Japan Land Values Rise in Urban, Commercial and Ski Resort Sectors

Japan Investment Properties

Japan Real Estate

25 Sept, 2018 –

The benchmark land values as of July 1, announced by the Land, Infrastructure, Transport and Tourism Ministry, show that the national average of all-purpose land prices has increased for the first time in 27 years. It is hoped that the land-value recovery will be utilized to facilitate sustainable economic growth.

The greatest factor behind the recovery was accelerated land-price increases in the three major urban areas of Tokyo, Osaka and Nagoya. Even greater land-value rises were shown in the regional major cities of Sapporo, Sendai, Hiroshima and Fukuoka. Against the backdrop of the corporate sector’s favorable performance, there was solid demand for office space. The opening of one commercial facility after another also supplied a favorable tailwind for the trend.

The recovery trend spread to areas popular among foreign visitors to Japan, too. Of the 10 spots ranked highest in the list of land-price increase rates in commercial districts, five were in Kyoto. The town of Kutchan in Hokkaido’s Niseko area, known for its ski resorts, headed the list of high land-value increase rates in commercial districts, and all three highest-ranked spots in residential areas were also in Kutchan.

The stable land-price increase can make the sentiment of corporations and investors positive, thereby revitalizing economic activities. It is important to secure a continued mild land-price rise based on genuine demand. The government should steadily promote regulatory reforms aimed at supporting new businesses and its growth strategy with which to boost private-sector vitality. However, what is worrying is the movement of money generated by the Bank of Japan’s extremely low-interest policy. Excessive loans seem to have brought about excessive real-estate investment. Originality, ingenuity needed.

One of the survey points in Tokyo’s Ginza area led the list of land values nationwide, marking a second yearly consecutive record high. The government and the central bank need to keep a more careful watch on the possibility of a “mini-bubble economy” in which land prices could soar in particular spots. Meanwhile, land-price falls have not been halted in areas where the economy is continuing to decline because of the population decrease and increased aging. Land values have continued to drop in somewhat more than 60 percent of all survey spots in provincial areas.

Another feature of the latest survey result is that there are distinct disparities in land prices even among areas in and around Tokyo, reflecting the convenience of each area. For instance, land values have dropped in suburban areas with poor access to transportation. There are cases in which original measures taken by some local governments, among others, were favorably viewed, leading to land-price rises in their areas.

Naoshima — a town on remote islands in Kagawa Prefecture — has achieved success in promoting community development efforts featuring art museums set up in the town, and this has resulted in an upward trend in land values there. Beppu, Oita Prefecture, has positively accepted people who wish to move to the city from outside, and the land prices of residential areas there have taken the first upward turn in 19 years. Each area has its own distinctive features. Local governments and economic circles should exert originality and ingenuity with which to make sure people want to visit and live in their areas.

The latest survey did not reflect the impact of natural disasters that have taken place this summer, such as the torrential rains that hit western Japan and the Hokkaido Earthquake. There are concerns about how the impact will affect land-price trends, including damage caused by negative misperceptions. The government must extend swift assistance to disaster-stricken areas.

 

(Source – The Japan News, Pic – Osaka Japan / “Douglas Sprott“)

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