Business

Commercial land prices in major cities grow faster on tourism boom

Kyodo

Average commercial land prices in Japan rose for the second straight year, helped by hotel construction and other development projects following a surge in foreign tourists, government data showed Tuesday.

The prices as of July 1 rose 0.5 percent from a year before, according to the Ministry of Land, Infrastructure, Transport and Tourism. The result compares with a 0.005 percent increase the previous year, which was the first rise in nine years.

Prices for the three largest cities of Tokyo, Osaka and Nagoya rose 3.5 percent, the sharpest increase since the global financial crisis in 2008, while those for four key regional cities — Sapporo, Sendai, Hiroshima and Fukuoka — were up an average 7.9 percent.

“Investment money is flowing out of the three largest cities where land prices are surging, and it contributed to improvement in more regional locations,” the ministry said.

Prices for all regional areas saw a slower pace of decline, falling 0.6 percent. But nearly 70 percent of surveyed locations in regional areas excluding the four key cities continued to mark falls, adding to concerns that price gaps are widening between bigger cities and regional areas.

Residential land prices, meanwhile, dropped an average 0.6 percent across the country, down for the 26th consecutive year. But the pace of decline slowed on solid housing demand due to improving employment conditions as well as tax breaks for home buyers, the ministry said.

Average industrial land prices remained flat for the first time in 26 years, according to the data.

In Tokyo, Osaka and Nagoya, residential land prices rose 0.4 percent for the third straight year of increase. Those in the key four regional cities were up an average 2.8 percent.

By prefecture, Kyoto topped the list of commercial land prices with a 5.7 percent increase. Real estate demand for shops and hotels is increasing as the capital of the prefecture is attracting foreign tourists.

As for residential land prices, Okinawa posted the highest growth of 2.4 percent on redevelopment projects in the capital city Naha.

Northern Japan’s Akita prefecture saw the largest commercial and residential land price falls of 3.1 percent and 2.9 percent, respectively, although the pace of decline slowed.

In Kyushu’s Kumamoto Prefecture, which is recovering from major earthquakes in April last year, commercial land prices were up 0.1 percent while residential land prices fell at a slower pace.

The Meidi-ya Ginza building in Tokyo’s Ginza shopping district logged the highest land price among the surveyed locations for the 12th consecutive year.

The price stood at ¥38.9 million ($350,000) per square meter, surpassing the ¥38 million logged during the peak of Japan’s asset-inflated bubble economy around 1990 and 1991.