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Wednesday, Jan. 13, 1999
Universal theme park faces developer pullout
OSAKA — With the recent pullout of a group of investors from plans to develop the area around Universal Studios Japan, there are growing concerns among potential investors that Osaka's hopes for a USJ-led economic revival face a serious setback.
The city envisions the theme park, scheduled to open in spring 2001, as the centerpiece for the redevelopment and economic revitalization of the bay area.
In addition to the park, in which the city has a 25 percent stake, Osaka plans to encourage construction of support facilities and hopes to convince high-tech businesses to relocate to the surrounding area. Last year, two private consortiums, one led by Sanwa Bank and the other by Sumitomo Shoji, drew up plans to develop the area surrounding the park.
But last month, the Sanwa Bank-led consortium announced it was abandoning its plan to develop hotels, restaurants and amusement facilities, partially because the group and the city, which owns the land surrounding the USJ site, failed to agree on the price per square meter.
The city wanted 870,000 yen per sq. meter, but the Sanwa group was only prepared to pay 500,000 yen. The group's development plan had called for a Daiei-related construction firm to build a 79,000-sq.-meter building, complete with a food court and entertainment facilities. Hankyu was supposed to build a 300-room hotel and Toei a multiplex cinema.
Sanwa Bank spokesman Haruhiko Kimura said the price differential was not the only reason for the pullout. He said the group looked at a variety of factors, including the potential for future business growth. "In the end, we judged that the development project was not feasible for a number of reasons besides the high price of land," he said.
Other members of the consortium have also long had doubts about the profitability of relocating outside the main business districts.
For example, Hard Rock Cafe, currently in Osaka's Namba district, is being forced to move due to plans to tear down Nankai stadium, which sits beside it. Hard Rock officials are concerned about moving from what is a very high customer traffic location to an area farther away from the main centers of activity.
A Hard Rock spokesman said no decisions had been made on whether to open somewhere else in central Osaka or to take a chance on moving down to the bay area. But Kimura said it was possible that several other members of the consortium would submit separate plans for development or relocation as the 2001 opening date for USJ nears.
Many investors and potential investors are also waiting to see how the city plans to improve access to the area.
USJ officially claims it is only 10 minutes from the center of the city by train. However, that calculation ignores transfer time from Nishikujo Station on the Loop Line — the transfer station to the USJ site — to either JR Osaka or Tennoji, as well as transfer time between Nishikujo and the USJ site.
At present, there are only two trains per hour running on the trunk line from where a new station for USJ is to be built and Nishikujo Station. This means a train trip from JR Osaka to the area could, depending on the time of day, take one hour.
Although JR has plans to add more trains on the trunk line after the park opens, a spokesman said it will still take much longer than 10 minutes to get from USJ to JR Osaka or Tennoji stations.