In a similar fashion to Yokohama’s Minato Mirai district, Fukuoka City’s manmade island is also running at a huge loss.
According to the city, the deficit at the time of the project completion was 18 billion Yen (23.4 million USD). In 2009, the city had forecast land sales to result in a 12.5 billion Yen positive balance. However, poor economic conditions meant that land values fell from 13,000 to 10,000 Yen/sqm, plunging the project into the red.
“Island City” is located in Hakata Bay in Higashi-ku. Construction began in 1994 and capital was raised through the issuing of bonds. The city planned to pay back the bonds through the sale of the reclaimed land.
Currently the city is advertising land in the eastern residential part for 10,800 Yen/sqm, and land in the logistics area for 13,000 Yen/sqm. They had originally planned to sell 143.9 hectares (1,439,000 sqm) by 2027, which would have resulted in a 12.5 billion Yen gain.
However, from March 2008 onwards, no land in the western logistics area has been sold to private or corporate buyers. Up until March 2011, only 20% of the total reclaimed area had been sold.
The Fukuoka City Port and Harbor Authority said that if sales improve, they may be able to cover their loss, but they admit that they had an overly optimistic outlook and did not foresee such a steep fall in land values.
Source: The Nishinippon Shimbun, February 13, 2012.
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