Japan Long Looked Down at Luxury Penthouses. Now Things Are Looking Up.
Kanebridge News
Share Button

Japan Long Looked Down at Luxury Penthouses. Now Things Are Looking Up.

Once considered an ostentatious display of wealth, extravagant top-floor spaces are suddenly in demand

By MIHO INADA
Fri, Jan 12, 2024 8:29amGrey Clock 6 min

Ken Akao, a 35-year-old cosmetic surgeon, was a little concerned when he bought a multimillion-dollar Tokyo apartment in October 2023. It wasn’t about the property itself, a three-bedroom, 39th- floor penthouse with a spiral staircase, Jacuzzi and infinity pool. It was about what his father, a frugal Japanese diplomat of the old school, would think after seeing a property so grand—and so un-Japanese.

After some time, Akao summoned the courage to invite his dad for a visit. To his relief, he says, the elder Akao enjoyed the tour and pronounced the pad “wonderful.”

A century after the Park Avenue penthouse became established as the height of residential luxury for New Yorkers, the concept has finally made it across the Pacific to Tokyo. Part of the credit goes to people with foreign experience such as the younger Akao, who grew up largely overseas, as well as the influence of Chinese buyers flooding into Japan these days.

It also reflects changing values about what constitutes the ideal property in Tokyo.

Japan’s capital first flourished in the 17th century as the seat of the shogun, or generalissimo, who reigned as Japan’s de facto ruler. The Tokugawa family of shoguns, having subjugated feudal lords across the land, insisted that the lords spend half their time in the capital. Soon the city then known as Edo was dotted with spacious compounds where grandees lived in sprawling low-slung wooden homes watched by the shogun’s spies.

Camille Bressange/THE WALL STREET JOURNAL

Long after Edo became Tokyo and feudalism ended in 1868, those properties served as the prototype for the rich. Kakuei Tanaka, a poor man from the provinces who got wealthy with business ventures while rising to become Japan’s prime minister between 1972 and 1974, used to hold court inside the walls of a leafy compound in the Mejiro area of Tokyo, where he could feed the carp in his pond. (The house was destroyed by fire on Jan. 8. No one was hurt.) In a country that tends to frown on ostentation and special treatment for the privileged, the high walls surrounding such properties offered privacy.

These days, most rich Japanese still prefer to keep their wealth under wraps. But other changes have made a luxury condominium in a prime central Tokyo location look attractive compared with a house on a spacious property in a residential area.

One is the burst of the land-price bubble in the early 1990s, which shattered the myth of land as an indestructible store of value. These days, say real-estate professionals, bankers are less inclined to insist on land as collateral and more willing to extend loans backed by quality condos that are seen as likely to retain value across economic cycles. Also, in an ageing country where labor is in short supply, many older couples look askance at trying to care for large grounds. “Weeding is such a pain for old people,” said Satoshi Omori, president of a Tokyo real-estate appraisal firm.

The 2011 earthquake in northeastern Japan boosted the appeal of living in an earthquake-resistant concrete building in a central location rather than a wooden house farther out, where services might be hard to come by in an emergency.

“Compact cities are a global trend and people tend to prefer places that are more convenient,” said Shigeru Funabashi, a Tokyo broker.

Funabashi is a cosmetic surgeon who has in recent years shifted his career toward real estate, having developed a fascination with luxury residences. In 2011, he went to London to take a look at One Hyde Park, which is the location of a penthouse that was recently one of the highest priced in the city. He recalls thinking to himself, “Something like this will come to Tokyo someday.”

Foreign developers were ahead of the game in tapping the wellspring of demand Funabashi sensed and spreading the word “penthouse” in the Japanese language. In the Shibuya district, popular among tourists, Canadian developer Westbank in 2020 completed a five-floor condominium designed by architect Kengo Kuma. Traditionally, such buildings had nothing fancier on the top floor than plumbing and electrical equipment. But Westbank put in a multilevel penthouse with a private infinity pool on the roof. It sold early last year for $50 million, according to the developer.

