The recovery in land prices has been spreading further from big cities to regional areas. The nationwide stability of asset values should result in wiping out the deflationary mind-set that had become deep-seated among businesses and consumers.
According to official land prices as of Jan. 1 announced by the Land, Infrastructure, Transport and Tourism Ministry, the national average value of residential land showed a visible increase for the first time in 10 years, following scant growth the previous year that was not reflected in the tally. The value of all-purpose land and land in commercial zones grew for the third consecutive year, with the margin of increase expanding for both.
With the rise in the number of foreign visitors to Japan, the demand for construction of stores and hotels has been increasing in not just major cities. Redevelopment is vigorous also in urban areas with an eye on the 2020 Olympics and Paralympics.
The growth in land prices based on such actual demand could brighten business prospects and bring about an effect of spurring a virtuous circle of attracting new investments and expanding consumption.
It is encouraging to see that the recovery in land prices has been spreading also to areas other than the three major metropolitan areas of Tokyo, Osaka and Nagoya.
The year-on-year rate of increase of residential land prices in the village of Hiezu, Tottori Prefecture, expanded to 2.2 percent from the 1.3 percent recorded the previous year. The village's population has soared due to meticulous assistance to child-rearing households, with the result that houses have been newly built one after another.
Commercial and industrial land prices in regional areas saw their first rise in as many as 26 years. Land prices turned upward in the city of Yamagata, where the opening of new stores has been conspicuous thanks to redevelopment, and in the city of Takamatsu, where hotels and restaurants have been thriving due to foreign visitors.
Beware speculative deals
Local governments and economic circles across the country are called on to compete to show the most ingenuity to bring back the bustle by taking advantage of regional characteristics.
The Niseko district of Hokkaido, which marked the biggest price increase for commercial and residential areas, saw a continued rush of development financed by foreign investment.
Innovative ideas to attract foreigners, including introducing advanced safety rules on ski slopes, have proved successful. This could serve as a model.
Steep land price increases in limited areas, including central Tokyo, will require a continued watch. In the case of the land where Yamano Music Co.'s main store in Ginza stands, whose calculated value is the highest in the country, the rate of increase has slackened, but its value still rose to 55 million yen per square meter -- larger than the peak during the bubble era.
Low-interest loans made available due to the Bank of Japan's ultra-easy monetary policy have been boosting real estate investment. The gap in interest rates between Japan and the United States has been expanding due to the U.S. interest rate hikes. As a result, not a few foreign investors are paying attention to Japan, where yen funds can be procured at relatively low cost.
The government and the Bank of Japan must not let down their guard against speculative transactions.
It is also a fact that land prices in many districts of regional areas show no signs of ceasing to fall. Drops continued in 52 percent of all the surveyed locations in regional areas. The average rate of land-price drops expanded in residential areas of Iwate, Nara and Toyama prefectures.
From a long-term perspective, it will become necessary to promote community-building in response to the decline in population based on such visions as constructing compact cities in which public facilities are concentrated in central urban areas.
(From The Yomiuri Shimbun, March 31, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
