Warner Bros. Discovery has revealed that it spent more than $114.9 million (£92.9 million) on its latest attraction themed to the boy wizard Harry Potter.
Called the Warner Bros. Studio Tour Tokyo – The Making of Harry Potter, the 30,000 square meter venue opened in June last year and follows a similar format to its counterpart at Leavesden Studios in the United Kingdom where all eight Potter movies were made along with the three Fantastic Beasts spinoffs.
Although the main series of Potter movies came to a climax in 2011, they are still casting a powerful spell on Warner’s bottom line. More than 18 million people have streamed through the turnstiles of the UK tour since the doors to its two cream-coloured soundstages swung open in 2012. Its success led to the development of the tour in Japan where Potter is wildly-popular.
Before the Tokyo tour had even welcomed its first guest, adult tickets, which cost $45 each, had sold out for the following two months. According to its general manager Torben Jensen, by the end of last year the tour had become the leading inbound tourist destination in Tokyo.
Built on the former site of the Toshimaen amusement park, the tour features some of the most memorable sets from the Potter films as well as interactive displays which lift the lid on the techniques used to bring them to the silver screen.
Theme park design wizards Thinkwell Group handled everything from concept development and master planning right down to in-field art direction, installation supervision and training. Thanks to its involvement with projects such as Warner Bros. World Abu Dhabi, comfortably the most immersive theme park outside Disney and Universal, Thinkwell has built a reputation for its astounding attention to detail. The Potter tour in Tokyo is no exception.
All of the exhibits are either original or built from the original blueprints to give guests the same breathtaking experience that the actors had on the sets.
The tour sets off inside a soaring stone replica of the Great Hall in Hogwarts Castle where Harry and his chums tuck into feasts in the films. It is identical to it right down to the design of the crockery sitting on the gnarled banqueting tables. All that’s missing is the candles floating above which were digitally added to the films in post-production.
Instead, spotlights hang from the rafters on the tour as they do on the actual set making the experience seem even more authentic.
Guests then get to peer inside Harry’s dormitory in Hogwarts Castle and walk the corridors of the Hogwarts Express steam train. There’s even a full-size recreation of the Dickensian Diagon Alley with models of towering colorful characters embedded in the wonky buildings. Just like on an actual movie set, instructions are scrawled on the reverse of the façades showing how they fit together.
All of these sets can also be found in the tour’s UK counterpart but the most spellbinding ones are unique to Tokyo. They kick off straight after the Great Hall and there’s a great sense of reveal. As guests round a corner they are suddenly met with a full-size recreation of the famous Hogwarts’ staircase which magically moves on screen when students climb its steps to get to the right doorway.
The version on the tour in Tokyo is static so it looks more like a scene from an M.C. Escher drawing. The area is also home to an equally magical feature which fans have been crying out for since it first appeared on the silver screen in 2001’s Harry Potter and the Sorcerer’s Stone. In an iconic scene, characters in oil paintings beside the stairway begin talking to each other and a photo opp on the Tokyo tour allows guests to appear in one of them. It isn’t the only interactive attraction on the tour.
There are no rides on the tour but some of the exhibits are almost as exhilarating. One digitally inserts guests onto the back of a broomstick and another makes it seem like they are in the crowd at a Quidditch match. First they decide whether to root for the heroic Gryffindor team or support their evil rivals Slytherin. Then a director tells them to duck, gossip, cheer or boo as they would if they were actually sitting in the bleachers. After that the cameras start rolling and the footage is edited into a sequence from the Potter films.
Visitors get to watch it on a big screen and even get to take the footage away as a digital souvenir thanks to the tour’s partnership with Nasdaq-listed specialist theme park photography provider Pomvom. That’s not all.
As anyone who has seen the Potter movies will know, wizards are governed by the Ministry of Magic and are teleported there in what is known as the floo network. They arrive in fireplaces engulfed in harmless green flames and in Tokyo, visitors can mimic this magical effect by posing for photos surrounded by smoke and strobe lighting. Although the journey to the Ministry of Magic is artificial, the spectacle is anything but.
Covering more than 900 square meters, the Ministry of Magic set was one of the biggest and most intricate ever created for the Potter film franchise and it has been rebuilt in Tokyo. The soaring set looks like one of London’s historic underground metro stations as the walls are covered with thousands of green and red tiles made from lacquered wood. It has a Victorian air as oil lamps sit on desks in circular offices set inside tiled turrets on the upper floors. At ground level, the walls are lined with golden fleurs-de-lis flanking the fireplaces where visitors arrive in the films.
Another interactive exhibit enables visitors to design their own digital mask like those worn by the villainous Death Eaters. Anyone who fancies their chances against them can train in the Defence Against the Dark Arts classroom. Just like in the movies, it is set in a stone-walled room with stained glass windows and a sweeping stone staircase. An iron chandelier hangs above and ancient artefacts, like a skull in a glass dome sit on a wooden desk. As a teacher tells visitors to call out spells the lights flicker, the skull sways, lightning flashes from behind the window and smoke sees off a Death Eater who appears on the staircase.