Some other buyers in the building bought two units to combine them. “It really showed us that there is this massive gap in the market for products at this level,” a Westbank representative in Japan said. She said that if Westbank had the chance to build the 12-unit property again, it would make it with only six units.

Marq Omotesando One is another luxury low-rise condominium by foreign developers in central Tokyo that was completed in 2021. The development, led by a unit of Hong Kong-based investment firm BPEA, features a 6,700-square-foot penthouse with roof pool that local agents said has been listed at a price in the tens of millions of dollars. Its current status couldn’t be determined.

At Japanese real-estate development companies, “no one really wanted to rock the boat or do anything different,” said Zoe Ward, a real-estate agent originally from Australia who has worked for 15 years in Japan’s property market. But they changed course after seeing foreign developers building extravagant properties and selling units at high prices never seen before, Ward said.

Japanese developers say that many customers of ultra expensive condos are locals, including corporate executives and younger entrepreneurs who are often familiar with high-end homes in places such as New York and London.

Azabudai Hills, a Mori Building project in central Tokyo that includes offices and apartments, opened on Nov. 24. The development includes what is currently the tallest building in Japan, with 91 Aman-branded apartments on high floors. Planning documents submitted to authorities show there are three duplex penthouse units on the 64th floor. The largest unit occupies half the floor and has a private pool, the documents indicate. Local brokers say all three have been sold.

Mori Building declined to release floor plans or price ranges for those apartments—a reminder that the rich here still don’t want their private business aired, even if their high-rise homes are visible dozens of miles away. A local publication, Daily Shincho, reported that the largest unit sold for the equivalent of $200 million, which would make it the highest-price condo ever sold in Japan by a multiple of two or three.

Swimming pools on rooftops are rare in Japan, partly because of concerns about water leaking during earthquakes. But that is also changing. A central Tokyo office-hotel building developed by Mori Building opened in October with restaurants and an infinity pool on the roof.

“The rooftop was never utilised in Japan as much as it should be,” said architect Shohei Shigematsu, who designed the building. He said his team added extra drainage to reassure the developer that water wouldn’t splash on passersby 49 floors below in the event of an earthquake.

More luxury penthouses are on the way, including several on the top floor of a 13-story building at Mita Garden Hills, a project jointly developed by units of Mitsui Fudosan and Mitsubishi Estate. The building won’t be completed until 2026, but Mitsui says all of the penthouses have been sold.

The most expensive one, with a floor area of about 4,000 square feet, sold for 5.5 billion yen, equivalent to about $38 million, according to a broker familiar with the deal. Mitsui declined to comment.

In Osaka, the centre of Japan’s second-largest urban area after the Tokyo region, a penthouse in a 46-storey building, due to be completed in December 2025, is listed for the equivalent of about $17 million. The price for the unit, which at 3,300 square feet is the building’s largest, would be the highest price ever for an Osaka-area condo, said a spokesman for Sekisui House, one of the developers.

The spokesman said the penthouse has the vibe of a European guesthouse for visiting dignitaries, with chandeliers hanging from ceilings that are as high as 16 feet. Some other units feature an elevator to carry the owner’s car into the premises.

While ultrahigh-price deals are usually not included in industry databases, prices of Tokyo apartments generally are rising, driven by the higher cost of materials and labor. The Real Estate Economic Institute, a Tokyo-based firm tracking the property market, said the average price of a new apartment sold in central Tokyo for the six months through September was up 36% compared with the same period a year earlier and topped 100 million yen, equivalent to about $700,000, for the first time.

Akao, the cosmetic surgeon and recently minted penthouse owner, says he grew fond of the luxury lifestyle when visiting Aman hotels in Japan and Greece. He wasn’t able to get his hands on one of the Aman units in Azabudai Hills, but found a good substitute in his penthouse across from Yoyogi Park, a central Tokyo urban oasis like New York’s Central Park.

