The Japanese language version of JLL’s City Momentum Index 2019 was published in late April, quickly becoming a hot topic in Osaka as the city ranked first among 131 cities in terms of commercial real estate momentum. The advantage of Osaka was particularly due to the strong rental growth in office and retail sectors. In fact, Osaka’s Grade A office rents have increased for 19 consecutive quarters on the back of strong demand and extremely limited supply, and the annual growth has also exceeded 10% for four consecutive quarters[1] (Fig. 1). In addition, with the increase in the number of foreign tourists visiting Osaka from China and other countries, retail rents in the Shinsaibashi area have continued to rise steadily. However, many people wonder how long will Osaka’s momentum continue.

Figure 1: Prime Office Rents in Osaka and Tokyo
Source: JLL Research, May 2019

For a city to maintain its momentum, it is crucial to have sustainable growth supported by “the infrastructure and environment that facilitates creativity, collaboration, innovation and entrepreneurship”[2]. From that point of view, Life Science City can be considered as one of the future images of Osaka. Osaka has long been headquarters of major Japanese pharmaceutical companies including Takeda Pharmaceutical (Takeda Pharmaceutical sold the Takeda Midosuji Building in 1Q2019, but its headquarters function remained), and in recent years, the life science industry is active with foreign pharmaceutical companies and public medical related organizations having offices near Osaka station. According to the economic census, while the number of business establishments in Osaka City is decreasing overall, the number of business establishments as well as the number of employees are increasing in the medical care and welfare industry (Fig. 2). Osaka Prefecture and Osaka City are also offering conditional tax breaks for the entry of life science related businesses[3], and working on urban development with an awareness of life sciences.

Figure 2: Number of Business Establishments by Industries in Osaka City
Source: Osaka City, Ministry of Internal Affairs and Communications

Nakanoshima Multi-linkS, scheduled to be completed in 2023, will be an international hub for medical innovation that integrates R&D liaison offices and cutting-edge medical facilities using genomic medicine, AI/IoT, and other technologies. The theme of World Expo (Osaka-Kansai Expo), which will be held in 2025 in Yumeshima, is themed as “Designing Future Society for Our Lives” with a sub-theme of “How to Lead a Healthy Life in a Diverse Manner” and “Sustainable Socioeconomic Systems”. In addition, Osaka is planning to attract and open an integrated resort (IR) in Yumeshima in 2024, and some IR operators have proposed unique plans of incorporating wellness facilities. After mid-2020s, a green innovation hub, “Umekita Phase 2”, is scheduled to open on the 17-ha land on the north side of Osaka Station, and the creation of new industries in health and medical fields is also expected. By making life science one of the pillars of innovation, there may be a possibility for Osaka to keep its momentum.

[1] JLL Osaka Office Market Summary Q1 2019, https://www.joneslanglasalle.co.jp/en/trends-and-insights/research/osaka-office-market-summary-2019q1
[2] JLL City Momentum Index 2019, https://www.joneslanglasalle.co.jp/en/trends-and-insights/research/city-momentum-index-2019
[3] Osaka International Business Promotion Center “Subsidy program/tax benefits”, https://www.investosaka.jp/eng/market/privilege.html

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