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In A World Of Bubbles, Tokyo’s ‘Skyscraper Curse’ May Be Scariest

It’s been a medal-caliber few years for Japan’s property developers. Not Olympic gold of the kind Tokyo will award athletes 12 months from now. But construction ahead of the 2020 Games, building that’s been a godsend for Japan’s property developers. That will happen when the cost of staging a few weeks of sporting events explode to $25 billion from the $7 billion Tokyo originally estimated.

What if, though, the 2020 construction boom spells trouble for the century ahead? The reference here is to the “Skyscraper Curse” that may be rearing its head in the third-biggest economy.

Building related to Tokyo 2020 turned the Japanese capital into a giant construction site. Even developers unattached to the August 2020 Olympics have used the excitement to build new office towers throughout the city. Office space that, frankly, might have a hard time renting out floors two years from now.

Multinational companies, after all, continue to favor Singapore and Hong Kong (for now, at least) for Asian headquarters. And it’s not Shinzo Abe’s seven-year reflation scheme is catalyzing a startup boom to fill all that office space once the five-ring Olympic circus leaves town.

Today In: Asia

Mori Building recently unveiled ambitious plans to construct Japan’s tallest skyscraper, a title suddenly held by Osaka. This epic redevelopment project that will include offices, residences, shops, restaurants, a hotel, and an international school will come at a cost of 580 billion yen ($5.45 billion), which surely has contractors and rivals salivating at the possibilities. But there’s reason for broader caution.

One can quibble with the wisdom of putting a 64-story, 330-meter edifice in the center of one of the world’s most seismically active metropolises. It’s economic risks, though, that Prime Minister Abe’s office should be considering.

History betrays an uncanny correlation between world’s-tallest-building projects and financial crises. Roll your eyes if you want, but I’ve been covering the phenomenon for two decades. Here’s a quick recap of the last 112 years.

The Panic of 1907, when the New York Stock Exchange lost 50%, occurred just as Manhattan celebrated the opening of the 47-story Singer Building and 50-story Metropolitan Life North Building. The Great Depression that began in 1929 coincided with the New York christenings of 40 Wall Street and the Chrysler Building. Despair and homelessness spoiled the party over the 1931 opening the Empire State Building.

Fast forward four decades to New York and Chicago, the hosts to the world-topping World Trade Center and Sears Tower projects. Both opened as the Bretton Woods monetary system was breaking down and stagflation was fueling fiscal crises.

In 1997, Kuala Lumpur was quaking amid regional market turbulence just as Malaysia’s Petronas Towers came online. In the early 2000s, Taipei opened the world’s biggest architectural marvel in time for political turmoil at home and growing tensions with China, which views Taiwan as a breakaway province. The 2008 completion of Dubai’s 828-metre Burj Khalifa Tower dovetailed with the city’s bust, cascading oil prices and the “Lehman shock” a world away.

This is just the last 100 or so years of the Skyscraper Curse. Spiritualists may track the phenomenon back to the biblical Tower of Babel. But coincidence or not, it’s hard to miss the overlap between history-making economic disruptions and new architectural Guinness World Records entries.

The common, and indisputable, thread is ultra-low interest rates fueling over-investment and froth. Developers are always looking to harness the newest engineering and technological advances. That impulse gets supercharged by excess monetary expansion. It’s not surprising, then, that tallest-building projects often get green-lighted near the top-ticks of speculative manias.

Again, not the most solidly scientific of arguments. Yet Asian developers still engage in serious real-estate one-upmanship. South Korea’s tallest building, the Lotte World Tower, opened in 2017 just in time for President Park Geun-hye’s impeachment and imprisonment on bribery charges. Also in 2017, Shenzhen toasted the opening of the Ping An Finance Center, the No. 4 tallest building globally, as U.S. President Donald Trump was telegraphing his China trade war.

In Melbourne, the ongoing Australia 108 project aims to become the Southern Hemisphere’s tallest residential tower. A coincidence, maybe, but many economists worry Australia is veering toward its first recession in more than 25 years.

