Land prices continue to climb in Japan’s major cities with 84% of survey sites recording an increase in land prices in the first quarter of 2015. 16% of the locations saw no change in land prices, and none of the locations saw a decrease in prices. Two retail locations saw prices rise by 3 ~ 6%: Ginza in Tokyo and an area near Nagoya Station.

Monetary easing and a bullish condominium market is behind the rise in prices in Tokyo, with 90.7% of locations seeing positive growth.

Land price changes nationwide (% of locations that saw an increase, no change or a decrease in prices):

Year Increase No Change Decrease
2013 Q1 53.3% 34.0% 12.7%
2013 Q2 66.0% 27.3% 6.7%
2013 Q3 71.4% 22.7% 6.0%
2013 Q4 81.3% 14.7% 4.0%
2014 Q1 79.4% 18.0% 2.7%
2014 Q2 80.0% 18.7% 1.3%
2014 Q3 82.7% 17.3% None
2014 Q4 83.3% 16.7% None
2015 Q1 84.0% 16.0% None

LAND PRICE RISES IN TOKYO

RESIDENTIAL LAND
Bancho area, Chiyoda-ku: 0 ~ 3% rise

Apartment prices have been rising due to continued strong demand from both wealthy Japanese buyers and foreign investors. Development sites remain limited. While there is a feeling of overheating, the Bancho area is Japan’s leading high-end residential neighbourhood and may see demand continue into the future.

Minami Aoyama area, Minato-ku: 0 ~ 3% rise

The area has been seeing a lot of transactions on new and old apartments, land and small retail shops. The demand is from Japanese looking to reduce their inheritance taxes and obtain rental returns, as well as foreign investors seeking capital gains. Rents on high-end expat apartments are starting to show a slow increase.

Tsukuda, Tsukishima area, Chuo-ku: 0 ~ 3% rise

A number of large-scale apartments are planned for this area. Based on current demand for development sites, land prices may continue to rise. The relative convenience to central Tokyo means the area has potential and demand for condominiums and rental apartments. Recently, apartments very close to the train station have been transacting at higher prices.

COMMERCIAL LAND
Marunouchi, Otemachi, Yurakucho, Hibiya areas, Chiyoda-ku: 0 ~ 3% rise

Due to a limited number of sale transactions it is difficult to grasp price changes in these areas. Office vacancy rates are declining and office rents are showing a slow trend upwards.

Ginza area, Chuo-ku: 3 ~ 6 % rise

Ginza is Japan’s top retail location. Retailers are befitting from the weaker Yen bringing a growing number of foreign tourists. Retail rents are rising and redevelopment of older buildings in back streets is increasing. Sellers are asking higher prices for their properties.

Roppongi area, Minato-ku: 0 ~ 3% rise

Redevelopments in the area may see a continued strong demand. As a result of the redevelopment plans, there have been several transactions of small-to-mid sized buildings.

Toranomon area, Minato-ku: 0 ~ 3% rise

Land prices in the Toranomon area increased by 0 ~ 3%, after a 3 ~ 6% increase in the previous quarter. A large number of redevelopment projects are planned for this area and the reconstruction of older buildings is also progressing.

The MLIT publishes their land price LOOK Report quarterly. It is a survey of land price movements for 150 commercial and residential locations across Japan. In this quarter’s survey, only 100 locations were surveyed (50 locations from areas including Odori Park in Sapporo and Hakodate have been removed).

Source: MLIT, June 5, 2015.

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