URBAN DEVELOPMENT

URBAN DEVELOPMENT Shibuya

A Bold Future for Shibuya

by Julian Ryall

Long recognised as the fashionable and youthful heartbeat of Tokyo, Shibuya is undergoing a transformation that has seen gleaming skyscrapers rise high above the station area and an influx of high-tech companies looking for an energetic and stimulating place for the headquarters of their Japanese operations. The rejuvenation of a district that a decade ago was looking slightly downat-heel has inevitably had a knock-on effect on prices for land in all sectors, including the residential market.

Opened as a quiet suburban railway stop in 1885, when it was surrounded by vegetable fields, Shibuya Station today handles nearly 3m passengers on average every weekday. It has gained worldwide fame for the statue of loyal dog, Hachiko; the scramble crossing directly outside the west exit and the plethora of neon, advertising and big screens that look down on all those passers-by. In part because of the 2020 Tokyo Olympic Games but also in an effort to attract more firms to the district, Shibuya Ward teamed up with Tokyu Corporation, a railway firm and property developer with extensive interests in the neighbourhood, as well as East Japan Railway Company and Tokyo Metro Co., Ltd. to rebuild the station area. The first visible manifestation of this vision was Tokyu’s Shibuya Hikarie, a 183-metre tower at the east of the station with offices, retail space, restaurants, conference facilities and a theatre. One of the very first firms to snap up office space in the building was mobile applications giant Line Corporation.

The area south of Shibuya Station has seen similar large-scale development, with global tech behemoth Google LLC taking over the entire top half of the 33-storey Shibuya Stream property. The lower levels, meanwhile, are occupied by a hotel, shops and space for incubators and startups. Just a stone’s throw away and directly above the station, which is undergoing a complete makeover, Shibuya Scramble Square rises 230 metres above street level and has indoor and outdoor observation decks that offer breathtaking views of the city and well beyond. The Dogenzaka area, directly to the west of the station, is also getting a state-of-the-art block that is a mixture of commercial and office space. A short distance away, in the Sakuragaoka neighbourhood, work is under way on a series of high-rise projects that will include a 180-metre, 36-storey office tower and a 32-storey development of apartments.

With multilingual medical and childcare facilities, as well as serviced apartments, the developers are clearly looking to appeal to foreign companies as part of the effort to reinvent Shibuya as a hub for international business.

“Shibuya has a reputation as a creative industries cluster and many IT venture companies have been born in this district,” said Maria Kanazawa, a spokeswoman for Tokyu Corporation. “After the arrival of the very first venture IT firms—something which began around 2000—Shibuya became known as ‘Bit Valley’ and, as that trend grew, some of the biggest tech firms in the world came here, including Google, CyberAgent, DeNA Mixi, GMO and others.”

Companies were attracted by the presence of other like-minded organisations, she added, making marketing, meetings and even socialising with contacts far easier. Equally, the working environment has improved immeasurably with the addition of advanced new office facilities,

while the district still retains some of its hip, down-to-earth atmosphere, particularly in the bars, restaurants and shops in the narrow streets to the west of the station. Announcing Google’s plans to move into Shibuya Stream in late 2017, Peter Fitzgerald, vice president of Google Japan, said being based in Shibuya would enable the firm to double the size of its presence in Japan. Moreover, he said the Google for Startups Campus—which opened in November 2019—would link with global locations from London to Sao Paulo to help startups develop their ideas, access Google resources and build connections with other entrepreneurs.

“This is a sign of our commitment to long-term investment in Japan,” he said of the campus. “It’s about creating the future with Japan’s innovators of today and those from the next generation.”

Industry analyst Andy Hurfurt says Shibuya has always had a “reputation for its vibrancy and youth,” which has proved attractive to tech firms. That translates into demand for space. The price of land in Shibuya Ward has soared 9% between the fourth quarter of fiscal 2018 and the same period in 2019, Hurfurt said, adding that this growth is “significantly faster than we have seen in recent years” such as the 3.4% increase in prices recorded within 2014. In the residential sector, developments have pri

marily been family apartment buildings of 50–300 units. By the fourth quarter of fiscal 2019, Shibuya was the most expensive sub-market within Tokyo, overtaking Minato Ward. Rents are at record highs, surpassing even the levels witnessed before the global economic crisis of 2008, to reach an average of ¥5,136 per square metre.

“I think the increased presence of tech and media companies in this part of Tokyo has put up rents across the entire sector, particularly because Shibuya also includes a number of high-end sub-markets, such as Hiroo, Ebisu and Daikanyama, Hurfurt added.

That demand has led to developers replacing old stock with newer properties that include facilities designed to appeal to “high-fliers in the tech sector,” such as apartment blocks with gyms, he said.

“Shibuya has always been a dominant player in the Tokyo property market, but I look at all those new buildings and the planned new developments and I think the district is changing,” Hurfurt said. “The stores and restaurants and other facilities that are going in there now are aimed more at older, wealthier consumers. We see more stand-alone, luxury stores and high-rise towers with expensive apartments. But I also think that [developers] don’t want to completely do away with everything that has made Shibuya what it is today: an energetic hub of creativity and energy,” he added. “To do that would almost destroy the very reason they came to Shibuya in the first place.”

Junpei Fujioka, vice president of Housing Japan, agrees that, while Shibuya was previously solely known for being “lively,” it now also has the high-end sophistication that makes it more attractive to a wider number of people and companies.

“That has had a good influence on the residential market,” Fujioka said. “When expat executives from Google or some of these other famous foreign companies relocate to Japan, they are going to want to live in attractive parts of Tokyo, which is helping to boost demand and prices.”

In the very heart of Shibuya there is a limited supply of residential properties and virtually no stand-alone houses, so people are looking slightly further afield, to Omotesando, Ebisu or the Shoto district, according to Fujioka.

“In these areas, there are far more highend condominiums that appeal to expats as well as local people,” he added. “And while we have had requests in the past for detached homes with a garden in these sorts of areas, it really is not a question of budget, it’s purely a question of supply.”