The average price of residential land in Japan as of July 1 rose 0.1% from a year earlier, rising for the first time in 31 years, as the country’s economy recovers from the coronavirus pandemic, government data showed on Tuesday.
Average commercial and overall land prices rose 0.5% and 0.3%, respectively, both rebounding for the first time in three years, also reflecting growing demand supported by low interest rates that created a favorable lending environment.
“As economic activities normalize, the trend of land price recovery has occurred across the country,” a government official said, citing price hikes in the Tokyo and Nagoya metropolitan areas, as well as in four major regional cities of Sapporo, Sendai, Hiroshima and Fukuoka.
The country’s residential land prices fell steadily after the collapse of the country’s asset-inflated economic bubble in the early 1990s. Although the speed of decline gradually eased from 2010, it has is widened in 2020 with the onset of the pandemic, leading to a 0.5% drop in the average price the following year.
Despite this trend, demand for housing has remained strong in urban centers and areas deemed convenient and desirable, which has helped drive up land prices in these locations.
In 2022, 14 of Japan’s 47 prefectures saw residential land prices rise, up from seven prefectures the year before, while 32 saw declines. The average price in Ibaraki prefecture, meanwhile, remained stable.
By region, average residential land prices climbed in Japan’s largest metropolitan areas, namely Tokyo, Nagoya and Osaka, after rebounding in western regions.
The average price for the regional areas fell 0.2%, but the scope for decline was less than the 0.7% decline seen a year earlier, with the fall cushioned by larger price increases in Sapporo, Sendai, Hiroshima and Fukuoka.
The 2022 survey covered average prices for all types of land, including commercial, residential and industrial, based on the value of 21,444 sites across the country, according to the Ministry of Lands, Infrastructure, Transport. and Tourism.
In terms of average commercial land prices, 18 prefectures recorded increases, compared to six the previous year, as a recovery in private consumption led to an increase in demand for shops, while demand for apartments and of offices was also firm.
Some tourist spots and shopping districts have seen land values rise due to increased activity due to the easing of pandemic restrictions.
The biggest rise in land prices was recorded in Kikuyo Industrial Zone, Kumamoto Prefecture, southwestern Japan, where a 31.6% increase was registered after the largest chipmaker under contract in the world, Taiwan Semiconductor Manufacturing Co., has decided to build a new factory there.
The biggest decline of 8.7% was seen in residential areas of Koriyama, Fukushima Prefecture, after the area was devastated by a typhoon in 2019.
The Meidi-ya Ginza commercial construction site in Tokyo’s Ginza shopping district hit the highest price per square meter for the 17th consecutive year of 39.3 million yen ($274,000).
The Meidi-ya Ginza commercial building in Tokyo is pictured on September 13, 2022 (Kyodo)
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