'Worst for land prices is over' in Japan
TOKYO — Commercial land prices in Tokyo rose last year for the first time in more than a decade, while nationwide land prices fell at a slower rate amid a rebound in the world's second-largest economy, the government said yesterday.
In the Tokyo area, commercial land prices rose 1 percent in 2005, according to data released by the Ministry of Land, Infrastructure and Transport. Prices in Osaka and Nagoya, two other major cities, also posted their first gains since 1990.
One reason for the rising commercial land prices in Japan's biggest cities was an increase in the number of large-scale office and shopping developments in prominent locations that are expected to attract a lot of people, the ministry said.
Overall land prices, meanwhile, fell an average of 2.8 percent last year, dropping for the 15th straight year. But the rate of decline slowed for the third straight year, suggesting that the drop in Japan's real estate market is bottoming out.
Japan has been mounting an economic recovery amid increased consumer spending, declining joblessness and overall economic growth.
The country's central bank, the Bank of Japan, recently abandoned its super-easy monetary policy — a move it said it would make only after it was clear the economy had escaped from deflation, or the state of continually falling prices.
"What's clear now is the worst for land prices is over, but real estate is and will continue to be a location-related business with some areas more attractive than others," said Jon Tanaka, director at RREEF, the real estate investment arm of Deutsche Bank.
Residential land prices across Japan fell an average 2.7 percent in 2005, slower than the 4.6 percent drop in 2004 and 5.7 percent decline in 2003, the report showed. Overall commercial land prices also fell an average 2.7 percent last year, compared with a 5.6 percent decline in 2004 and a 7.4 percent decrease in 2003.
The ministry's report on land prices per square meter is measured as of Jan. 1 and is compiled annually. It serves as a benchmark for public and private land transactions and for government assessment of inheritance and property taxes.
The latest report surveyed prices at 31,230 locations nationwide.