval for all their projects simply by citing the olympics.
I think one of the reasons the bay area is so overheated is that it seems relatively easy to get approval to build massive hi-rise developments. It's probably much more difficult to get approval for a massive 50 story building in other residential neighbourhoods in Tokyo.
To quote Mr Murakami, more fully from the bloomberg article, he says:
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."
You can read the bloomberg piece here:
http://www.bloomberg.com/news/2014-07-02/butcher-laments-tokyo-bay-bygone-era-on-olympics-renaissance-.html
JeffLee
@M3M3M3
The Bloomberg article is about Tokyo Bay area, which is distinct and not representative of the market overall. Your posts are about the real estate market overall, which is NOT in a bubble.
A slight uptick after a couple of decades of consistently falling land prices, a decline that continued despite ultralow interest rates, is nowhere near being a bubble.
M3M3M3
Yes, I'm talking about major urban centers where major projects are being approved, not just Tokyo Bay. The rise in condo prices is completely unwarranted unless you accept that the stock market has reached its likely reasonable peak and investors are looking for other places to park their money. Of course Tokyo isn't London. Maybe I'm a big jaded but unless prices in Japan are falling like a rock, I get suspicious and call that a bubble.