Land Prices Up In 3 Big Cities For 1st Time In 5 Years

TOKYO (Nikkei)--Average land prices in greater Tokyo, Osaka and Nagoya were up 0.1% as of July 1, the first year-on-year rise since the global financial crisis sent them spiraling downward, according to data the Land Ministry released Thursday.

The last time that land prices increased in the three biggest metropolitan areas was in 2008.

Prices rose for 2,093 locations, or 37% of all sites surveyed in those areas, about quintuple the year-earlier figure. Meanwhile, the number of locations where prices declined dropped by half to 2,028.

Hopes for an economic recovery fueled demand for commercial and residential property.

The average price for commercial land increased 0.6%. Prices climbed in all three cities on such factors as the Tokyo Skytree, the opening of large commercial facilities and redevelopment near Osaka Station.

Aggressive buying of commercial facilities by real estate investment trusts was another plus. These funds decided to acquire a total of 1.5 trillion yen in properties during the January-August period, with the annual total on track to surpass the record of 2 trillion yen set in 2006.

Residential land prices dipped 0.1%, leveling off from the 0.9% drop a year earlier. Interest rates have remained low, making it easier for consumers to obtain mortgages, and sales of condominiums and houses rose ahead of next April's planned consumption tax hike. Demand was especially strong in greater Nagoya, where residential land prices advanced for the first time in five years.

The nationwide average price declined 1.9%, compared with a 2.7% drop the previous year, down for the 22nd year in a row. Prices rose for 2,925 survey sites, or just 14% of the total. Residential land prices slipped 1.8%, while commercial land prices fell 2.1%.

In regions other than the three metropolitan areas, prices dropped 2.6%. Residential land prices sank 2.5% as rural areas suffered from depopulation, while commercial land prices plunged 3.1% as stores shut down.

(The Nikkei, Sept. 20 morning edition)

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