Japanese Property Market Quarterly Review, Third Quarter 2016-Inbound Demand Peaks Out Affecting Retail Stores and Hotels-

mamoru masumiya

2.Land Prices

Regarding “Kijun Chika,” national land prices as of July 1, 2016 by MLIT, the average commercial land price remained unchanged y-o-y for the first time since 2007 (Chart-8). Those in the three major metropolitan areas of Tokyo, Osaka and Nagoya accelerated, appreciating by 2.9% y-o-y from 2.3% in the previous year, and those in local cities alleviated, declining by 1.1% y-o-y from 1.6% in the previous year.

However, regarding residential and industrial land, land price appreciations in the three metropolitan areas could not compensate for decline in local cities. Thus, decline continued in the average national land price for all usage at 0.6% y-o-y.

Chart-8 “Kijun Chika” Commercial Land Prices

Despite the improving y-o-y numbers for land prices, q-o-q numbers have already shown a leveling off. According to Nomura Real Estate Urban Net, the average residential land price in the Tokyo metropolitan area was largely unchanged, posting 0.1% q-o-q growth (Chart-9). Though residential land prices in the Tokyo 23 wards maintained appreciation of 0.5% q-o-q, those in the surrounding prefectures; Kanagawa, Saitama and Chiba, have sidelined, and those in greater Tokyo even declined by 0.5% y-o-y.

Among commercial land prices in the center of Tokyo, those in Ginza have noticeably appreciated, recovering to the level seen in 2008 (Chart-10). However, those in Osaka have remained far from the peak in 2007 (Chart-11).

Chart-9 Tokyo Metropolitan Area Residential Land Prices/Chart-10 Tokyo Commercial Land Prices

Chart-11 Osaka and Kobe Commercial Land Prices