Merlin Entertainments has confirmed that it is to open a Legoland park in Nagoya, Japan. The new park, its second in Asia, will open in 2017.
Representing an investment of ¥32 billion ($315/€230 million), the park will be built under Merlin’s ‘operated and leased’ model, with the infrastructure funded by a third party.
Nagoya as the park’s location as it is ideally positioned in the centre of Japan, approximately two hours from Tokyo and one hour from Osaka, with a potential catchment area in excess of 20 million people. The park is expected to employ up to 1,000 staff in a variety of roles.
“Today’s announcement is another major milestone in the development of the Legoland brand,” notes Merlin Entertainments chief executive Nick Varney. “We are delighted to be working closely with the City of Nagoya and with KIRKBI on the project, both of whom appreciate the potential of the brand in the second biggest theme park market in the world.”
Merlin will directly invest ¥9.2 billion ($90/€65m/£53m) over the next three years and lease the balance of the assets from a company owned by KIRKBI Invest, a subsidiary of KIRKBI A/S, the privately held investment and holding company that owns a 75% share of the Lego Group and 29.9% of Merlin. KIRKBI’s investment, which is separate to that of Merlin’s, will be funded through a combination of equity and external debt provided by Sumitomo Mitsui Banking Corporation (SMBC). Merlin’s investment is expected to deliver returns consistent with the group’s stated pre-tax cash ROIC target of 20%.
The park will be constructed close to the port, with excellent road and rail links. The initial development will focus on the theme park, with potential options available for further park expansion and the development of on-site, themed accommodation over future periods. The City of Nagoya has agreed to support the development with the required local travel infrastructure, including a 5,000 space multi-storey car park and improved road connectivity to the park.
The Japanese theme park market is the largest in Asia, with an estimated value of ¥690 billion (€6.8bn/€5bn). It already boasts some of the world’s most successful park brands including Disneyland and Universal Studios, with annual attendances almost rivalling those in Orlando (in Universal’s case higher). Given the high level of Lego brand awareness and the specific ‘young family’ target demographic, Legoland Japan is expected to be complementary to the existing parks in the region.
Merlin dipped its toes in the country with the Legoland brand in 2012 when it opened an indoor Legoland Discovery Centre in Tokyo. The full sized Legoland Japan, which will be of a similar scale to the recently opened Legoland parks in Malaysia and Florida, will debut in the second quarter of 2017. Before that, Legoland Dubai will open in 2016.
“Long term, we continue to believe that there is significant opportunity for the Legoland brand, with the potential for up to 20 parks across the world and we remain committed to our target of opening a new park every two to three years,” adds Varney.