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Why doesn't it take place in Castelia city?

No.58317827 View ViewReplyOriginalReport
It wouldn't play/look much different and would make sense if Gamefreak is working to remake the Unova games.

I suspect GF is skipping B/W and is remaking X/Y next for the Switch 2 instead. GF can easily copy and paste the Map into the remakes of X/Y and save a lot of development resources. Maybe even allowing them to make the entire game open world with Luminous city as the central hub and all the cut regions and content restored.