There is an en-suite bathroom in the primary bedroom, rare for a Japanese home, and Miele appliances in the kitchen. The staircase from the living-dining area, which features sofas from Arflex Japan, leads to an open-air 700-square-foot deck with the infinity pool.

“I often have large group get-togethers,” Akao said. “The pool will make gatherings easier.”

Akao said that growing up in the U.S., Switzerland and Austria where his father was posted made him familiar with the lifestyle because some of his classmates lived in houses with a pool and talked about it casually at school.

While analysts say most of the recently built penthouses are bought by people who intend to live in them, there are still flippers. Akao might be one of them. He said he is trying to sell his unit before considering whether to move in. He declined to disclose what he paid but said he was asking the equivalent of about $9 million.

—Peter Landers contributed to this article.



MOST POPULAR

Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Related Stories
Property
They Were About to Move In When the Ocean Almost Washed Away Their New Home
By E.B. SOLOMONT 23/02/2024
Property
The suburbs where demand for share housing has hit historic highs
By KANEBRIDGE NEWS 21/02/2024
Property
London Property Outperformed Seven Other Kinds of Investments Over Last Decade
By CASEY FARMER 21/02/2024
They Were About to Move In When the Ocean Almost Washed Away Their New Home

Gail and Ron Fink’s property in Jupiter Inlet Colony sustained major damage during an unusually windy day. ‘The whole backyard is shot. All the landscaping is gone.’

By E.B. SOLOMONT
Fri, Feb 23, 2024 8 min

Gail and Ron Fink weren’t home the day the ocean swallowed their backyard.

The Florida couple, who are in their 70s, were a few miles away on Feb. 6—an unusually blustery day in the Sunshine State—as waves pounded their beachfront property in Jupiter Inlet Colony, sweeping sand, dirt and trees out to sea. When it was all over, the Finks’ newly-built, roughly 10,000-square-foot home was intact; so too was their free-form swimming pool, improbably balanced on exposed concrete-and-steel pilings.

“That’s what saved the whole thing,” said Ron, founder of an air- and-water purification company. “The pilings are holding up the house and pool.”

Gail and Ron Fink recently finished building a roughly 10,000-square-foot home. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Drone footage and pictures from local photographers and the Finks’ builder show the severity of the destruction, which left their pool suspended in the air, with pipes protruding from the earth. Town officials said erosion claimed 7 to 10 feet of sand and created steep drop-offs in front of about half-dozen homes, including one belonging to Kid Rock , the rapper-turned-country rocker, who paid $3.2 million for the property in 2012. Conair heiress Babe Rizzuto also sustained damage to her property down the street, which she bought for $6.3 million in 2015 and currently has listed for $22.5 million, according to Zillow.  Neither responded to requests for comment.

But the Finks house, located just past the end of a granite revetment wall—a kind of sea wall—bore the brunt of the heavy wind and waves.

 

“The whole backyard is shot. All the landscaping is gone,” said Ron. Also gone are fully matured Palm trees and an ipe-wood deck. “It’s out floating in the ocean someplace.” Ron is self-insured and the repair work will be quite expensive. undefined

A New Jersey native, Ron is an engineer by training who worked at nuclear-testing sites in California and Nevada before moving to Florida in the 1980s. He is the founder of RGF Environmental Group, which makes air- water-and food-purification systems.

For almost 40 years, the Finks—who have three adult children and eight grandchildren—have lived in Admirals Cove, a gated community in Jupiter about 5 miles from their new house. They paid $180,000 for the Admirals Cove lot in 1987 and built a roughly 6,000-square-foot house, Ron said. The Finks also own homes in the Cayman Islands and Bahamas.

Until now, the Finks have lived in Admirals Cove, about 5 miles from their new house. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Ron said they began looking for property in Jupiter Inlet Cove years ago. “It’s a neat place, just a closed little colony right on the ocean, low key and quiet,” he said.

