Osaka IR looks lonely after local firms eschew contracts

At one point the most anticipated IR development, these are now lonely days for the Osaka Yumeshima IR, whose buzz has become nearly inaudible.

To be sure, there’s a good chance that in the years ahead, should this IR receive a license and the MGM-Orix get the construction underway, feelings of excitement could begin to capture the imagination once again. Momentum that has been lost could return, and flagging spirits could be revived. But as we sit here in mid-2021, the low tide is certainly upon us.

In terms of the major urban IRs, all eyes are currently on Yokohama, where a car wreck of a mayoral election on August 22 will likely determine if the Kanto or the Kansai hosts the nation’s largest casino development. If Yokohama falls, Osaka will potentially have the big spotlight all to itself once again.

But the lonely days are not only related to the lack of attention from the media or the national IR race, but also a dramatic shift in local business attitudes.

Two years ago, the initiative was hitting on all cylinders, with the Kansai big business community lining up to get in on the action. The heads of the business federations declared their support, the heads of major corporations—especially private railways—started offering their own Yumeshima development plans, and construction companies and others set up dedicated teams of staff all focused on the big opportunity.

However, when the Osaka City Government made a tender offering for the development and maintenance of a 2,000 square meter plot of land around the under-construction Yumeshima subway station, not a single local company stepped forward to make a bid.

There are probably four major, often interrelated factors that killed the momentum that had once seemed unstoppable.

First, Yokohama declared its entry into the national IR race in August 2019, provoking many of the major international IR operators to quickly pull up stakes from Osaka in order to compete for the presumably even more promising Kanto market. This led quickly to a situation in which the MGM-Orix consortium was left as the only player still on the local scene, reducing the Osaka government’s leverage significantly.

Next—in a self-inflicted wound—after pushing international operators too hard for an IR opening before the 2025 World Expo, scaring some of them away with its demanding stance, the local government finally admitted in December 2019 that they had been too ambitious about their development timeline. But the damage had already been done. Now there was the new problem that most or all of the hoped-for synergies between the Expo and the IR opening had disappeared.

Third came the biggest blow, which was of course the onset of the global Covid pandemic. This event delayed the timeline by at least another nine months and, more seriously, drained many of the local businesses of the capital that they had been earmarking for their Yumeshima development plans.

And it didn’t end there: In November 2020 the Osaka Ishin political party, which dominates local government, narrowly lost, for the second time, in a popular referendum on its cherished plan to administratively merge the prefectural and city governments. Osaka Mayor Ichiro Matsui is now a self-proclaimed lame duck, planning to retire from politics in April 2023. This adds a major element of local political uncertainty.

It’s no mystery why the once red hot prospects for Yumeshima development are now ice cold. After the World Expo in the summer of 2025, there will then be—what?—a three or four year period before a smaller-than-expected MGM-Orix IR opens its doors. No one but construction workers and truckers serving the container ships have any reason to visit Yumeshima during that long gap of years.

Moreover, it can no longer even be stated with full certainty that the Yumeshima IR will ever be built. Perhaps a year from now that question will be definitively answered, but not at this moment.

So the lonely days for the Osaka Yumeshima IR look set to continue for some time yet—at least until the central government confirms that Osaka has been licensed and the MGM executives sign on the dotted line. Then, maybe, the era of excitement will begin to reappear. (AGB Nippon / AGB Nippon – JP)