Building the Tama Garden City: railway and line-side development as one (1966)

The apex, and the limit, of the develop-and-recoup model

The building of the Tama Garden City can be seen as the decision that remade Tokyu from a railway company into a developer that opened up whole tracts along its line. Braced for the railway alone to run in the red, it recouped the investment through the sale of land and housing, and the population that grew up there in turn steadied the railway’s earnings. It is a case in which the cycle held up as the ideal of private-railway management was run to completion on the vast, real ground of the Tama Hills. Even so, Noboru Goto himself looked back on the project in later years as one he “drove through on sheer obstinacy” (Nihon Keizai Shimbun, 14 March 1989), and as “a high-risk venture whose success would have been doubtful without Japan’s ‘miracle’” (Nihon Keizai Shimbun, 16 March 1989). It was, one may fairly say, a bet that came off only on the tailwind of high growth and rising land prices.

This develop-and-recoup business model long defined Tokyu’s character thereafter. Its confidence in a structure that earned from land and housing encouraged the bubble-era expansion into non-core fields such as resorts and department stores; those were turned toward cleanup after the special loss of $456.1M (¥43bn) in the year ended March 1995, exposing too the wide swings of a management reliant on development gains. Tokyu set up Tokyu Fudosan Holdings ahead of the rest in 2013 and, in 2019, hived off its rail business as Tokyu Railways, remaking the parent into a holding company presiding over real estate and life-services. That structure — running railway and real estate on separate decision lines, unusual among Tokyo’s private railways — can be seen as the “two wheels of railway and real estate” established at the Tama Garden City reaching, half a century on, into the very shape of the organization.