Land values drop nationwide for second year, but increase in Tokyo

Japan’s Standard Land Prices were announced yesterday by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). The national average dropped by 0.4% from last year. This is the second year in a row to see a decline, but it is a slight improvement from last year’s 0.6% drop. The nationwide average has been in the negative for 27 of the past 30 years.

Commercial land prices dropped 0.5%, after a 0.3% fall in 2020. Residential land prices dropped 0.5%, after a 0.7% fall in 2020.

Leading retail districts saw the biggest dip in land prices as the pandemic continued into 2021. While retail and commercial were hurting, residential has seen a boost as telework has some looking for better living spaces. 

The most expensive land in Japan is under the Meijiya Ginza Building in Tokyo. It was valued at 39,500,000 Yen/sqm (approx. US$33,500/sq.ft), down 3.7% from last year. In 2020 it dropped by 5.1%.

Prices up in Tokyo, down in Osaka

Average prices in the Tokyo region increased by 0.1% for both residential and commercial land. In the Osaka region, residential land prices dropped by 0.3% and commercial land prices dropped by 0.6%. This is thought to be due to the consistent demand for prime assets in Tokyo, particularly from foreign funds with access to cheap capital.

Osaka’s Dotombori district saw the biggest drop nationwide with land prices falling 18.5%. Retail has been sluggish and vacancies on the rise as the highly tourist-dependent area faces a second year without inbound tourism. Tokyo’s Kabukicho bar district saw land prices drop 10.1% as ongoing restrictions on restaurant and bar operating hours have cut revenues. 

Residential winners

Karuizawa, the historically wealthy summer retreat for Tokyo’s elite, saw land prices increase by 10.9% as more and more people consider buying holiday homes in the town. Miyakojima Island in Okinawa Prefecture had the highest percentage increase nationwide with land prices at one survey site increasing by 22.9% this year. Land prices at this site in Miyakojima had stayed mostly flat for the past 35+ years, before increasing by 37.3% in 2020. 

The most expensive residential land in Japan for the third year running is under the Homat Royal condominium building in Akasaka, Tokyo. It was valued at 4,870,000 Yen/sqm (approx. US$4,100) in 2021, up 3.2% from last year.

Hokkaido sees land prices rise for first time in 30 years

The Standard Land Price across all uses in Hokkaido rose by 0.1% in 2021, marking the first increase since 1991. The land values have been pushed up by residential demand, especially around Sapporo.

In top spot was a residential site in Kitahiroshima on the outskirts of Sapporo with a 19.2% increase – putting it in the 2nd spot nationwide in terms of percentage growth. Kitahiroshima took up the top 3 spots for residential growth in Hokkaido. The ski resort town of Niseko, normally seeing the highest growth in Japan, was bumped to 4th spot in Hokkaido and 5th spot nationwide with 17.4% growth at one residential survey site. This comes following a 29.17% increase in 2020 and a 66.67% increase in 2019. Average residential land prices across Kutchan Town grew by 6.5%. 

About Standard Land Prices:

Standard Land Prices (kijun-chika) are one of two annually reported land valuations used in Japan, the other being the Government Assessed Land Values (chika-koji). Standard Land Prices are based on a survey date of July 1, while Government Assessed Land Values are based on a January 1 survey date.

The Government Assessed Land Values cover just 1,627 survey sites nationwide with a focus on urban areas in town planning zones, while the Standard Land Prices 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.

Standard Land Prices tend to follow Government Assessed Land Values, although with less volatility. During the bubble economy, Government Assessed Land Values increased by more than 20% at one point, while the Standard Land Prices increased by around 10%. During the most recent mini-bubble in 2007 and 2008, Government Assessed Land Values were in the positive territory, while Standard Land Prices remained negative.

Neither land valuations represent the true market value of a piece of land and should not be used to decide what a property is worth on the open market. However, they are useful as a general guide and to indicate market trends.

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