The "tower mansions," or high-rise apartments in Kobe's Sannomiya district, are nearly finished.

They will also be the last of their kind, as the city has effectively banned the construction of such buildings. 

Located in one of Kansai's busiest downtown areas, Sumitomo Realty & Development Co.'s two 27-story buildings have panoramic views of the port city's renowned "10-million-dollar nightscape."

The company said that all 690 units—including those priced near 200 million yen ($1.4 million)—are selling well, but this success is not only due to the apartment’s allure.

“The scarcity of high-rise apartments has grown due to Kobe’s regulations, and their value is likely to rise over time,” a company spokesman said.

Construction began in 2019.

The following year, the city banned new residential developments in the bustling 22.6-hectare area on the south side of JR Sannomiya Station. It also began regulating residential buildings with a floor area ratio exceeding 400 percent in the surrounding 292-hectare area.

This effectively halted new high-rise apartment projects in the city center.

At the same time, Osaka’s Umeda district was seeing multiple high-rise apartments being built in line with the redevelopment efforts of the northern area around Osaka Station. This attracted high-income families who wanted to live close to their jobs.

Why did Kobe decide to regulate high-rise apartments, often seen as symbols of the city’s prosperity?

Kobe Mayor Kizo Hisamoto said, “It’s not appropriate for municipalities to compete to attract people by building high-rise apartments in a time when the population is decreasing.”

“We do not follow Osaka’s approach of building more such apartments,” he said.

Hisamoto voiced his belief that Kobe is unlikely to see a population increase again.

“Continuing to build housing despite knowing the population will decrease is essentially creating future waste,” he said. “High-rise apartments are typical examples.”

One of the reasons behind Kobe city’s regulations on high-rise apartments is the risk to the future.

As these buildings age, maintenance costs soar. The diverse range of residents makes reaching consensus on repairs difficult, and it becomes inevitable that there will be insufficient preparations for maintenance costs.

If their value falls and residents decrease, these buildings could turn into abandoned structures in the city center, unable to cover demolition costs.

Kobe was one of the first among government ordinance-designated cities to experience a population decline. 

After peaking in 2011, the city’s population began to drop and was subsequently overtaken by Fukuoka and Kawasaki, which were designated as such cities after Kobe.

Its population fell below 1.5 million in October last year.

Urban areas will face significant challenges due to population decline, including intense competition for the working-age population, ages 15 to 64, which is projected to decrease by 20 percent in 2040.

Kobe is caught between the immediate need to compete for residents and the necessity of ensuring long-term survival.

CONCERNS OVER TAX REVENUE

Kobe is not only concerned about the aging of high-rise apartments. It worries that if these buildings attract residents to the city center, urban overcrowding and suburban depopulation will worsen.

Suburban area would go from an unbroken sprawl to smaller patches with many vacant lots in between. This would make it difficult to maintain transportation infrastructure and turn city assets into liabilities.

Kobe also aims to create a vibrant city center filled with business and commercial facilities, driving the entire city’s growth.

Similar regulations were approved in Yokohama.

Since 2006, the city has limited residential floor area ratios around Yokohama Station and effectively banned the construction of high-rise apartments without commercial facilities.

The city acknowledges that easing height restrictions on complexes contributed to the revitalization of the city center.

However, no municipalities have followed suit, with many instead viewing high-rise apartments as catalysts for population growth.

In Osaka, the construction of these buildings is booming.

“There is no need for policies that restrict or regulate residences,” a city official said.

The official dismissed concerns about potential abandonment or suburban depopulation.

According to demographics data released by the internal affairs ministry in July, Osaka’s population increased by 16,055 last year, while Kobe's fell by 10,492.

Osaka ranked as the top city for population growth among all municipalities, while Kobe ranked the worst for decline; it is aware that the rush to kick off high-rise apartment construction projects in surrounding areas accelerates population outflow.

Another factor that makes Kobe's situation even more challenging is competition from the neighboring municipality. The city of Akashi has gained attention for its child care support policies.

Many municipalities strive to attract young people to maintain their vitality and tax revenue.

If a city falls behind in the battle to attract residents and suffers a decrease in tax revenue, it could lead to a worsening gap in public services. That creates a negative spiral leading to more residents moving away.

Hisamoto believes in regional cooperation for overall development rather than engaging in competition to attract residents.

However, Kobe's mayor acknowledges the challenge of gaps in city services, admitting, “Sometimes, we need to engage in the competition.”

(This article was written by Akihito Ogawa and Tomoyuki Suzuki.)