About 20 miles north of Palm Beach, Jupiter Inlet Colony is at the southern tip of Jupiter Island. The town, founded around 1959, has approximately 240 homes and is surrounded on three sides by water—the Atlantic Ocean, Jupiter Inlet and the Intracoastal Waterway. Long a destination for wealthy homeowners, homes in Jupiter Inlet Colony tend to trade for between $2 million and $5 million, although one sold for $18.6 million in January, according to real-estate brokerage Redfin. Last year, a home on the Intracoastal sold for $21.4 million, a record for the town.

In 2020, the Finks paid $4.9 million for a vacant beachfront lot and subsequently built a coastal-style house with a copper-and shake-style roof, covered loggia, pool and outdoor fire pit. “You know, it’s kind of a dream home,” Ron said. “We have built quite a few homes, but this is the end of the line for us, hopefully the last one.”

He said the property originally belonged to the singer Perry Como, one of the town’s first residents. A prior owner demolished Como’s house, and when the Finks bought it, there were concrete-and-steel pilings sticking out of the ground.

Ron Fink said he never removed about 60 pilings, he simply added roughly 30 more. “Now I’m glad I did,” he said. (Pilings are based on the design of a house, so Ron retained some pilings that he didn’t necessarily need.)

John Melhorn of design-build firm Thomas Melhorn, which built the house, said the Finks were a final review away from obtaining a certificate of occupancy when the backyard was destroyed. “They were right there at the goal line,” he said.

The Finks’ house and pool are standing on about 90 concrete-and-steel pilings. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Melhorn said the erosion began in late October amid unusually high winds and ocean swell. During the first week of February, sand beneath a row of sea grapes that stabilized the dunes between the house and ocean began to wash away. By the evening of Feb. 6, the plantings disappeared. The yard was gone by the next morning.

Melhorn said a pre-existing, low wall between the ocean and house—described as a cinder-block retaining wall on land surveys—also washed away, as did a walkway and steps to the beach. But he said the 2-foot-high wall was less of a retaining wall and more like a curb between the street and sidewalk. In this case, a prior owner used it to hold sea grapes back from encroaching on the property. The Finks replaced the wall with decorative stone, now lost to the ocean. An outdoor fire pit is still there, cantilevered over the ocean. “We tried to pull as many things out as we saw the erosion coming, but we lost a lot,” Melhorn said.

In Florida, erosion is increasing because of more frequent, more severe storms and sea-level rise, said Cheryl Hapke, a research professor at the University of South Florida and the chair of the Florida Coastal Mapping Program. But she said it isn’t just hurricane-level storms that cause major damage. “One thing I have found about barrier islands [like Jupiter Inlet Colony] is that sometimes a series of smaller events can have as big an impact as a major hurricane,” she said. “But people get caught off guard. It’s something they don’t think of.”

In Jupiter Inlet Colony, longtime residents said this month’s erosion is the worst the area has seen in years, possibly ever.

Mayor Ed Hocevar, who has lived there for 17 years, said it has been a particularly cool and challenging winter with an abnormal number of Nor’easters. On Feb. 6, local news channels warned of high winds, with gusts between 40 and 50 miles an hour. (There were also reports of an earthquake off the coast that week, causing high waves.)

Since the 1980s, Jupiter Inlet Colony has had a granite rock revetment wall that extends from the northern end of the community past 11 oceanfront homes. “But we’ve got 28 homes along the beachfront, so it isn’t complete,” Hocevar said. “Where the wall ended is where the significant damage occurred.” Hocevar said he doesn’t know why the wall wasn’t completed, although local lore is that homeowners building the wall ran out of money.

Last week, the town hired a local mining company to bring in 7,000 tons of sand to replace what washed away. Hocevar said it would cost about $500,000, which will come out of the town’s reserve fund. Long term, he said, extending the revetment wall isn’t a strong possibility.

