On August 21, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) released the quarterly LOOK Report showing changes in land prices in Japan’s major cities. With July 1 as the survey point, this is the second look at land values since the pandemic began.

As expected, the pandemic has hit commercial land prices the hardest, with almost 50% seeing land prices fall between 0 ~ 6%. The residential sector was more resilient with 85% of locations seeing no change and 15% seeing a decline of 0 ~ 3%. Four of the five residential areas to see a decline in land prices were located in Nagoya City. In fact, all nine residential and commercial locations in Nagoya saw land prices drop.

This quarter, just one survey site saw an increase in land prices, compared with 73 in the previous quarter. That lucky location was commercial land in front of Sendai Station in Miyagi Prefecture. Office and retail demand in front of the station has remained strong, despite the pandemic, with lease cancellations having only a limited effect. Nationwide, 61 sites saw no change in land prices (up from 23 in the previous quarter), while 38 reported a decrease in land prices (up from 4). 

In Tokyo, just four locations (all commercial) saw land prices decline. They were Kabukicho (3~6% decrease), Shinjuku 3 Chome (0~3% decrease), Ueno (3~6% decrease), and Ginza (0~3% decrease). In Osaka Prefecture, eleven out of thirteen locations saw land prices fall, including Shinsaibashi (3~6% decrease), Namba (3~6% decrease), and Chayamachi near Umeda (3~6% decrease). Not surprisingly, these districts were either heavy nightclub zones or retail/shopping areas that were reliant on the currently non-existent inbound tourism market. 

The survey covers 100 sites across Japan (43 in greater Tokyo, 25 in greater Osaka, 9 in Nagoya, and 23 in regional cities). Of the 100 sites, 32 are high-density residential zones, and 68 are high-density commercial zones. 

In Tokyo’s prime residential neighborhoods, such as Bancho, Minami Aoyama and Shinagawa, prices aren’t expected to see any upwards or downwards change as demand from owner-occupiers and tenants appears to have bounced back after a temporary shut-down in April and May. Supply is becoming more constricted in some neighborhoods, however.  

Source: MLIT, August 21, 2020.