Foreign Funds Bought 373 Hectares of Forestry in Japan

About 98,000 hectares of farming land is sitting idle across the country as well

Farmland with rice paddies in the dusk
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The Ministry of Agriculture, Forestry and Fishery (MAFF) in Japan revealed some facts about the land status across Japan. Forestry of Hokkaido seems to me especially popular with foreigners, while farmlands stay unused and idle as the result of the aging of the Japanese population, and farmers in particular. Let us take a closer look at the current state of things with land available for sale in Japan.

Forestry

In 2018, foreigners (or rather foreign funds) made 30 acquisition totaling at 373 hectares of forestry in seven prefectures of Japan. Hokkaido leads in popularity. The largest acquisition was made by an individual from Hong Kong who bought 34 hectares of forestry in Shosambetsu, Tomamae for asset holding.

Second in line came acquisitions in vicinities of Niseko ski resorts that became an especially popular destination among foreigners during recent years.There were six transactions in Niseko in total with four transactions made to buyers from Hong Kong and two more to buyers from the British Virgin Islands. Rankoshi that is nearby Niseko accounts for seven transactions to foreigners, with six of them coming from Australia, Thailand, Canada, Macao, and the Philippines.

The largest acquisition was 34 hectares of forestry in Shosambwtsu, Tomamae for asset holding.

Beside Hokkaido and its resorts, foreign funds were investing in land for solar farms development. For example, 258 hectares in Hyogo Prefecture went to an American fund aiming to build a solar farm there.

During 2006-2018, 2,076 hectares of forestry was sold to foreigners. While there are no restrictions on forestry ownership by foreigners in Japan, since 2012, the Forest Act prescribes to report about sales of forestry land to foreigners in advance.

Idle farmlands in Japan

MAFF also reports about 97,814 hectares of farmlands in Japan that sits unused as of 2018. This is 700 hectares less than the year before, however, it is also the third time in a row that the amount of idle farmland in Japan goes up to almost 100,000 hectares. It looks like the situation will stay this way since farmers keep on aging while new generation shows little to none interest in agriculture.

About 94% of idle land is not cultivated, and the remaining part cannot be used because of property conditions. Fukushima is leading in the amount of unused farmland having 7,397 hectares of it. Even Tokyo Metropolitan Area accounts for 340 hectares of idle farmland.

Japan tries to legally prevent the farmland abandonment. The Agricultural Land Act prescribes local agricultural committees to look into the property and find out if the owner has any plans for farming or leasing the property to someone who will farm the land. If this is not the case, the committee will issue an advice to the owner regarding the land. If the owner fails to follow it and does not cultivate the land, the management rights might be passed to the land management organization.

Interestingly, those farmlands that received an advice are taxed at higher rates: annual property taxes can get the bill of 1.8 times higher compared to the regular one. In 2019, MAFF issued 481 such advice orders covering 93 hectares.

Is there an opportunity in Japanese farmland?

The prices keep on falling and fields stay unused as the number of farmers declines and no buyers show interest in cultivating the land. Since 2018 the average price of the rice field went down 1.4%, while other cultivated land prices decreased by 1%.

On the one hand, Japan tries hard to preserve agricultural lands and stimulate interest in farming with generous donations. On the other, the cultivation of rice fields is hard work with little profitability margins and high taxes. As Japan embraces foreign food culture and consumes less rice than before along with Trans-Pacific Partnership removing the import barriers, keeping farmlands idle might not be the best solution.

Can this land be used for non-agricultural purposes? Yes. However, it is a tricky process. First, deals with the farmland must be done with the permission of the local agricultural committee (when planning to cultivate it). If the land will not be used for agricultural purposes, then one must get the permission of the prefectural governor to perform other types of activities on the farmlands.

Thus, if you are looking for land plots in Japan, there is plenty to look into in all the regions of the country. Yet, remember to consult the professionals about the terms of acquisitions and the following taxation to avoid problems with authorities.

"Otsumami" - a bite size snack:

Investing in forestry or farmland in Japan is a bit tricky, but it surely holds a lot of opportunities.

What do you think?

Veteran

Written by Viktoriya Kuzina

Likes business in Japan and helping entrepreneurs become successful.

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