buying apartments worth 400 million or 500 million but not living in them, is the final act of the 'investment game' taking place at Mita Garden Hills?

文字数: 5408 | 予想読書時間: 11 分 | 閲覧数: 161

In 2023, the large-scale high-end residential project "Mita Garden Hills," jointly developed by Mitsui Fudosan, Sumitomo Realty & Development, and others, officially began sales in Mita, Minato-ku, Tokyo. As one of the most notable residential projects in Tokyo's city center in recent years, this development has drawn attention not only for its scarce 25,000㎡ land area and planning scale of 1,000 units but also for its unprecedentedly high selling price, becoming a central topic of discussion.

The price per tsubo is 14 million yen, 500 million "basic model."

Mita Garden Hills is not a traditional high-rise tower-style apartment complex but is instead composed of five low-density residential buildings, each with fewer than 14 above-ground floors. It emphasizes a lifestyle of "urban oasis" and "understated luxury." According to public information, the average price per tsubo (approximately 3.3 square meters) during sales exceeded 13 million yen, with some high-floor units even surpassing 14 million yen. For instance, a unit with an area of 121 square meters was sold for prices ranging from 480 million to 520 million yen, setting a historical high in the Minato Ward residential market.

Even so, when the project was launched, it still attracted a large number of high-net-worth clients, wealthy local Japanese individuals, and investors from mainland China and Southeast Asia to subscribe. It was completely sold out in a short period of time.

In March 2024, Mita Garden Hills was completed and began the process of handing over properties. However, to the market's surprise, a large number of resale listings immediately appeared on various real estate second-hand platforms. The data shows:

• The listed price for a unit of approximately 80 square meters is between 650 million to 730 million yen, which translates to a price of about 25 million to 30 million yen per tsubo.
• Units over 100 square meters are listed at prices as high as 1 to 1.3 billion yen, with the unit price nearing 35 million yen.

Compared to the sales prices from two years ago, the prices of these units have nearly doubled. This phenomenon clearly indicates that some buyers of Mitama Garden Hills are not purchasing for their own use, but rather view the properties as "highly liquid assets"—buying them to resell at a higher price within a short period to achieve significant capital gains.

The rate of return on investment is gradually decreasing, and the rent does not match the property prices.

From an investment logic perspective, the core returns of real estate come from two parts:

1. "资产升值" translates to "Capital Gain" in English.
2. The translation of "租金收益" to English is "rental income gain."

However, based on the current observations of the properties listed for sale and rental market conditions, the rental returns are not ideal.

• The monthly rent for an 80㎡ unit ranges from 950,000 to 1,300,000 yen.
• The monthly rent for a 100 square meter unit is approximately 1.5 million to 2.2 million yen.

Even when calculated at the distribution price, the net return rate is only 3.5% to 4.5%. However, if based on the current second-hand listing price (i.e., the premium price), the investment return rate quickly compresses to between 1.7% and 2.0%, which is close to the yield of a Japanese 10-year government bond (approximately 1.34%). For the vast majority of professional investors, the risk-reward ratio is already unbalanced.

The market has shifted towards short-term speculation, and the logic behind long-term allocation no longer holds.

At the current stage, investors face a dilemma:

• If you choose to hold and rent it out, the returns are not as good as financial products.
• "If you choose to sell at a high price, it will require a new round of buyers willing to take over at that price."

In other words, Mita Garden Hills has transformed from an "asset allocation project" into a purely capital gaming platform.

Based on the fundamental logic of real estate investment, in an environment lacking long-term stable rental income support and facing high tax pressure, the potential for continuous asset appreciation is limited. The model that overly relies on "resale price differences" is essentially similar to the "passing the parcel" game in the financial derivatives market.

Tips for Investors

1. Cautiously assess the investment cycle and tax structure: Real estate in Japan faces higher tax burdens if transferred within five years of holding. If merely pursuing short-term arbitrage, one should carefully avoid tax costs.
2. Caution with the Market Turning Point: The current market conditions have entered an overvaluation stage. Once there is a shake in market confidence or tightening of policies, price volatility risks will be magnified.
3. Focusing on the sustainability of the rental market: The rental market capacity for high-end projects, such as Mita Garden Hills, is relatively limited. It is not advisable to be overly optimistic when assessing the potential for future rental growth.

Conclusion

Mita Garden Hills is a mirror reflecting the "irrational exuberance" of the high-end residential market in the heart of Tokyo. It may not be today or tomorrow, but when prices deviate too far from the fundamentals, a correction is often inevitable.

"The value of real estate will eventually return to the essence of living and use."

For reprinting or collaboration requests, please contact the TLL Real Estate editorial team.

WeChat QR

Chen Tan

Founder of Urbalytics

Certified Building Management Administrator, licensed real estate broker, and former strategy consultant. Originally from China and currently based in Tokyo. After working at a global consulting firm, founded a PropTech company in Shibuya and developed real estate analytics platform “Urbalytics,” focusing on data-driven decision support for real estate investment and transactions. Outside of work, enjoys parenting and life with a dog.