The Tokyo Skytree, twice as tall as the Eiffel Tower, opens next week as Japanese train operators counter an aging population by building malls, offices and tourist attractions.
The 634-meter (2,080 feet) structure in eastern Tokyo sits in a retail complex housing more than 300 shops and restaurants, a planetarium and an aquarium. Developer Tobu Railway Co. (9001) expects the project to draw 32 million visitors in its first year, surpassing the numbers at Tokyo Disney Resort. Tobu, whose revenue has fallen for five years, will also get a 28.3 billion yen ($352 million) sales boost in the year ending March 31, according to Kazuhiko Hirata, a general manager for finance.
The 143 billion yen development, which took four years to build, follows last month’s opening of Tokyu Corp. (9005)’s 34-story entertainment complex in the Shibuya shopping district and East Japan Railway Co. (9020)’s ongoing 50 billion-yen renovation of Tokyo Station. The companies are taking advantage of land they own around stations to generate new income and lure more travelers as Japan’s shrinking birthrate threatens commuter traffic.
“People will use the Tobu line to go to Tokyo Skytree and they will shop in Tobu shops when they get there,” said Masayuki Kubota, who oversees the equivalent of $2 billion in assets in Tokyo at Daiwa SB Investments Ltd. “It’s a very good investment.” He doesn’t own Tobu shares, he said.
The development will boost Tobu’s operating profit by 3.2 billion yen in the year ending March 31, according to Hirata. The company will have as many as eight trains an hour running from the Asakusa terminus to the development’s closest station, which has been renamed Tokyo Skytree.
856 Million Passengers
Tobu, which operates routes to the north of the capital, carried 856 million passengers in the year ended March 31. The company is the third biggest by ticket sales among the 11 major train operators in Tokyo and surrounding cities, according to JR East. (9022) The region is home to 35 million people. By contrast, Amtrak carried 30 million passengers in the U.S. in the year ended September 2011.
Tobu, which also operates buses, hotels, shopping centers, department stores, golf courses and sports clubs, dropped 0.3 percent to 386 yen at the close of trading in Tokyo. It’s jumped 24 percent in the past year, compared with a 9.9 percent decline for the benchmark Topix Index.
The Skytree, opening about a year after a temblor and tsunami devastated parts of northern Japan, stands on three legs with a central column in the style of a pagoda to make it more earthquake-resistant. Its steel frame changes from a triangle at the base to a circle at the top, and its curves and arches reflect a traditional Samurai sword, according to Tobu’s website.
The tower, which cost 65 billion yen on its own, will have two observation decks, one at 350 meters and another at 450 meters. A trip to the lower deck will cost 2,000 yen. Visits up the tower are fully booked through July 11, said Kenji Aoyagi, a Tobu spokesman.
The tower surpassed the 600-meter Canton Tower in Guangzhou, China, as the world’s tallest, according to the Council on Tall Buildings and Urban Habitat. Dubai’s 828-meter Burj Khalifa is the tallest building, according to the council.
The new tower is also about double the height of Japan’s previous record-holder, the 333-meter Tokyo Tower, which opened in 1958. Six TV stations, including state-owned NHK, will start using the Skytree instead of the older tower for transmissions next year.
Skytree looms over Tokyo’s Asakusa district, previously one of the city’s main entertainment areas and still home to geishas and traditional Japanese restaurants. The area also houses Senso-ji temple, a popular tourist site, famed for Kaminarimon, Thunder Gate.
Property prices in Sumida City, which includes Skytree, are the third-lowest of Tokyo’s 23 wards, according to the Ministry of Land, Infrastructure, Transport and Tourism. Commercial land prices have fared better than other Tokyo wards this year, falling 1 percent, compared with an average 2.1 percent decline.
“As a local, I’m very happy,” said Naoyuki Sato, 56, who runs a restaurant near the tower and has lived in the area all his life. “It’ll be a new symbol for Japan. It’s a ray of hope after the earthquake.”
Japan’s population peaked at 127.1 million people in 2005 and has been shrinking since, according to figures from the Ministry of Internal Affairs and Communications. The population of Tokyo’s 23 wards, villages, towns and cities will start declining after reaching a peak of 13.35 million by 2020, according to forecasts from the Tokyo Metropolitan Government.
Tokyu, the Tokyo region’s fourth-largest train operator, last month opened Hikarie in Shibuya ward, which houses 26 restaurants, about 200 shops and sales outlets, and a 1,972-seat theater. About 14 million people will visit a year, said Isao Watanabe, an executive officer at the Tokyo-based company.
“We have great hopes for the new building,” he said. “We’re sure it will increase the number of people using our trains as well.” Tokyu also operates hotels, supermarkets and entertainment facilities.
JR East, the largest train operator in the Tokyo area, is working to turn Tokyo Station in the Marunouchi financial district into a tourist destination. Plans includes adding more shops, restoring rooftop domes destroyed in World War II and building a plaza in front of the station that will be lit up at night. An expanded 150-room hotel will also open in October.
The Tokyo-based rail company is trying to increase its share of revenue from shops, hotels and offices to almost 40 percent from about 30 percent by the year ending March 2019.
“The railway companies have to put their energy into expanding other forms of revenue to grow,” said Ryota Himeno, an analyst at Barclays Capital Japan Ltd. “Train travel isn’t going to increase when the population is shrinking.”
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