The impact of relocating Tsukiji market - Governor Koike rapidly makes redevelopment a reality

The impact of relocating Tsukiji market
- Governor Koike rapidly makes redevelopment a reality

In the Tokyo Metropolitan assembly election held on July 2nd 2017, the Yuriko Koike led "Tomin First no Kai" (Lit. Tokyo Citizens First Party) won an overwhelming victory(*1) and became the leader of the Tokyo Metropolitan Assembly. Prior to the election, Governor Koike had made plans to "relocate Tsukiji market to Toyosu, and redevelop it", and she has remarked that this idea is believed to have "gained confidence" due to the victory.

While the Governor's insisted "Toyosu relocation and redevelopment of Tsukiji" can't be thought of as the main issue of the election, such an overwhelming victory means that the probability of Governor Koike's policy proceeding smoothly is at high. The problem of relocating Tsukiji market to Toyosu has been smoldering for a long time, and is finally moving towards a realistic solution.

But what was the "Toyosu relocation issue" in the first place?

Tsukiji market, which boasts the largest scale of transactions in the world has existed for more than 80 years since establishment, and problems related to aging and safety have been pointed out in the past. In the 90s, while plans for rebuilding Tsukiji market itself progressed, they were abandoned due to prolonger construction and growing costs, among other issues. In 200, the relocation to the new Toyosu market was decided on, and it was scheduled for November 2016.

However, after Governor Koike reached power in the July 2016 Tokyo Governor's Election, political issues relating the increase in overall costs, land acquisition, and the discovery of contaminated underground land issues, among others (the soil contamination existed prior to Governor Koike taking office). Governor Koike decided to postpone the move in order to discuss various issues, and re-announced it in June this year. During this time there were a variety of twists and turns in the story, such as a change in Tokyo’s governor due to scandals, and citizens seem to be rather disconcerted regarding the issue.

In any case, the transfer of the market will be decided by Governor Koike and the Tomin First no Kai. While the timing is still undecided, it seems that Governor Koike is aiming for it to occur by the end of 2018. After the move, the plan is to strengthen the functions of Toyosu, and make it a central wholesale marketplace as well as a foothold for integrated logistics. Further, there are plans for Tsukiji to be used as a temporary parking lot during the Tokyo Olympic Games, with the prospect of redevelopment into a "food theme park", by borrowing power from the private sector after 5 years.

The important point is the "borrowing power from the private sector" part. No matter what happens, Tsukiji market is prime real estate next to Chuo-ku Ginza, and within a 10 minute taxi ride from Tokyo station. The site covers 230,000 square meters, making it more than big enough for 30 soccer pitches. Currently it isn't clear how private companies will be used, but the open land created by moving all the facilities will make it a prime location. Inevitably, there will be fierce competition by major companies for the land.

In fact, for the past few years the area around Tsukiji hasn't been rising in price much. Despite the fact that Ginza, which is essentially next-door, has seen prices rising above even those of the late 80s real estate bubble peak. The current standard price(*2) of Tsukiji is around one sixth of the peak bubble period price. It is only around 20% higher than the year 2012, when and prices bottomed out.

This is probably because nearly half of Tsukiji is comprised of Tsukiji Fish Market, Tsukiji Honganji (Built in 1617), and the National Cancer Research Center, along with other properties, giving it a remarkably lack of liquidity. Otherwise, it would be hard to explain why Kachidoki and Tsukishima just over the Sumida River have seen land prices rise more than Tsukiji.

A few hundred meters away from the market is the Tokyo Metro Hibiya Line Tsukiji station area, where newly built condominiums can be seen here and there. Compared to Hatchobori Station on the same line, where prices are around 60 to 70 million yen per 60 square meters, Tsukiji sees the same area priced at 50 to 60 million. It seems that the Tsukiji Station area is usually around 10 to 20 percent cheaper. In the future, if a private sector competition begins over the old Tsukiji market site, it can't be denied that prices may leap up. While they may not reach the level of neighbouring Ginza, it can be expected that the gap will start to close to some extent.

However, the redevelopment of Tsukiji is still at a phase where it is simply an idea of Governor Koike, and a concrete schedule and contents are still undecided. Governor Koike has proposed plans to return some of the market functions to Toyosu to Tsukiji again, and it is also true that there are many aspects of the plans which are fluid. Since Governor Koike is very conscious of the 2020 Tokyo Olympic Games, the next two years should see rapid progress. The real estate market may well see the day when a "Tsukiji Redevelopment" shock occurs.

*1 Rising from 6 seats pre-election to 49 after, 55 if including independent but Tomin First no Kai nominated candidates. In addition, this rises to 79 of the total 127 seats if other parties that support Gov. Koike are included.

*2 One of the Japanese land price indicators, announced by each prefecture every September.