What’s up with Azabudai Parkhouse?

In April 2012, Mitsubishi Jisho Residential announced via their sales website for Azabudai Parkhouse and that “sales have been suspended while business planning is under review.” All floorplans and property details have been removed from the site which can be seen here.

No other information was provided, but the rumor is that they have given up on selling the apartments and will try renting them out instead. This might anger some owner-occupiers who did not expect to be buying into a tenant building. Rental apartments were supposed to be advertised from May, but there is still no information available.

Planning for the Azabudai project began prior to the Lehman Shock in 2008, and the building was completed in December 2010. Obviously the market has changed considerably since 2008 and cannot support an extravagant product at over the top prices.

When new, apartments were priced between 65 and 840 million Yen, and had an average price of 1,720,000 Yen/sqm. They were banking on the name brand of the attached Tokyo American Club, but buying into the building did not grant automatic access to the club as residents were still required to pay the club’s expensive membership fees. It was estimated that at least half of the 165 apartments remain unsold more than 18 months after completion.

The land underneath the building is leased from the Tokyo American Club under a 51-year leasehold. At the end of this lease, the building must be demolished and the land returned to the Club. Leasehold apartments are notoriously difficult to sell new, and even more difficult to resell in the future. Add in the luxury price tag, and you have a very difficult product to move.

There are 3 apartments currently listed for re-sale in this building.

• 4F 1-Bedroom 61.56sqm 73,800,000 Yen (approximately 78 million Yen when new)
• 10F 2-Bedroom 143.22sqm 248,000,000 Yen
• 14F 2-Bedroom 143.22sqm 310,000,000 Yen
  (These two apartments were priced around 271 million Yen when new, although the actual price would have depended on the  floor).

There are also two apartments listed to rent, possibly by individual landlords:

• 2-Bedroom 125.61sqm 1,050,000 Yen/month
• 2-Bedroom 86.11sqm 520,000 Yen/month

If you are looking at high-end apartments, you will find better prices in Mori’s new Ark Hills Sengokuyama Residence, although you will still have to share facilities with tenants. Prices there average 1,600,000 Yen/sqm, and best of all the land is freehold.