Throughout the tour, the original movie props are within touching distance including costumes, wigs and, of course, wands. Rows and rows of them. Every item is meticulously tagged with details of the film it was used in, the character it was used by and even the fictional materials it is meant to be made of.
Perhaps the only aspect of the UK tour which isn’t as enchanting as the rest of it is the dining on the way. There’s no problem with the food or drink, which of course includes Potter’s favorite tipple of Butterbeer, a non-alcoholic beverage flavored like cream soda and butterscotch. However, the setting seems jarring as the dining area is designed like a studio backlot cafe which, ironically, fits the theme too well.
After being immersed in immensely detailed sets for hours, the backlot cafe seems spartan in comparison. Tokyo has taken this to heart as its dining area is themed to the frilly and flowery home of Hogwarts teacher Professor Umbridge. It serves afternoon tea in a pink and leathery central circular seating area surrounded by saucers on the walls which seem to show moving cats just as they do on the silver screen. Sparing no expense, Warner hired specialist restaurant developers Lumsden which worked with MinaLima, the graphic design firm behind the iconic art in the Potter movies.
It all comes at quite a cost. The Tokyo tour is run by Warner Bros. Studios Leavesden which also operates its UK counterpart. The company’s latest filings are for the year to December 31, 2022 and show that Warner spent $66.3 million (£53.6 million) on the construction of the Tokyo tour during that time bringing the total to $114.9 million. It opened just over five months later so the spending didn’t stop there and there may be more to come.
Many of the sets on the UK tour were bolted on after it opened to cater for its surging popularity. In Japan they were planned in from the beginning so accessibility and guest flow have been optimised. What’s more, expansion spaces have already been allocated which will minimise disruption when they are developed.
Getting the attraction to opening day took much more than money and the wave of a magic wand. As Jensen points out, construction and training for the tour took place during the pandemic.
The Japanese-speaking Dane was educated at INSEAD and has a Diploma in Business administration from Copenhagen Business School. He has been working with Japanese corporations for more than 20 years and in late 1990s was Denmark’s Trade Commissioner for Sapporo which involved him consulting with Danish companies to improve their results in the Japanese market. It worked as he increased the revenue of the Trade Commission by a staggering 250%.
Jensen went on to become project director of Merlin Entertainments’ $300 million LEGOLAND Japan which opened in 2017. He didn’t just run the operation but also managed the negotiations with the City of Nagoya to complete of the Master Development Agreement and the Land Lease Agreement. He even co-ordinated negotiations to complete the loan facility agreement between the main investor and a major Japanese bank.
It paid off as LEGOLAND Japan made an operating profit from its first year leading to a $100 million investment plan featuring a 252 room LEGOLAND Hotel and a SEALIFE attraction. Jensen also oversaw a sponsor program delivering $37.5 million of revenue over five years and helped to boost annual pass membership base to more than 100,000. It gave the resort firm financial foundations and put Jensen on Warner’s radar. That really is a magic touch.
Meanwhile, China’s central bank has been on an easing trajectory, with its latest decision in February cutting 25 basis points from banks’ five-year loan prime rate (LPR), the largest shave since the LPR was designated as the main rate benchmark in 2019.
“From the commercial real estate perspective, the appetite is quite a tale of two countries: foreign investors continue to look for opportunities in Japan but remain very silent when it comes to China,” said Henry Chin, global head of investor, thought leadership and head of research for Asia-Pacific at CBRE.
Flows of foreign money into commercial property reflect the shift from China to Japan.
In 2019, foreign investment in Chinese commercial real estate reached US$12.3 billion, almost double the US$6.2 billion invested in Japan, according to CBRE’s tracking of all transactions worth US$10 million or greater. By 2021, this gap had narrowed, with China getting US$10.1 billion and Japan US$6.5 billion. In 2022, the two countries received roughly equal foreign investment, US$8 billion for China and US$7.7 billion for Japan. Last year, the tables turned, with Japan taking in US$5 billion and China getting just US$3.2 billion.
China’s share of total foreign investment in property declined from 38 per cent in 2019 to just 8 per cent last year, while Japan’s has been relatively steady at 21 per cent in 2019 and 17 per cent in 2023, according to data cited by JLL.
“Foreign investor appetite could not be stronger for Japan at the moment,” said Pamela Ambler, head of investor intelligence for Asia-Pacific at JLL. “Despite the recent BOJ announcement, Japan is still the only market with accretive cash-on-cash returns. In fact, monetary policy may drive domestics to look overseas, opening up opportunities for foreign investors to enter the market.”
