Commercial land prices fell an average 0.8 percent in the year ended June 30 — following their first upturn in 16 years the year before — while the 1.2 percent average decline in residential land prices for the same period marked the 17th straight yearly dip and was steeper than the previous year for the first time in five years.
Falling real estate investment with foreign capital due to the subprime housing loan crisis in the United States, and to the slackening demand for office buildings as the Japanese economy cools, have led to the nationwide downturn in land prices.
The land and infrastructure ministry says that in the Tokyo, Osaka and Nagoya megalopolis regions, commercial land prices went up an average 3.3 percent, much slower than the previous year’s 10.4 percent rise, and residential land prices rose an average 1.4 percent, down from the previous year’s 4 percent rise.
The situation shifted greatly in the first half of 2008. From July 1, 2007, to Dec. 31, 2007, commercial land prices at 28 spots in Tokyo had gone up, with a spot in Shinjuku Ward rising the most at 12.5 percent. But from Jan. 1, 2008, to June 30, 2008, corresponding prices at 21 of the 28 spots either went down or leveled off. Similar trends were seen in Osaka and Nagoya.
Outside the Tokyo, Osaka and Nagoya regions for the year ended June 30, commercial land prices dropped for the fifth straight year, by an average 2.5 percent, and residential land prices fell for the fourth straight year, by an average 2.1 percent. Land prices fell in 79 percent of the nation’s commercial areas and 83 percent of the residential areas.
Land price increases were observed only in areas near newly opened railway or expressway routes or redevelopment areas. Some real estate investment appeared to make light of actual demand, leading to mini-bubbles that could burst.
With land prices falling, local governments and private companies should strive to carry out attractive land-use planning with consideration given to traditions, landscapes and environment. Real estate firms should try to profit by putting buildings to real use, not through land speculation.
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