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The average land prices of Japan has rose for the first time in 27 years in the year to July 1 as an influx of foreign tourists boosted demand for hotel properties and shops, according to a government survey.
The survey showed on Tuesday that the commercial land prices rose for a second straight year while the pace of decline in residential land prices slowed for a ninth consecutive year.
The land ministry’s annual survey also said that land prices are a key indicator to gauge how much Japan asset prices have recovered after decades of deflation.
“Land prices are recovering steadily and gradually,” a ministry official said.
He said that recovery in wages and employment as well as low interest rates aided the recovery, reports Reuters.
The survey found that nationwide average land prices grew 0.1 per cent in the year to July 1, the first increase since 1991, when a real estate bubble burst.
Commercial land prices rose 1.1 per cent, after a 0.5 per cent increase in the previous year, led by a tourism boom and redevelopment of urban areas.
Strong corporate earnings increased demand for offices, the survey found.
Residential land prices slipped 0.3 per cent, it showed, compared with the previous year’s 0.6 per cent decline.
Industrial land prices rose 0.5 per cent, also the first increase in 27 years, on demand for large-scale logistics facilities.
Average land prices in Tokyo, Osaka and Nagoya rose 4.2 per cent, accelerating from 3.5 per cent the prior year, it showed.
The government has a goal of 40 million foreign visitors by 2020, when Japan hosts the Summer Olympic Games. The number rose 19.3 per cent to a record 28.7 million in 2017.
Among commercial sites, land prices in the town of Kutchan, a part of the popular Niseko ski resort on the northern island of Hokkaido, rose the most, jumping 45.2 per cent to 45,000 yen per square meter.
Demand for accommodation and resort facilities spurred the rise, the survey found.
Land prices of another Kutchan site had the biggest gain among all residential areas, surging 33.3 per cent to 36,000 yen per square meter.
Tokyo’s Ginza luxury shopping district remained the most expensive location, with 41.9 million yen per square meter, up 7.7 per cent from a year earlier.
The ministry surveyed about 21,600 locations nationwide. The survey is used as a standard for land transactions, together with another ministry one published in March.