Today the announcement was made that on August 29 2008, developer URBAN DESIGN SYSTEM announced that it had filed for bankruptcy. The company filed for protection from its creditors under the Civil Rehabilitation Law and the Tokyo District Court accepted its application. The company’s liabilities totaled 20.38 billion yen (US $180 million).
Urban Design System started as an collaboration of a group of upcoming architects and bloomed into an innovative designer/developer producing some unique work over the past few years. They began with the cooperative house concept bringing end users and architects together to plan and develop condominiums together, moved into other residential products and then branched into larger projects including retail and hotels. See pictures of some works here.
In the hotel arena we were very impressed, as were others, with the renovation of a Meguro warehouse into the unique and boutique hotel CLASKA. The Granbell Hotel in Shibuya is not quite so exciting, more like your standard contemporary Japanese urban look, although fitting to its Shibuya clientele. But they really upped the ante with the plan for Sezoko Island, a 5-star contemporary beach resort hotel on the secluded north side of Okinawa.
Unfortunately, this huge undertaking has probably become the downfall of UDS, as is the case with many other upcoming developers that have moved quickly to catch up with a fastmoving market through 2007 but now the liquidity rug has been pulled out from underneath.
It will be interesting to see who raises their hands to sponsor the group now, as fundamentals for Okinawa tourism are very good and the UDS projects were good, although those undertaken in 2007 were probably pricey. Domestic tourists have steadily grown from 2.6 million 20 years ago to an expected surpass of the 6 million mark this year! That has resulted in direct tourism revenues over $4 billion USD and estimated economic effect over $22 billion. The perceived `summit effect` of increased tourism after the 2000 G8 Summit held in Okinawa was actually well underway beforehand and since then Okinawa has become the default domestic beach resort destination.
While this has led to an overdevelopment the last few years, leading some companies getting a bit out of control like Zephyr to their recent demise also, the fundamentals are still good and the very well done, truly 5-star hotels are still far and few between. We`ll be watching to see what eager parties come to the plate this time.