What about Tokyo? Abe’s seven-year revival project has been 90% monetary easing and perhaps 10% structural reform (and that’s being generous). All that liquidity, coupled with the construction boondoggle that is Tokyo 2020, has revived land prices in an otherwise deflation-traumatized economy.

As of February, the Nikkei Financial Review reported, Tokyo property prices, as measured by new condos, approached late 1980s bubble-period levels. Yet inflation is advancing just 0.6% year-on-year, less than halfway to the 2% target. And ominously, real wages are down six straight months now as Trump’s China trade war slams Japan’s export engine.

All this means the Bank of Japan’s historic easing has Tokyo construction sites buzzing with activity. The rest of the nation’s slowing economic regions, not so much. All that building is stellar news for property developers, but it’s also creating a bull market in concerns that Japan’s latest building boom could be, well, cursed.

I am a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” My journalism awards include the 2010 Society of American Business Editors and Writers prize for commentary.

Source: In A World Of Bubbles, Tokyo’s ‘Skyscraper Curse’ May Be Scariest

The one-year countdown to the 2020 Summer Olympics begins! As Tokyo gears up to host the games, NBC’s Keir Simmons takes us around the amazing venues in Japan’s capital city. » Subscribe to TODAY: http://on.today.com/SubscribeToTODAY » Watch the latest from TODAY: http://bit.ly/LatestTODAY About: TODAY brings you the latest headlines and expert tips on money, health and parenting. We wake up every morning to give you and your family all you need to start your day. If it matters to you, it matters to us. We are in the people business. Subscribe to our channel for exclusive TODAY archival footage & our original web series. Connect with TODAY Online! Visit TODAY’s Website: http://on.today.com/ReadTODAY Find TODAY on Facebook: http://on.today.com/LikeTODAY Follow TODAY on Twitter: http://on.today.com/FollowTODAY Follow TODAY on Instagram: http://on.today.com/InstaTODAY Follow TODAY on Pinterest: http://on.today.com/PinTODAY #SummerGames #TokyoOlympics #TodayShow 2020 Olympics 1 Year Out: How Tokyo Is Prepping For Summer Games | TODAY

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Japan Casino Resort Hopeful Wakayama Makes Its Case

Tuna fileting demonstrations at Kuroshiro Market are a signature attraction of Marina City, proposed site of a Wakayama integrated resort.Muhammad Cohen

Integrated resorts in Japan’s largest cities promise to be spectacular successes. But most action on the IR front right now is in the so-called regional sector, areas that have been losing population and relevance as economic power becomes more concentrated in major urban centers. Hokkaido, north of main island Honshu, held an IR showcase in January with seven IR operators participating. Last month, Wakayama, east of Osaka, hosted 300 people for an IR forum.

“Wakayama continues to be aggressive in letting everyone know that they desire to host one of Japan’s three potential IRs,” Global Marketing Advisors government affairs director Brendan Bussmann, who spoke at the event, says. Government plans call for Wakayama’s IR to have 2,500 guest rooms plus convention and exhibition facilities and cost about US$2.5 billion to develop.

“Attendees seemed pleased – this was, for most, the first time they were able to listen to and meet with IR operators,” Hogo managing partner in Japan Chris Wieners says. The hospitality and entertainment marketing specialist organized the half-day event along with publisher Asia Gaming Brief, supported by the Wakayama Prefecture Government and Chamber of Commerce plus four IR operators, Manila’s Solaire, France’s Groupe Barriere, US tribal Mohegan Gaming and Entertainment and Macau’s Galaxy Entertainment.

Wakayama Governor Yoshiniobu Nisaka provides strong support for the IR effort.Wakayama Prefecture Government

Wakayama may be the least risky regional IR location from numerous perspectives. Unabashedly pro-IR Governor Yoshinobu Nisaka was reelected to a fourth term last November by a four-to-one margin in a campaign that Nisaka’s opponent declared a referendum on casinos.

Like Osaka, Wakayama has selected its IR site. Unlike elsewhere, “You can start construction right away,” Governor Nisaka says. Wakayama’s IR will occupy roughly half of Marina City, a 49 hectare (121 acre) artificial island in Osaka Bay that’s a short drive from downtown Wakayama City, the prefecture capital. The island currently houses tourist facilities including seafood and fruit markets: Wakayama is famed for oranges and plums.

