Land price data released last week highlights the growing divide in parts of Japan outside the top three metropolitan areas around Tokyo, Nagoya and Osaka — between the four major regional cities of Sapporo, Sendai, Hiroshima and Fukuoka on one hand, and the rest of the regional economies on the other. Steep increases in commercial land prices in some areas meanwhile need to be closely monitored as to whether they reflect real demand or have been inflated by speculative investments fueled by the Bank of Japan's negative interest rate policy, which would not be sustainable and could result in wild ups and downs in prices that would severely disrupt the economy.
On a national average, the commercial land prices in Japan as of July 1 stopped falling for the first in nine years — rising 0.005 percent from a year ago, while residential land prices fell 0.8 percent for the 25th year of decline in a row, although the margin of decline slightly narrowed, according to the Land, Infrastructure, Transport and Tourism Ministry. The ministry attributed the trend to robust construction demand for hotels and shops in response to the continuing sharp increase in the number of inbound tourists, as well as active real estate investments aided by the ultra-easy monetary policy.
But the polarizing trend attests to the uneven growth of Japan's economy — that the policy advocated by the Abe administration of regional revitalization has yet to revive land prices except in the three biggest metropolitan areas and some major regional cities. Noticeable was the steep upsurge in commercial land prices in Sapporo, Sendai, Hiroshima and Fukuoka, whose 6.7 percent average growth was even sharper than in the greater Tokyo, Nagoya and Osaka areas, where the prices rose 2.9 percent. But land prices in other municipalities in the nation's regional economies fell 1.5 percent.