Building in Saitama sells for minus 7 million Yen

A long-vacant school gymnasium building and land in Saitama Prefecture sold for a negative amount last December. The seller, Fukaya City, will pay 7,950,000 Yen to the buyer of the property. This is the first case in Japan of an auction being held with a negative starting price for bidding.

The former Municipal Nakaze Elementary School and gymnasium closed in 1984. Fukaya City later demolished the school building but left the gymnasium available for use by local residents until 2010.

The city had previously made two earlier attempts at selling the gymnasium in 2015 and 2017 with a reserve price set at 17,821,000 Yen. No bids were made.

Local realtors say similar land in the neighborhood can fetch between 12,000 ~ 22,000 Yen per square meter which would give this lot a market price of around 18,000,000 Yen. However, the city’s estimate for demolishing the gymnasium building exceeds this amount, effectively giving this property a negative value. This was the reasoning behind the negative reserve set at the recent auction. The future buyer is responsible for demolition costs, and any new construction is limited to residential use due to zoning regulations.

The winning bid of minus 7,950,000 Yen was made by a local food manufacturer. There were just two bids made on the property. The second bidder submitted an offer of minus 9,999,000 Yen.

The sale included the 40-year old building and 1500 sqm (16,140 sq.ft) of land. The buyer is required to demolish the building within 12 months.

The property is located at the very northern edge of Fukaya City and is over a 20 minute drive from Fukaya Station. The city had a population of 142,000 as of October 2018 and is Saitama Prefecture’s 14th most populated city. The city has seen a year-on-year decline in population since 2010.

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