A survey by the Land, Infrastructure and Transport Ministry shows that, as of July 1, average land prices in the Tokyo, Osaka and Nagoya megalopolis areas rose from the previous year for the first time since 1990 — 3.6 percent for commercial areas and 0.4 percent for residential areas. In contrast, average land prices nationwide fell for the 15th straight year. Thanks to the current economic recovery, asset deflation in large urban areas appears to be nearing an end.
While the nationwide average land price dropped, the rate of decline was smaller than the previous year — from 5 percent to 2.1 percent for commercial areas and from 3.8 percent to 2.3 percent for residential areas. Kumamoto Prefecture was the only prefecture where the rate of decline in commercial areas increased. Seven prefectures suffered a larger rate of decline in residential areas, compared with 16 such prefectures a year earlier. An upward trend in land prices appears to be gradually spreading to the countryside.
The Diet has passed laws to regulate the opening of large stores in suburbs to help revitalize local urban centers. But this does not guarantee the comeback of such centers. The fact that land prices fell at more than 90 percent of the surveyed locations nationwide underlines the need for creative efforts to make local urban centers attractive to businesses, investors and tourists. Efforts to make residential areas in the countryside attractive to home buyers from urban areas will also be necessary.
In Tokyo, land prices rose in all surveyed locations for the first time in 19 years. Minato Ward registered the highest increases — 19.6 percent for commercial areas and 24 percent for residential areas. Locations near Nagoya Station registered a jump of more than 30 percent. In Ibaraki Prefecture, locations along the newly opened Tsukuba Express railway line marked a climb of more than 20 percent. There is a need to be alert for “mini-bubbles” caused by real-estate investment funds.
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