Japan's land prices fall for 12th straight year

Land prices fell for the 12th straight year in 2002, the land ministry said in a report released Monday.

Residential land prices fell an average of 5.8 percent, a decline larger than the previous year’s 5.2 percent, according to the report on prices per square meter at 31,866 select locations nationwide.

Commercial land prices fell an average 8 percent as declines in areas outside major urban centers more than offset increases in some busy metropolitan districts, the Land, Infrastructure and Transport Ministry said.

The margin of commercial decline was smaller than the 8.3 percent the previous year.

The average price of commercial land is now roughly equivalent to that in the late 1970s.

The report serves as a benchmark for public and private land transactions, and for government assessment of inheritance and property taxes.

A ministry official traced the decline to a series of corporate real estate sales and to falling demand for suburban condominiums.

The official also cited the construction of high-rise office buildings in urban areas and a resulting fall in office rents as contributing to the continued downward spiral.

“Prices are expected to move in tandem with economic trends” for a while, the official said.

The report found that the margin of decline in commercial land prices for the Tokyo, Nagoya and Osaka metropolitan areas narrowed by 1.4 percentage points to 7.1 percent.

This was due to the fact that land prices in busy commercial districts in Tokyo, such as Marunouchi and Shinagawa, rose by 7 percent to 9 percent, the highest increase in 12 years.

These areas are seeing a surge in redevelopment projects.

But price increases were limited, as areas just outside redevelopment zones saw prices fall or remain flat.

Prices of commercial land in some outlaying areas fell by more than 20 percent due to the closure of major retail outlets and bank branches.

“The prolonged recession directly hit local cities and helped expand the gap between them and metropolitan areas,” a ministry official said.

Residential land prices in the Tokyo, Osaka and Nagoya metropolitan areas fell 6.5 percent, the same margin as the previous year.

The margin of decline in areas outside major urban centers expanded to 5.1 percent from 4 percent for residential areas and to 8.7 percent from 8.1 percent for commercial areas.

The most expensive commercial property in Japan was the Marunouchi Building in front of JR Tokyo Station in Chiyoda Ward for the second consecutive year, with 1 sq. meter priced at 20 million yen, up 7 percent.

Japan’s most expensive residential area was Gobancho in the same ward for the seventh straight year, with 1 sq. meter priced at 2.14 million yen.