The gap in land prices between large and small cities continues to widen even though the average price in select areas has moved higher for the first time in 14 years.

The National Tax Agency said Tuesday that land prices in Tokyo and Nagoya rose more than 20 percent as of Jan. 1, while the pace of the drop in nine prefectures expanded.

In the Tokai region, where Toyota Motor Corp. and other car companies are based, the good performances at these firms has lifted real estate prices higher.

Evidence of the rise can be seen in front of JR Nagoya Station, where redevelopment is ongoing. The land price per square meter in front of the station is 4.6 million yen this year, up 26.4 percent from the previous year.

Across the street from JR Central Towers, a high-rise building Central Japan Railway Co. (JR Tokai) opened in 2000, the 47-story Midland Square will be completed next month.

Toyota will move about 3,000 sales employees from Tokyo and Nagoya to the new building in January.

Inflowing real estate funds are a major reason for the continuing redevelopment of the area, local business sources said.

Last year’s World Expo held in Aichi Prefecture helped to show off the local economy and made it attractive to investors, said Toshihiro Uchida, an economist at Mitsubishi UFJ Research & Consulting Co.

But the area in front of JR Akita Station stands in stark contrast, as it is quiet even on holidays. Some shops are closed and have notices asking for tenants.

One female shopkeeper said, “The area in front of the station is always deserted.”

The land price per square meter in front of the station is 230,000 yen, sharply down from 1.4 million yen in 1993. The price has fallen for 13 years.

The regional tax bureau in Sendai said the large drop in land prices is blamed on the hollowing out of the city center as big shopping malls are built on the outskirts.

Akita Gov. Sukeshiro Terata has been making efforts to revitalize the area by trying to persuade businesses to stay and building a free parking area.

“Real estate prices mirror regional vitality,” said Takashi Ishizawa, chief real estate analyst at Mizuho Securities Co. “Local land prices do not rise unless the population increases, and rising prices in major cities will not spread to regional areas as they did in the bubble economy (in the late 1980s).”

This polarization is not just occurring between urban and rural areas but within Tokyo itself.

Construction is booming in the new Shiodome area in Minato Ward. About 160 firms are housed in the 19 buildings already completed, and 15 others are on a waiting list.

“This area’s image and brand are proving popular,” a landowner said.

But in the nearby Shimbashi area, several small buildings are looking for tenants.

“These buildings cannot be equipped with advanced office network systems, and the bathrooms are old. Unless rents are largely cut, people don’t want to rent such space,” a local real estate agent said.

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