Japan’s land prices grew for a fifth straight year in 2019, helped by foreign tourism and low interest rates with some regions posting their best gains since the country’s property crash of the early 1990s.
A boom in tourism has been pushing up land prices especially among destinations popular with foreign visitors such as northern Hokkaido, southern Okinawa and Japan’s ancient capital of Kyoto.
Prices rose 1.4%, the fastest gain since 2008, the survey showed.
Despite the rise, the coronavirus has clouded the outlook as the outbreak caused a tourism slump, supply chain disruptions and consumer spending damages, raising risks of a recession.
The survey was conducted before the global coronavirus became a pandemic in the first quarter of 2020, so the results did not reflect the hit to prices from the virus, an official of the land ministry said.
“Overall, Japan’s land prices have been improving,” said the official.
“It is hard to gauge how the impact from the coronavirus will affect the land prices at the moment,” he said.
Commercial land prices in regional Japan, excluding metropolitan areas surrounding Tokyo, Osaka and Nagoya and some other major cities, rose 0.3%, up for the first time since Japan’s asset-inflated bubble burst 28 years ago.
Residential land prices in those areas also stopped falling for the first time since 1996.
An increase in foreign tourists boosted demand for hotel properties and retail space while low interest rates supported strong office demand.
Redevelopment projects and maintenance of transportation also helped increase commercial land prices, which rose 3.1%, up for a fifth straight year, while residential land prices rose 0.8%, rising for the third year in a row, the survey found.
The biggest rises in both residential and commercial land prices were in the town of Kutchan, a popular ski resort in Hokkaido, jumping 44.0% and 57.5% respectively, thanks to an influx of foreign tourists.
Tokyo’s Ginza luxury shopping district remained the most expensive location with 57.7 million yen ($537,800) per square metre, up 0.9%, the survey showed.
The ministry surveyed about 26,000 locations nationwide.
