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September 10, 2013 4:43 pm
A first-of-its-kind bullet train; Japan’s first high-speed motorway; an expanded international airport with a monorail to whisk visitors to the city centre.
These were just some of the freshly completed infrastructure projects that greeted visitors to Japan when Tokyo held its first Olympic Games in 1964. In a city that had been bombed to ruins two decades earlier, the building frenzy helped fuel an economic boom.
Some are hoping Tokyo’s selection as host of the 2020 summer games will ignite a similar, if smaller, investment rush. Shares in construction and building materials companies have rallied during the two trading days since the International Olympic Committee chose the city over Madrid and Istanbul.
Taisei Construction, a big building group with a record of erecting large sports venues, including Tokyo’s 1964 Olympic Stadium and stadiums for the 2002 Japan-Korea World Cup, is up by 29 per cent. Taiheiyo Cement has risen 14 per cent, and Nippon Steel & Sumitomo Metal, Japan’s largest steelmaker, has gained 7 per cent.
“Japan’s economic recovery should get even stronger, with more infrastructure investment and accelerated redevelopment of the capital region, as well as an increase in foreign tourism,” says Hiromasa Yonekura, chairman of Keidanren, the lobby group that represents Japan’s biggest industrial companies.
Experts disagree widely about the economic impact of hosting large sports events, and the Tokyo games are still seven years away, making it that much more difficult to predict its effects. The capital’s government says it expects the event to give Japan as a whole a Y3tn ($30bn) boost, with about Y1.7bn of that amount concentrated in Tokyo.
Spending on venues looks certain to be lower than in other recent Olympics, with Tokyo having promised a compact games that will take advantage of the city’s many existing facilities. As many as 15 “legacy” buildings, including conference centres and venues built for the 1964 games, will be pressed into service.
Still, there will more than 20 new sites, the most impressive of which promises to be an 80,000-seat retractable-roof stadium, designed by the British-Iraqi architect Zaha Hadid, that is expected to cost at least $1.3bn. The athletes’ village is to be a cluster of high-rise apartments built on an existing man-made island in Tokyo Bay; afterwards they will be sold off as private residences.
For its first games, Japan spent the equivalent of 3.6 per cent of its 1964 gross domestic product on Olympics-related projects, according to Nomura. This time round, projected spending during the seven years before the games is far less than 1 per cent. But some say that a “build for the games” mentality could lead to a broader increase in investment.
For instance, advocates of ultra-high-speed Maglev trains, one of which has been in testing in Japan for years, are suggesting that plans to begin commercial service be speeded up. JR Central, which operates the existing Shinkansen bullet train link between Tokyo and Osaka, is hoping to start limited service on a planned Y5tn Maglev line in 2027.
“It would be nice to have at least Tokyo-Nagoya operating [by 2020],” says Mr Yonekura.
Daiju Aoki, an economist at UBS, says there is the potential for Y8tn of new spending on public infrastructure, which the Olympics could help realise.
Similarly, airlines are likely to use the games as an opportunity to argue for accelerated expansion of Tokyo’s airports, Narita and Haneda. A rail line linking the two facilities directly for the first time is already on the drawing board, but industry executives want more runways and bigger terminals.
“Haneda’s international terminal is going to be expanded next year, but even then it won’t be nearly enough [to handle increased demand],” says an executive at one of Japan’s big carriers. “The Olympics will help us move things forward.”
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