Osaka IR Land Lease – Higher Price Decided on
Ischiro Matsui, the mayor of Osaka, recently held its regular press conference. On that occasion, he announced that at least three of the four companies that wanted to be included in the real estate appraisal agreed on the leasing price for the lot that was supposed to get bid by Osaka IR.
The press release:
Osaka Port Office already spoke to the media on December 15th, and stated it didn’t guide the contractors to agree upon the price. There weren’t positive business results in the past, which led to the opinions that companies formed about the lot.
It was stated that it’s a “large commercial facility complex,” and three of them agreed that the rent price needs to be JPY428, which is US$3.15 per square meter. The value of the light industrial zone where the property is placed is half the price they agreed upon.
The plans for leasing the property include 49 hectares on Yumeshima. The lease plan is currently designed for the next 35 years, and the annual rental fee will be JPY 2.5 billion, or US$18.4 million.
At the press conference, Matsui explained: “This land was not for sale in the first place. The sale price was only calculated as a basis for setting the lease fees. The lease amount can’t be determined without knowing the value of the land. The IR operator requested that the IR plot be leased and not sold. They said they want the initial investment to be building, not land.”
Comparison to the USJ:
There was a question that commented on the increase in the price, saying that it isn’t much lower than the one which Universal Studio Japan has to pay. Mayor answered: “When USJ was first pitched, the lease was cheap, and it has risen with USJ’s growth. Yumeshima’s land will not be sold but leased. I believe the price will increase with the market over the next 10 or 20 years.
First, we will make the land appealing. It’s the same as what we did with USJ. The value of the land will increase as the location becomes a central gathering point. However, the initial foundation must be appraised by the appraisal office. This is still a location unaffected by market forces.”
The major stated that this decision was neither directed by the government nor personal. If there were any kind of problems regarding this matter, the major personally would take the blame, relinquishing his entire yearly compensation. He also added that he would take disciplinary action against anyone who would be responsible for any breach.
The IR development plan made by Osaka prefecture was submitted to the central government back in April. The plan was decided with the help of MGM Resorts and ORIX, and it is currently awaiting the government’s approval. According to the plan, the property will be opened in the autumn or winter of 2029.