Business / Economy

Japan's land prices rise for fourth consecutive year overall, but 27 prefectures see declines

Kyodo, JIJI

Land prices have risen for the fourth straight year, reflecting strong demand in major cities and tourist spots driven by increasing numbers of visitors from overseas and a recovering economy, according to National Tax Agency data released Monday.

Brisk demand for hotels and offices pushed prices up by 1.3 percent on average as of Jan. 1, against a year earlier, but the gap between urban and rural areas continued to widen.

Land prices, mainly in urban areas, reflected a strong appetite for real estate investment and stable housing demand supported by improved employment. The prices are used to calculate inheritance and gift taxes.

Prices climbed in 19 of the 47 prefectures, including Tokyo, which will host the Summer Olympics next year, compared with 18 in the 2017 calender year, the data showed.

However, prices dropped in 27 prefectures and remained flat in Hyogo.

The survey covered about 329,000 sites for calculation of inheritance and gift taxes for 2019.

By prefecture, Okinawa saw the steepest rise of 8.3 percent backed by robust demand for tourism centered on Naha, followed by Tokyo at 4.9 percent and Miyagi, where redevelopment projects have been implemented around Sendai Station, at 4.4 percent.

Land prices in Ishikawa and Oita prefectures rose for the first time in 27 years but stayed flat in 13 prefectural capitals. Tottori was the only capital to see a decline, of 4.5 percent.

The plot in front of the Kyukyodo stationery store in Tokyo’s Ginza shopping district was estimated to be worth a record ¥45.6 million per square meter, making it the most expensive piece of land in the country for the 34th straight year.

It was the third consecutive year the plot’s price exceeded the ¥36.5 million it recorded in 1992, the last year land prices felt the effects of the “bubble economy” of asset inflation that started in the late 1980s.

Land designated as evacuation zones in parts of Fukushima Prefecture following the 2011 nuclear disaster continued to show no value in the report.

Also, prices along the tsunami-devastated Pacific coastline of Tohoku have been declining, according to people involved in the local real estate business.

Eight years since the disasters of March 11, 2011, the number of land deals is down, they said. Apartments were in high demand after the disasters, but supply has exceeded demand in recent years, they said.

A site in Niseko, a ski resort area in Hokkaido popular with foreign tourists, saw the sharpest price hike for the second straight year, at 50 percent.