Marina City also has a yacht harbor, hotel, onsen (hot spring) with sea views and fishing pier. There’s room for a ferry to connect to the airport and even cruise ship facilities. IR plans call for capitalizing on the seaside location with water sports and a leisure vibe. An amusement park now on the IR site would be easily demolished, and there are no chemical or archaeological surprises looming.

Seiganto-ji Temple is among the UNESCO World Heritage sites that attract more than 30 million visitors annually to Wakayama.Wakayama Prefecture Government

Wakayama Prefecture already annually attracts 33.4 million overwhelmingly domestic tourists, drawn mainly by UNESCO World Heritage Buddhist shrines, Waikiki sister beach Shirarahama and Adventure Land, a wildlife and amusement park featuring pandas. Wakayama City hosts Japan’s Olympic sailing training center and annual national scholastic sailing competition.

Wakayama’s top selling point: it’s in Kansai region, Japan’s second largest population center with more than 22 million people. Wakayama City is 40 minutes by car from Kansai International Airport, the region’s overseas gateway, marginally closer than Osaka and just over an over by train or car from Osaka city. Access to potential domestic and foreign customers boosts Wakayama’s case.

It’s widely assumed that Osaka will win an IR licenses, bolstered by its successful bid for the 2025 World Expo. With just three IR licenses on offer nationally, skeptics doubt Japan would award two to the same region. Many also suggest a Wakayama IR couldn’t compete with an Osaka IR expected to cost four times as much.

Wakayama City seen from Wakayama Palace. Proposed IR site Marina City is over the arch bridge in the left background.Wakayama Prefecture Government

“One IR won’t for enough for Kansai,” Barriere Japan president Jonathan Strock says. “Osaka and Wakayama IRs are not competitors, they’re complementary,” Osaka as a primarily domestic destination with Wakayama targeting foreigners. Barriere, which runs more than two dozen casinos around France, has made Wakayama “the focus of our IR efforts.”

It will likely take about a year until the central government is ready to assess IR bids from localities to consider awarding licenses. If two or more of Japan’s largest cities use that time to follow Osaka’s lead and enter the IR fray, the central government must decide whether to issue a regional license or take a more lucrative urban opportunity – central and host governments split the 30% gaming tax and ¥6,000 (US$54) casino entry fee for Japanese residents. That’s a political decision.

“The national government appears to be heading in the general direction to re-balance the focus and concentration of wealth, talent and population from Tokyo and other major prefectures, to these regional areas, lest the imbalance widen,” Vector Risk Management managing director Kenji Okamoto says. “Providing a regional license may also help garner support and interest for IRs, both of which are still lacking among the general populace.”

Those goals may or may not outweigh the political imperative that every IR be an overwhelming commercial success. As a regional location accessible to an urban population, Wakayama has a pair of aces in the hole.

Hong Kong On Air author Muhammad Cohen is Editor At Large for Inside Asian Gaming. Follow him on Twitter @Muhammad Cohen.

Source: Japan Casino Resort Hopeful Wakayama Makes Its Case

Japan-South Korea Tensions Spur The Need For Courage And Creativity

A series of incidents have driven relations between Japan and South Korea to new lows. Frustration has mounted as each government has blamed the other for the sorry state of affairs. Though domestic politics is partially to blame, the real problem is more deeply rooted. Each country sees the other as the cornerstone of its own national identity, and their respective self-images make conflict inevitable. While the U.S. can help the two countries address this problem, only courageous and inventive leadership in Tokyo and Seoul can resolve it…………….

Source: Japan-South Korea Tensions Spur The Need For Courage And Creativity

Gokayama Village Japan -Instagram post by Armin Hamidian • Jan 25, 2018 at 7:27pm UTC

27 Likes, 1 Comments – Armin Hamidian (@onlinemarketingscoops) on Instagram: “@wasabitool .. Gokayama is an area within the city of Nanto in Toyama Prefecture, Japan. It has…”

Source: Instagram post by Armin Hamidian • Jan 25, 2018 at 7:27pm UTC

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