Business / Economy

Japan's regional land prices rise first time in 27 years on tourist boom

Kyodo

The average price of all types of land in regional areas rose last year for the first time since 1992 as the growing influx of foreign tourists rejuvenated real estate investment, the government said Tuesday.

In regions outside the three major metropolitan areas of Tokyo, Osaka and Nagoya, the average price for land across all categories, including commercial, residential and industrial, grew 0.4 percent from a year earlier as of Jan. 1, the annual government survey showed. The rise was aided by redevelopment projects and investment in such cities as Sapporo, Sendai, Hiroshima and Fukuoka.

However, land prices in depopulated areas continued to fall, underlining the polarization of regional land prices in Japan, according to the survey.

As of Jan. 1, the average regional land price was unchanged from a year earlier, according to the nationwide survey by the Land, Infrastructure, Transport and Tourism Ministry covering some 26,000 locations.

Regional residential land prices edged up 0.2 percent from a year earlier, marking the first rise in 27 years, while commercial land prices went up 1.0 percent for the second straight year of increase.

But prices dropped at 48 percent of regionalsurvey spots and remained flat in 19 percent of them as growth was mostly limited to tourist sites and areas with improved access due to redevelopment.

Among the major regional cities, Fukuoka observed the largest increase in commercial land prices at 12.3 percent, followed by Sendai at 10.7 percent, Sapporo at 8.8 percent and Hiroshima at 5.8 percent.

Residential land prices rose 4.4 percent on average in the four cities.

Overall, the national average price for commercial land increased 2.8 percent and that of residential land crept up 0.6 percent.

The three largest metropolitan areas also saw an average growth of 5.1 percent in commercial land prices and 1.0 percent in residential land prices, propped up by increased demand for condominiums and business offices driven by low interest rates.

“Unlike during the bubble economy years, when numerous land transactions were aimed at resale, the rising land prices this time are backed by (real) economic activities,” a ministry official said.

By prefecture, Okinawa led in both commercial and residential land price gains, registering an increase of 10.3 percent and 8.5 percent, respectively. Niigata Prefecture saw the largest fall in commercial land prices at 1.4 percent, while Akita and Wakayama prefectures logged the biggest drop in residential land prices at 1.3 percent.

By site, the town of Kutchan in Hokkaido, a popular ski area among foreign visitors, led the nation in both commercial and residential land price jumps, surging 58.8 percent and 50.0 percent, respectively.

Meanwhile, areas in western Japan devastated by heavy rains and flooding last summer saw major declines in their land prices, including residential areas in Kurashiki, Okayama Prefecture, and commercial zones in Kure, Hiroshima Prefecture

The main shop of Yamano Music Co. in Tokyo’s Ginza shopping district logged the highest land price among the surveyed locations across the country at ¥57.20 million per square meter.