Tokyo, Kobe: Two Sides of Development : Real estate: Japan’s biggest city went too far, too fast. The southern port’s more conservative approach is paying off.

During the real estate boom of the late 1980s, the Japanese threw themselves wholeheartedly into remodeling long-neglected waterfronts in Tokyo and elsewhere.

Now, land prices are falling and hard times threaten to slow or stop many of Tokyo’s most grandiose plans. Contracts have been delayed by years and some of the more than 40 projects planned for Tokyo Bay have been mothballed. Several man-made islands lie empty.

But the western port city of Kobe is forging ahead with futuristic blueprints for its once-grimy waterfront, and it appears likely to emerge almost unscathed from Japan’s economic slowdown.

The experiences of the two cities offer a cautionary tale about long-term city planning.

The blueprint for transforming the Kobe waterfront is similar to Tokyo’s own plans for remaking itself into an elegant world capital: Carve up a few mountains, dump them in the bay and put up some of the most sophisticated office and residential buildings in the world.

But there’s one big difference. Kobe’s city planners say they insulated themselves from the bursting of the “bubble economy” of the ‘80s by resisting the temptation to count on collecting inflated rents to recoup money spent on their massive port projects.

So although Kobe’s real estate prices have fallen along with those of other urban areas, contracts for the city’s massive Rokko Island project remain viable, said Kobe city developer Masayuki Yashiro.

In contrast, Tokyo’s projects were based on a continuation of sky-high land prices and low interest rates, which have since evaporated, said Tokunosuke Hasegawa of the private Research Institute of Construction and Economy.

“The profitability of the project was highly suspect from the start,” Hasegawa said.

With a population of 1.4 million, Kobe is only a fraction the size of Tokyo, home to more than 12 million and workplace for more than twice as many commuters.

But it shares Tokyo’s biggest headache--a land shortage that makes building huge islands in the sea seem sensible.

Both cities were laid waste by fire bombs during World War II and were hurriedly rebuilt in a hodgepodge of cul de sacs, winding alleys and tiny homes and shops. Their waterfronts served strictly as ports.

Kobe officials began laying out blueprints for transforming their heavily industrialized city in the 1970s, when it became clear the steel and shipbuilding industries were destined to decline.

They built an 8.75-mile conveyor belt to transport to the bay earth and stones from mountains flattened for inland suburbs.

Port Island, a 1,076-acre reclamation project finished in 1981, was developed to provide land for housing, government offices and modernized port facilities. About 40% of Kobe’s revenue still comes from activities related to shipping.

Kobe’s next big project--1,432-acre Rokko Island--includes a water amusement park, moderate and luxury housing, a five-star hotel and a shopping center.

Although other urban redevelopment projects in Kobe have faced difficulties finding tenants, Rokko Island is expected to open on schedule late this year.

“We’re a little worried, but we don’t expect delays of more than a few months,” said Yashiro, the city developer. “The recession won’t last for decades, and when it ends, we’ll be there with plenty of office space and housing.”

Planners say the future of Tokyo’s 1,106-acre Teleport Town development and other projects in Tokyo Bay are much less certain.

The development, begun in 1987, is intended to provide homes for 60,000 people, offices for 110,000 workers and leisure facilities for the entire city. But plans for integrated heating and cooling systems for the town’s 21,000 apartments have been scrapped, and planners say the project won’t start turning a profit until 2021.

Financing problems brought about by the fast fall in real estate prices and difficulty finding tenants have delayed the project’s schedule by three years.

Department stores and other major tenants have been withdrawing from other Tokyo Bay developments.

Many property-backed loans have gone bad, putting hundreds of real estate developers out of business and endangering many projects, according to the financial newspaper Nihon Keizai Shimbun.

All this has many in Tokyo worried that the city has overextended itself.

“Tokyo is in trouble. Maybe they ought to just use the land for a cemetery,” said Hasegawa of the Research Institute of Construction and Economy.