Estates Gazette

25/06/2005

Octopus dipped in batter – or takoyaki – is the food of choice for all right-thinking residents of Osaka. And, if it’s possible to define a city by its gastronomic speciality, then battered octopus balls do just that.

Earthy, straightforward but tinged with a little mystique among outsiders, all these things describe both Osaka and its favourite cephalopod-based snack. But if local and national government gets its way, Osaka’s regeneration will soon make the city as well-known as Tokyo.

Arriving in Osaka by shinkansen bullet train from the capital, the feel of the cities is considerably different. Whereas Tokyo has a chaotic, almost alien feel thanks to its sheer size, the vibe in Osaka, capital of the Kansai region, is a little more down to earth.

Ex-pats from Australia and the US meet in the English-themed Covent Garden bar in Osaka’s trendy Horie district, and like to think of themselves as having discovered something largely unknown outside Japan. To an extent, they have. Despite being regarded as Japan’s second city, Osaka is often ignored in favour of neighbouring Kyoto by most visitors to the country.

But the Japanese government is trying to change the way the city is perceived, especially by international businesses. As in Britain, the government wants a “renaissance” of the country’s regional cities. And Osaka is at the top of its list. Having taken a battering in the recession of the early 1990s, Osaka is one of four designated Japanese Priority Urban Redevelopment Areas. In 2003, an Urban Revitalisation Task Force – similar to a UK urban regeneration company – was established in the city. This was the first in Japan, and another will soon follow in Nagoya.

Toru Takahashi, deputy director of the Osaka office of the task force, says much of the advantage that can be given to these areas concerns site volumes.

“Japan has very strict controls on density, based on access to sunlight. We are able to give incentives, such as allowing an increase in the floor-area ratio, to encourage development,” he explains.

More priority sites

Osaka has more priority sites than other cities in Japan, according to Takahashi. The largest is Kita Yard – literally meaning North Yard – in the Umeda area of Osaka, close to the city’s main railway station.

Most of the 76-acre (31ha) site is still used by Japan Railways as a freight distribution yard. It is to be developed along similar lines to those seen at Shiodome in Tokyo, which is another former JR site.

Professor John Worthington, a director and co-founder of UK-based strategic design consultancy DEGW, who has done work with the City of Osaka, compares the regeneration project to London’s Kings Cross scheme. “It’s a similar size to Kings Cross, and, like Kings Cross, there is development happening all around the edges.”

By this, Worthington is referring to JR’s plans for a 2.2m sq ft tower development on a neighbouring site and Hankyu’s proposals for a new office tower above its department store, among others.

The first phase at Kita Yard, due for completion in 2011, covers around 17 acres (7ha), split into three areas. Areas A and C – 2.7 and 3 acres respectively – are owned by JR, but the 3.7-acre Area B has been taken in hand by the government to allow more control over development. The remainder of the site will be public space and access.

The concept of co-ordinated, strategic regeneration, rather than ad hoc redevelopment, is relatively new in Japan, so the government’s involvement is a little unusual. A detailed pre-planning process, involving a number of private sector companies, is also considered innovative.

Alex Stewart, of Osaka-based Alexander Capital Access, explains that this process – known as makizukuri – led to the idea of creating a “knowledge city” aimed at hi-tech businesses for Area B. General contractor Takenaka, with engineer Arup and architect Derek Lovejoy, also came up with a wacky-sounding idea entitled “Mother Forest”. But the race for development rights remains open, with Takenaka and fellow general contractor Kajima among those competing.

No-one knows whether all three areas in the first phase will be handed to one developer, or whether different developers will be granted permission for sites A, B and C respectively. Takahashi suggests the city’s preference is for one developer to take control of the overall site.

Fortuitous that large site is available

Seiichiro Matsumoto, secretary general of Takenaka’s Kita Yard development department, believes the scheme as a whole is crucially important to Osaka’s future.

“People in the Kansai region have felt a period of economic crisis, so it’s fortuitous that this size of development site is available in the centre of the city,” he says.

Matsukazu Maeda, general manager of Kajima’s project development department, says: “If you can include the hi-tech knowledge city idea, it has the effect of elevating the region and helping to bring people in.”

But some are sceptical. One Japanese official responsible for promoting international investment says: “There is no demand from occupiers outside Osaka. And what exactly is a knowledge city? There are question marks over who will use the space.”

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Osaka fights off its ’second-city’ challengers

As in the UK, Japan’s capital Tokyo, with a population of 12.2m, dwarfs its regional cities. And, as in the UK, no-one can quite agree on the identity of Japan’s second city.

Measured purely in population terms, Yokahama is closest to Tokyo, with 3.5m residents. The problem is it’s geographically close to Tokyo, too – only 20 minutes from Tokyo by shinkansen in fact – meaning it is usually viewed as a mere extension to the sprawling capital city.

Step up, Osaka (pop 2.5m), the capital of the Kansai region and the main contender for second city status. With its industrial and mercantile past, the city is comparable with Manchester and in fact has a partnership agreement with the UK city. Modern Osaka is dominated by the hi-tech sector, as Sharp, Sanyo and Panasonic all have bases nearby.

However, the city was also hit hardest by the recession of the early 1990s and, even more so than Tokyo, has found it difficult to recover.

“The city’s economy is continuing to struggle and I don’t know what the long-term prospects are,” says Brett Jensen of Colliers Halifax in Osaka. “It has suffered a lot more than other places. There has been a hollowing-out of the industrial base, which has moved off-shore. Osaka is trying to restructure itself.”

The city’s woes have allowed its rivals to sneak up and attempt to steal that second-city status. At the head of the pack is Nagoya. Thanks to the influence of Toyota, which is to expand its operations close to the city, Nagoya is beginning to thrive.

According to one official involved in attracting inward investment to Osaka, Nagoya will be the second city within 10 years. This is partly because the city also has a new airport and because it is the closest major city to the highly publicised 2005 Expo event being held in Aichi.

Peter Gensheimer of Cushman & Wakefield in Tokyo points to Fukuoka in the Kyushu region as an emerging market.

But while Osaka’s long-term prospects are far from certain – and foreign investors certainly are not rushing in, according to agents in Tokyo – there is one possible salvation.

Pretty much everyone agrees that the emerging markets of Asia are going to continue to strengthen, and this could boost Osaka, which has always been regarded as an outward-looking city.

Says Jensen: “Osaka, more than any other city, has better, closer links with South Korea and China. It’s just one-and-a-half hours from Osaka to Seoul, and Osaka could do well as those places expand.”