Land in Japan continues to grow more expensive for the 4rth year in a row. The upcoming Olympics in Tokyo in 2020 and the surge in tourism drive demand for property in major cities and popular resort areas. The economy is also on the rise with 2.1% growth in the 1st quarter of 2019 compared to the same quarter a year earlier. Some places reached or even surpassed the prices that Japan saw during the overheated “bubble economy” in the 1980s.
Current Situation
The National Tax Office has published its yearly survey on land and property prices. It includes calculations of inheritance and gift taxes for 2019 and covers nearly 329,000 sites. The price in Japan rose by 1.3% on average. They went up in 19 out of 47 prefectures, including also non-metropolitan areas. The leaders here are Sakae district in Nagoya, Fukuoka that is the startup hub of Japan, and Toyama. It has happened for the 1st time in 27 years.
Currently, the most expensive plots are in Ginza in front of the Kyukyodo stationery store costing JPY 45.6 mln (USD 422,000) per square meter.
Currently, the most expensive plots are in Ginza in front of the Kyukyodo stationery store: JPY 45.6 mln (or about USD 422,000) per square meter. Ginza is a popular shopping place that drives a lot of locals and tourists there, keeping the prices the highest in the country for the 34th year straight. Moreover, this is the third time that this plot costs more than JPY 36.5 mln, the highest price it had during the heated period of the “bubble economy” of the 1980s.
Prices for existing condominiums in Tokyo went up 3.04% compared to the 1st quarter of 2019. The prices for new condominiums also rose marking a 3.9% increase year-over-year for the same quarter.
Prefecture-wise, Okinawa leads the charts with 8.3% increase due to the popularity of its capital city of Naha as a tourist destination. Even the Tokyo metropolitan area with its 23 wards could not keep up with its 4.9% increase. (Land prices in one ward even went down.) Sendai is closing the top-3 list of most expensive places having 4.4% price growth thanks to development projects around the Sendai Station.
As for the site logging, another tourist destination took the lead. Prices on Niseko Kogen Hirafusen street in the Kutchan on Hokkaido, the heart of Japanese ski resorts, jumped 50% as the place became extremely popular among foreigners for its exceptional powder snow, and people are looking for accommodation there throughout the year. The chief of the Kutchan chamber of commerce Kazunori Abe believes that developers are making investments in the area because soon it will be connected to the shinkansen bullet train line. However, these investments are often beyond the capabilities of domestic developers.
Future Property Price Trends
Takeshi Ide, the senior chief analyst from Tokyo Kantei, states that condominium process in Tokyo went up because the land price did. his trend will probably not stop after the Tokyo Olympics since Japan will host a World Exposition in Osaka in 2025. There will also be a maglev train connection between Tokyo and Nagoya scheduled for opening in 2027. Although this trend will not stop any time soon, Mr. Ide believes that it will slow down at some point because current land prices in Japan are unaffordable for ordinary people.
"Otsumami" - a bite size snack:
The price growth will eventually slow down.
