Commercial standard land prices in Japan’s big cities increase for 4th year in a row

ginza-nagoya
Ginza and Nagoya both saw standard land prices increase between 27 ~ 32% over the past 12 months.

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) announced this year’s Standard Land Prices on September 20.

Nationwide, land prices declined for the 25th year in a row with a 0.6% decrease, although the rate of decline is slowing. Meanwhile, commercial land prices stopped their downwards trend for the first time in 9 years.

Land prices in Japan’s urban centres of Tokyo, Osaka and Nagoya continued to benefit from booming foreign tourist numbers, redevelopment and infrastructure projects, shrinking office vacancy rates, and monetary easing.

Commercial land prices in these three cities increased by 2.9%, representing a fastening pace after 2.3% growth in 2015 and 1.7% growth in 2014. In the Tokyo metropolitan area, commercial land prices increased by 4.1% in 2016, after a 3.3% increase in 2015. In Osaka city, they were up 4.7% this year.

Residential land prices in these cities grew by 0.4% in 2016 after a similar 0.4% increase in 2015.  In the Tokyo metropolitan area, residential land prices increased by 1.5% in 2016 after a 1.3% increase in 2015. Osaka city, however saw zero growth in residential land prices for the second year in a row.

Differing data

In contrast to the standard land prices, the government assessed land values (chika-koji) measured on January 1 each year showed a nationwide increase for the first time in 8 years.

The reason for the conflicting data is due to the different set of survey sites used. Chika-koji land values cover just 1,627 survey sites nationwide with a focus on urban areas in town planning zones, while kijun-chika land valuations cover 21,675 survey sites of all types and varieties across Japan, including 3,500 sites located outside of town planning zones with little-to-no development potential and limited opportunities for price increases.

Kijun-chika prices within town planning zones decreased 0.2% nationwide, while land outside of town planning zones decreased by 2.4%.

Kijun-chika prices tend to follow chika-koji prices, although with less volatility. During the bubble economy, chika-koji prices increased by more than 20% at one point, while the kijun-chika prices increased by around 10%. During the most recent mini-bubble in 2007 and 2008, chika-koji prices were in the positive territory, while kijun-chika prices remained negative.

Niseko leading the pack

A residential survey site near Grand Hirafu in Niseko reported a 27.3% increase in 2016, putting it at the top of the charts for residential land price increases nationwide. The land had a standard land price of 21,000 Yen/sqm in 2016, up from 16,500 Yen/sqm in 2015.

This rate of increase is still lower than what was seen during the previous mini-bubble where land values at a survey point in  increased by 40.9% between 2007 and 2008.

Top increases nationwide:

[RESIDENTIAL LAND]
[1] Kabayama, Kutchan, Hokkaido +27.3%
[2] Honmachi, Kanazawa +15.6%
[3] Yotsukuramachi, Iwaki, Fukushima +12.3%
[4] Takamiya, Fukuoka +12.0%
[5] Urashibatamachi, Sendai +11.7%
[6] Rokubancho, Chiyoda, Tokyo +11.3%
[7] Sanbancho, Chiyoda, Tokyo +11.3%
[8] Yamatomachi, Sendai +11.0%
[9] Izumigaoka, Iwaki, Fukushima +11.0%
[10] Josei, Sendai +10.6%
[COMMERCIAL LAND]
[1] Tsubakicho, Nagoya +32.3%
[2] Meieki, Nagoya +32.0%
[3] Minamisenba, Osaka +28.9%
[4] Nipponbashi, Osaka +28.1%
[5] Tsubakicho (2), Nagoya +28.0%
[6] Ginza 6 Chome, Tokyo +27.1%
[7] Fukakusa Inarionmaecho, Kyoto +26.2%
[8] Hirooka, Kanazawa +25.3%
[9] Nakanoshima, Osaka +25.1%
[10] Ginza 2 Chome, Tokyo +25.0%

 

Tokyo’s top increases:

[RESIDENTIAL LAND]
[1] Rokubancho, Chiyoda (3,630,000 Yen/sqm) +11.3%
[2] Sanbancho, Chiyoda (2,650,000 Yen/sqm) +11.3%
[3] Nibancho, Chiyoda (2,020,000 Yen/sqm) +10.4%
[4] Jiyugaoka, Meguro (1,010,000 Yen/sqm) +8.5%
[5] Roppongi 5 Chome, Minato (1,960,000 Yen/sqm) +7.1%
[6] Kojimachi, Chiyoda +7.0%
[7] Minami Aoyama 4 Chome, Minato +6.8%
[COMMERCIAL LAND]
[1] Ginza 6 Chome, Chuo (22,500,000 Yen/sqm) +27.1%
[2] Ginza 2 Chome, Chuo (33,000,000 Yen/sqm) +25.0%
[3] Ginza 3 Chome, Chuo (10,500,000 Yen/sqm) +20.0%
[4] Ginza 7 Chome, Chuo (5,900,000 Yen/sqm) +15.7%
[5] Ginza 2 Chome (2), Chuo (5,870,000 Yen/sqm) +15.1%
[6] Takanawa 2 Chome, Minato (2,600,000 Yen/sqm) +15.0%
[7] Nihonbashi Muromachi, Chuo (14,600,000 Yen/sqm) +15.0%
[8] Shinjuku 3 Chome, Shinjuku (14,900,000 Yen/sqm) +14.6%
[9] Shinjuku 1 Chome, Shinjuku (16,100,000 Yen/sqm) +14.2%

Land price changes (2014 ~ 2016)

RESIDENTIAL 2014 2015 2016
Nationwide -1.2% -1.0% -0.8%
3 Major Cities +0.5% +0.4% +0.4%
Greater Tokyo +0.6% +0.5% +0.5%
Greater Osaka +0.1% 0.0% 0.0%
Greater Nagoya +0.9% +0.7% +0.5%
Regional -1.8% -1.5% -1.2%
COMMERCIAL 2014 2015 2016
Nationwide -1.1% -0.5% 0.0%
3 Major Cities +1.7% +2.3% +2.9%
Greater Tokyo +1.9% +2.3% +2.9%
Greater Osaka +1.5% +2.5% +3.7%
Greater Nagoya +1.5% +2.2% +2.5%
Regional -2.2% -1.6% -1.1%

Sources:
The Nikkei Shimbun, September 20, 2016.
MLIT, September 20, 2016.

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