Japan slips to world’s fourth-largest economy, behind US, China and Germany
Japan slips to world’s fourth-largest economy, behind US, China and Germany
Hong Kong-based private equity fund Axe Management Partners is one investor making a major bet on Japan’s commercial property prospects. In March, it completed an acquisition of three hotels in Osaka for 10.7 billion yen (US$71 million).
Currently known as WBF Honmachi, WBF Kitasemba East and WBF Kitasemba West, the hotels have a total of 500 rooms. They are slated to relaunch in the last quarter of the year as part of Garner hotels, a brand under UK-headquartered IHG Hotels & Resorts. They will be the midscale brand’s first hotels outside North America.
“It’s very easy to see that this is an attractive market,” said Gary Kwok, founder and CEO at Axe Management. “In terms of the interest rates, it has a positive carry, and that obviously attracted a lot of the foreign capital looking for a positive yield. And in our view one of the key asset classes is hospitality.”
Axe Management, which has earmarked more than US$85 million for the acquisition and renovation, is aiming for a return of as much as 20 per cent on the investment, Kwok said.
Hong Kong, mainland China office-leasing outlook bleak, CBRE says
Hong Kong, mainland China office-leasing outlook bleak, CBRE says
As for China, opportunities are still present, especially with a number of distressed assets available in the market, said Sam Lau, Axe Management’s founder and managing partner.
“The market is very huge, and China is a place that we can never ignore,” he said. However, the company is being more selective about investments there, he added, looking into hotels, retail and student housing in first-tier cities but avoiding residential properties and offices.
Both Chin of CBRE and Ambler of JLL forecast continued strength in the Japanese commercial property market.
“Japan has strong fundamentals with its strong, stable and transparent economy,” Ambler said. “The yen is also depreciated against major currencies such as the US and Singapore dollars and has interest rate differentials to other countries, which leads to favoured lending terms and yield differences. There are also clear exits in Japan, and it is also a relatively more liquid market.”
Foreign investors, meanwhile, are likely to have a limited appetite for China for some time, Chin said.
China property: rate of decline in investment slows, official statistics show
China property: rate of decline in investment slows, official statistics show
“Japan and mainland China are in different cycles when it comes to commercial real estate,” he said. “We continue to see the growth in Japan while China is currently going through repricing with limited leasing demand.
“The Japanese economy continues to outperform, as the country has experienced real wage growth … However, the Chinese economy faces challenges while the unemployment rate continues to be on the high side.”
The bank’s Tokyo-listed shares fell for a second day, tracking losses in U.S. regional lenders overnight.
The commercial lender said Thursday it expects to post a net loss of 28 billion Japanese yen ($191 million) for the fiscal year ending March 31, compared with its previous outlook for a net profit of 24 billion yen. The bank forecast a net profit of 17 billion yen for the next fiscal year.
“Aozora is a major mid-tier lender whose strength lies in its relationships with real estate/business revitalization financing companies and regional financial institutions,” Goldman Sachs analysts wrote in a Friday note.
They retained their sell rating on Aozora’s shares with a price target of about 2,460 yen per share, mainly due to the short to medium outlook for the bank’s profits.
Aozora said Thursday it expects its Common Equity Tier 1 ratio, which compares a bank’s capital against its assets, to fall to 6.6% by the end of the current fiscal year, temporarily dipping below its 7% target.
“There have been some concerns in recent years over a decline in the CET1 ratio due to deterioration in U.S. commercial real estate credit costs and valuation losses on available-for-sale securities,” Masahiko Sato, a senior analyst with SMBC Nikko Securities, wrote in a Thursday note to clients.
“How this will impact other banks is another question,” Sato added. “U.S. real estate lending for around 10% of (its) total lending with a CET1 ratio of below 7% due to unrealized losses on securities has no precedent.”
Aozora’s update came shortly after U.S. regional bank New York Community Bancorp announced a surprise net loss of $252 million for the fourth quarter.
NYCB also slashed its dividend and said it had “[built] reserves during the quarter to address weakness in the office sector” — renewing some fears over the strength of U.S. regional banks, which were embroiled in a liquidity crisis last year.
The lender said this was in response to its purchase of the assets of Signature Bank, one of the regional banks that collapsed in last year’s crisis. That purchase raised their total assets to $100 billion, placing them in a category that subjects the bank to more stringent liquidity standards.
Bank of America analysts said in a Wednesday note that the sell-off in U.S. regional banking shares on contagion fears is “likely overdone given idiosyncratic factors tied to NYCB.”
“However, higher losses tied to commercial real estate office exposure, increase in criticized loans tied to multi-family CRE [commercial real estate] are a reminder of ongoing credit normalization that we are likely to witness across the industry,” Bank of America U.S. banking analysts wrote.
“It is worth pointing out that the credit/liquidity build at NYCB are mostly the bank playing catch-up to actions taken by larger regional peers over the last year,” they added.
— CNBC’s Michael Bloom contributed to this story.