Photo: Yohel Yamashita
The contest was heated between the three final cities following London 2012: as George Osborne announces the UK economy is “turning a corner”, London’s example showed that a city could benefit from hosting the sporting event, becoming a safe haven for overseas investors as well as sparking a rebound in new development.
“After just one of the four year programme designed to capitalise on the success of the Olympics, the British government announced an impressive and much welcomed trade and investment boost of GBP 9.9 billion,” notes Ray Withers, CEO of investment firm Property Frontiers.
Boris Johnson commented : “I am sure that, like London, your great city will put on an extraordinary event. This is a magical moment of celebration to savour before the years of hard work ahead.”
Tsunekazu Takeda, leader of Japan’s bid, added: “It is a great honour that Tokyo has been chosen. The first thing I will do when I return is to thank all of Japan.”
Tokyo is now the first Asian city to host the Olympics twice, a promising sign for the market as investors begin to jump on its future potential. With China’s growth slowing, Singapore introducing new measures to cool its property market and Hong Kong tightening its credit, Tokyo’s profile is rising.
Indeed, Grosvenor, who manage the property assets of the Duke of Westminster, are now moving towards the capital.
“Right now we see most attractive pricing in Tokyo,” Nicholas Loup, the chief executive of Grosvenor’s Asia Pacific business, told World Property Channel . “There is a bit of an adjustment at the macro level in China, with the focus on shadow banking and monetary restrictions. Some of those restrictions also apply in Hong Kong.”
“We started investing again in Tokyo not too long after the earthquake, and even before the earthquake we thought the timing was about right,” Mr. Loup added. “We’ve since then got the unforeseen effect of so-called Abenomics.”
Abenomics, the name given to Prime Minister Shinzo Abe’s aggressive economic policies, has already seen real estate prices climb. Indeed, the value of Japan’s real estate deals in the first half of 2013 pole vaulted to $23.7 billion, the highest level since 1997, according to Urban Research Institute Corp.
The last surge in investment was seen just before the global financial crash, when private funds were entering the market. Now, long-term institutional buyers are driving growth, as the market seems set for growth on a bigger scale in the run-up to the Olympics.
Developers are already enjoying the boost of the initial announcement: Mitsubishi Estate, Japan’s second-largest developer, saw stocks climb 4.7 per cent . The country’s biggest developer saw a rise of 6.4 per cent. According to the International Olympic Committee, the economic impact upon the construction industry will be an estimated 475 billion yen and approximately 152 billion yen for the property sector.
Bridges, stadiums, parks will all need to be built, not to mention a 44-hectare, 95.4 billion yen village next to Tokyo Bay – the country’s biggest housing project in 42 years.
Indeed, Property Frontiers is already looking towards the country for opportunities. Withers, who is half-Japanese, tells TheMoveChannel.com: “Once the celebrations in Tokyo have finished, the city will be braced for the hard work to begin. Japan faces years of planning, construction and preparation, with thousands of jobs being generated in the run up to 2020. Ten new sports venues are to be built, including some striking developments such as the $1.5 billion Kasumigaoka Stadium and the transformation of Tokyo Bay.”
The successful bid has followed news of rising concerns in Fukushima, where a nuclear plant leaked in 2011 after a devastating earthquake and tsunami.
“It will never do any damage to Tokyo,” the Prime Minister told concerned officials, while many hope that the city, which is 150 miles from the capital, will benefit from having the world’s spotlight shining on Japan. Since the leak two years ago, more people have now probably died as a result of problems relating to the incident than in the quake and tsunami itself, according to one Mainichi newspaper .
For Tokyo, though, the outlook is decidedly optimistic.
“There is no doubt that Japan will be an investment hotspot during the coming years,” continues Ray. “The property market in Tokyo and the surrounding areas is naturally tipped to boom, which will be welcome news following a slump that has lasted for nearly a quarter of a century. Property prices in some areas are down some 80-85% compared with 24 years ago, which is going to create some incredible investment opportunities between now and 2020.”
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