The Redevelopment of the Osaka Station-Umeda Area:
Focus of Growing Hopes for the Revitalization of the Kansai Economy
June 17, 2004
The economy of the Kansai region is in a virtuous circle. Since early 2002, exports, especially exports to Asia, have been growing steadily. This has led to a rise in production, a recovery in business profits and a more positive stance on capital investment. This improvement in economic indicators is largely due to business fluctuation factors but a variety of initiatives aimed at fostering growth industries and promoting the visitor/tourist industry with a view to achieving economic regeneration and local revitalization in the longer term, have emerged. In the field of urban regeneration, opportunities relating to the redevelopment of the Osaka Station-Northern Umeda area have begun to emerge.
The Osaka Station-Northern Umeda area is a huge metropolitan-type business/shopping area, by far the largest of its kind in the Kansai region, where it boasts the highest figures for number of passengers using the nearest railway stations and for department store sales. In the Kansai, Kanto and Chubu regions taken together, it has the third highest figure for number of passengers using the nearest railway stations and the second highest figure for department store sales. The Osaka Station-Northern Umeda area is large for a redevelopment project, but not exceptionally large when compared with other major redevelopment projects and is its greatest strength is the ability of the surrounding Osaka Station and Umeda areas to attract visitors.
It is hoped that the redevelopment of the Osaka Station-Northern Umeda area will attract commercial, business, housing, and hotel accommodation functions.
In terms of commercial facilities, the JR Osaka Station Renovation/New North Station Building Development Plan incorporates measures to attract department stores and as the redevelopment of the Umeda North Yard, for which detailed plans have yet to be published, is likely to further enhance the attractions of an area which already benefits from the outstanding ability of the Osaka Station-Umeda area to attract visitors, it should be possible to allocate a certain amount of space to specialty stores, restaurants, etc.
As regards office facilities, owing to the movement to downscale head office functions in the Osaka area and the fact that few foreign companies choose to establish operations in Osaka, demand for office space in the city is low, and competition between multiple large-scale projects could have a detrimental impact on the balance of supply and demand. The Osaka Station-Northern Umeda area has good potential as a location for office buildings, but it will no doubt be necessary to take steps to promote diversification of applications and avoid an over-supply of office space.
On the housing front, it is possible that existing demand for convenient city center locations has not been fully satisfied and, given its excellent location, it should be possible to provide a considerable number of housing units within the Osaka Station-Northern Umeda redevelopment project.
The Osaka Station-Northern Umeda area redevelopment project is expected to be extremely large in terms of both physical scale and amount of investment required, etc., but the improving investment climate and that the growing range of schemes to support urban redevelopment on the financial side are grounds for optimism. However, as the redevelopment project is the focus of attention in that it concerns an area that is effectively the front door to the city of Osaka, expectations are also high. If the facilities and spaces that one would hope to see at the front door of Osaka were to offer little hope of viability or profitability, the issue of how to apportion the burden of their cost would arise. Increasing the floor area ratio, as was done in the Shiodome district of Tokyo, would raise the question of whether or not the city will be able to absorb the increase in the supply of office and commercial space, etc.
In Europe and North America, there are schemes such as TIF and gap funding in which the public sector plays a part in attracting private investment, and it will be necessary to determine what kind of problems will arise as the specific details of the Osaka Station-Northern Umeda area redevelopment plan are worked out and to determine whether schemes such as TIF and gap funding will provide appropriate solutions. In planning the provision of public services, if it turns out that any element that cannot be covered using the profit made on the development, the first step will surely be to reconsider whether the scale of that element is appropriate. If the plan goes head, it is important that it be implemented in an efficient manner through the use of PFIs, etc.
For more information on the content of this report, please contact
Kansai Economic Research Center, Economics Department