Any buyers? Deficit Difficulties Lead to Last Minute Sales Tactics at Minato Mirai Business District in Yokohama
Editor’s Note: Zoe Ward is the publisher of Japan Property Central and has extensive experience in the Tokyo real estate market, working for some of the advertising agents on Real Estate Japan.
Minato Mirai 21 (MM) is a 186 hectare waterfront business district in Yokohama, and is home to the Yokohama Landmark Tower. The land reclamation (40% of the area) and urban renewal project began in 1983, but there are still some large parcels of undeveloped land that the city is desperately trying to sell.
The MM development has not been a profitable venture for Yokohama and it has been running in the red. In 2007, the city estimated the deficit to be 59.1 billion Yen but the latest figures put the deficit at 71.9 billion Yen. Repayment of the debt will be due by 2032.
As a last-ditch effort to sell the unused land, the city’s port and harbor authority have decided to offer sales commission to any agent who can broker the sale. The poor performing economy over recent years has meant that no buyers have yet been found. Even if the city does manage to sell the land, with interest on the debt piling up, and land prices falling, the sale price will not cover the entire debt.
Yokohama City began reclaiming land from 1955. The city issued bonds in order to finance the reclamation costs for MM and other man-made islands in Tokyo Bay. The plan was that the sale or leasing of the land would then pay back the debts incurred. The current total debt stands are 160.6 billion Yen (2.08 billion USD).
There has also been a delay to the reclamation project in Minami Honmoku as project fees have been growing rapidly.
Of the 186 hectares in MM, 35 hectares (almost 20%) remain unsold. The city said that they need to sell 12 hectares of land. Part of the land is also leased to the Yokohama Cosmo World amusement park, and some also leased to the J-League Yokohama F-Marinos as their training facilities. The MM population is capped at 10,000 residents so the land is not suitable for developing apartments and is limited to commercial developments.
The Japanese Government has included the MM area as a special economic zone which means businesses who operate within this area may be eligible for tax benefits.
If you are looking for a place in Yokohama, please see Real Estate Japan’s up-to-date listings of Yokohama apartments and condos for rent.
The Chunichi Shimbun, January 22, 2012.
Photos: Courtesy of Zoe Ward