The Yomiuri ShimbunThe underlying tendency of recovery in land prices has become clearer than ever. By creating an environment for moderate rises in land prices to continue, this trend should be linked to stable economic growth.

According to official land values as of Jan. 1 announced by the Land, Infrastructure, Transport and Tourism Ministry, the national average value of land for all purposes showed a year-on-year increase for four years in a row. In the three major metropolitan areas of Tokyo, Osaka and Nagoya, the rate of year-on-year increase been greater than in the previous year in the categories of both residential and commercial land.

For residential land, the average value in regional areas took an upward turn for the first time in 27 years, giving the impression of a spreading recovery in land prices. Improved situations of employment and income, and an increase in housing demand — thanks to low interest rates — have become a tailwind.

Meanwhile, prices of land in commercial zones have been pushed up by brisk office space demand in major cities. It is said that companies are moving their offices to ones that are more spacious and more pleasant to work in one after another, to attract superior human resources. The vacancy rate of office buildings has declined, while the rents have been rising.

It is a positive factor that corporate activities have become livelier. It is important to make this a sustained movement.

There is also a marked impact from the rise in the number of foreign visitors to Japan. The town of Kutchan, Hokkaido, home to the Niseko ski resort, which is popular among foreigners, was the place that marked the biggest increase in the value of both residential and commercial land.

Disaster perspective needed

Demand for land not only for hotels and resort villas but also for accommodations of those working at resort facilities has also grown. This indicates the magnitude of the ripple effect. Kyoto, Osaka and Okinawa prefectures, all of which have been bustling with holidaymakers, have also ranked high on the list of areas where land prices have increased.

In order to continuously attract foreign visitors to Japan, a unified effort by both the public and private sectors will be needed. Development of attractive hotels and commercial facilities and an effective utilization of tourist resources will be called for.

Regarding the land where Yamano Music Co.’s main store in Ginza, Chuo Ward, Tokyo, stands, whose calculated value is the highest in the country, the rate of year-on-year increase has slowed from the 9 percent level registered last year to the 3 percent level this time. It can be said that the steep rise in land prices, which has been dubbed a “mini bubble,” has started to slow down.

Nevertheless, the land prices in central Tokyo continue rising. The possibility of a property bubble due to large-scale monetary easing, even though in limited areas, requires continued vigilance.

Regional disparities are also a challenge. The “four major regional cities” of Sapporo, Sendai, Hiroshima and Fukuoka have seen even steeper land value rises than those logged in the three major metropolitan areas, but there are more than a few areas in other regions where land values have fallen.

The population in regional areas is expected to continue declining. It could become difficult even to maintain such infrastructure as public services and transportation. Such community-building effort as constructing compact cities where urban areas are limited in scope will need to be promoted.

In areas hit by torrential rains in western Japan and areas affected by a massive quake in Hokkaido, both of which occurred last year, land values have declined markedly. Major disasters are a heavy blow to local economies. Disaster prevention capability should be reinforced from such a perspective, as well.

(From The Yomiuri Shimbun, March 20, 2019)Speech

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