Hapke, the coastal geology expert, said that in recent decades, sea walls and hardened structures have fallen out of favor as scientists discovered they are detrimental to the environment around them. “Storm water wants to flow, so it will redirect water to the area without a sea wall,” she said, adding that the most ideal long-term solution is to move homes away from the coastline.

 

Hocevar, 67, who has been mayor of Jupiter Inlet Colony for about a month, said the town is working closely with the Department of Environmental Protection on its response. He said the DEP’s recommendation, should erosion like this occur again, is to bring in more sand. Hocevar emphasised that the community is rallying together. “Think about it as a fortress and your wall has been breached,” he said. “You want to protect your neighbourhood and that’s what we’re trying to do here.”

Holly Meyer Lucas of Compass, who represented the seller when the Finks purchased their property, said Jupiter Inlet Colony is a “special little enclave” where sales exploded during Covid. “Listings sell after a day or sell off-market,” she said.

Lucas said the consensus among local real-estate agents is that property values will hold, despite the erosion. “I think this is a really rare, weird, fluky event,” she said. “I’ve sold everywhere up and down the coast and I’ve never heard of anything like this.”

The couple were close to getting their certificate of occupancy for the newly-built home. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Babe Rizzuto, whose house is two doors down from the Finks, listed her house for $24.5 million in December 2023 and cut the price to $22.5 million on Feb. 6, according to Zillow.

“She’s going to continue to sell,” said Milla Russo of Illustrated Properties, who is marketing the property with her husband, Andrew Russo. “Even though the timing isn’t great, it is what it is.”

Russo said there has been erosion in the past, and during hurricanes residents of Jupiter Inlet Colony are the first in the area to evacuate. But in general, people are not preoccupied with the weather. “Maybe because we live here, when the hurricanes come, we all have hurricane parties. We go to people’s homes and we barbecue and grill. Of course we’re careful and we lock up and all that, but weather is weather,” she said. “We’ve never been terribly scared.”

(The Russos were also involved in selling the Fink property. However, in 2020 the closing agent on the deal, Florida-based Eavenson, Fraser & Lunsford, PLLC, sued Milla Russo and Illustrated Properties as part of a commission dispute. The seller, Michael Cantor’s Range Road Developers, was named as a defendant and cross-plaintiff in the suit, in which a judge ruled in favor of Eavenson, court records show. Milla Russo declined to comment on the suit. Eavenson declined to comment beyond the judge’s findings and Cantor did not respond to requests for comment.)

Ron was also matter-of-fact about the state of beachfront living. Bring a life jacket, he jokingly told a photographer who inquired last week about taking his picture.

However, the Finks are facing weeks of costly repairs. Although the town is bringing in sand to replace the decimated beachfront, the couple is self-insured and will be on the hook for the cost of rebuilding. Several major home insurers have pulled out of Florida, and Ron said insurance on the house would have cost $100,000 a year. Now, he estimated they could face about $1 million worth of repair work. “We gotta eat it,” he said.

The couple, who was supposed to move into the house this month, has put those plans on hold—for now. An engineer recently inspected the property and deemed the house safe, Ron said. “We’re doing wallpaper today,” he said. “We can put it back together again.” The patio and pool area, meanwhile, are roped off while the area underneath is backfilled with sand.

Ron said being near the ocean makes it worthwhile. “I just love the ocean, we both do. It’s important to us,” he said. “It isn’t easy to look at, but I’ve been through a lot worse.”

MOST POPULAR

Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Related Stories
Property
Wild cities and concrete corridors: How AI is reimagining the landscape
By Robyn Willis 06/12/2023
Lifestyle
The Science-Backed Schedule for Your Perfect Weekend
By ALEX JANIN 08/01/2024
Money
Hotter-Than-Expected Inflation Clouds Rate-Cut Outlook
By JUSTIN LAHART 14/02/2024
0
    Your Cart
    Your cart is emptyReturn to Shop