Nationwide rosenka land values increase for 2nd year in a row

In 2017, Japan’s rosenka land values increased for the second year in a row with an average growth of 0.4% nationwide. In 2016, rosenka land values increased by 0.2%, ending an 8 year decline.

In Tokyo’s Ginza district, an uptick in retail demand due to record-high foreign tourist numbers has helped to push land values to a historical high, exceeding those seen during Japan’s bubble economy.  The land value alongside Ginza Chuo Dori in Ginza 5 Chome (in front of the Kyukyodo Building) reached 40,320,000 Yen per square meter (approximately 33,100 USD/sq ft) this year, up 26% from 2016 and exceeding the previous record of 36,500,000 Yen last seen in 1992. This particular location has been the most expensive land in Japan for the past 32 years.

13 prefectures recorded an increase in land values, while 32 recorded a decline.

Miyagi Prefecture recorded the highest average prefectural increase with land values increasing by 3.7%. According to local real estate appraisers, central Sendai city has been seeing strong demand from office investors, while an increase in population has been pushing up residential prices in Sendai’s suburban areas.

Both Tokyo and Okinawa saw an average increase of 3.2%. In Tokyo’s Toranomon district, major redevelopments led by Mori Building as well as plans for a new subway station have helped push up land values by 15% in 2017, after an increase of 10% in 2016. The land alongside Omotesando Hills had a rosenka value of 12,560,000 Yen/sqm in 2017, up 24.7% from 2016. Shibuya Crossing had a value of up to 21,600,000 Yen/sqm, an increase of 15.9% from last year.

Areas outside of major cities and tourist destinations continue to see land values fall. Akita Prefecture recorded the biggest decline in land values for the fourth year in a row, with a drop of 2.7%.

77% increase in Niseko

In Hokkaido’s ski resort town of Kutchan, which includes Niseko, rosenka land values at one survey point increased by 77.1% in 2017. The area welcomed over 350,000 foreign hotel guests in the last ski season. Domestic and international developers have been working on several luxury projects in this area, including both hotels and condominiums. A luxury condominium that opened in December 2016 had two penthouses priced between 400 ~ 600 million Yen (approx. 3.5 ~ 5.3 million USD). Both units have since sold to buyers from Hong Kong and Thailand. The number of properties owned by foreign capital has increased by over 11% over the past year, of which almost a third is owned by Hong Kong-based companies and individuals. Transactions involving Japanese parties has been steadily decreasing in the area, with the market relying heavily on foreign demand.

About the Rosenka land values:

Rosenka land valuations are conducted by the National Tax Agency on land fronting major roads and cover approximately 330,000 sites across Japan. Valuations are done on January 1 each year, with results announced on the following July 1st. The values are used to calculate inheritance and gift tax and typically represent around 80% of the chika-koji (assessed land values), which may then in turn represent around 60 ~ 80% of actual market values, although this is not always the case.

Sources:
National Tax Agency, July 3, 2017.
NHK, July 3, 2017.