Japanese real estate giant Mitsui Fudosan has paid 85.03 billion yen ($811 million) for an 89-year-old building in Tokyo, a price 183 percent higher than expected by the seller, according to a report in Japan Property Central.
The seller of the former Tokyo Service Center Japan Post Insurance building expected a capital gain of 30 billion yen ($270 million) on the sale in May last year, when it put the historical building on the market.
Mitsui Fudosan’s acquisition comes as land prices in Tokyo continue to climb after a long stagnation in the market.
Heritage Building Trades as Tokyo Residential Heats Up
The deal for the vintage property asset gives Mitsui Fudosan a 26,000 square metre site in a prime location in Tokyo’s Minato ward at a time when land prices in the prime Tokyo district have been rising since 2012.
The site is home to a 1929 vintage art deco building which has been used for storage in recent years as the value of the land has gradually risen. The average land price in the Mita district where the building is located is 1,072,615 yen per square metre, which values the former Tokyo Service Center site at 28 billion yen ($265 million), according to Japanese real estate information provider Utinokati.
The property is located in Minato’s Mita district, down the street from the Australian Embassy and across from a historic members-only club built for the Mitsui family.
Mitsui Fudosan Targets Prime Area
The 4-storey art deco building has a total floor area of 34,500 square metres (371,000 square feet) and four internal courtyards. The building’s exterior remains in largely original condition, despite an earthquake retrofitting carried out in 2001.
Minato ward is home to the capital’s most expensive neighbourhoods, namely Azabu, Aoyama and Akaska, also known as the three As. The ward’s land price rose 11.5 percent last year to $1,420 per square foot, the biggest jump in all of Tokyo’s 23 municipalities, according to agency data.
The upscale ward is home to foreign embassies and headquarters of top Japanese firms including Honda, Mitsubishi Motors Corporation, NEC, Sony and Fujitsu, as well as the Japanese headquarters of multinational firms such as Google, Apple and Goldman Sachs.
Japanese Firm Builds Global Portfolio
In addition to snapping up historical building in its home country, Mitsui Fudosan has also been buying up assets overseas in recent months. Last September, the Japanese developer took a 90 percent stake in the $3.8 billion Hudson Yards Tower on Manhattan’s West Side.
Mitsui owns the St. Regis Hotel & Residences near Orchard Road in Singapore, and it has a four-project portfolio in China including a mixed-use project Haoshi Fengxiang Yuan and a retail mall LaLaport Shanghai Jinqiao in Shanghai.
Mitsui Fudosan is also the developer behind the redevelopment of the Television Centre in London. The former BBC studios and offices are being turned into a mixed-use complex comprising offices, residential housing, a hotel.