Japan’s average land prices are up for the first time in 27 years. Back then, investor speculation fueled the gains. These days, it’s the rising number of foreign tourists.
Government data compiled from prefectural surveys show an average increase of 0.1 percent from a year earlier as of July 1st.
The figures are up in both smaller municipalities and big cities, all on the back of demand for new hotels and shops.
A hotel opened in Tokyo’s Nihonbashi area last week. It has a traditional atmosphere and features a Japanese-style spa. The receptionists speak a total of 7 different languages.
Yumi Sakai of Mitsui Fudosan said, “Demand from foreign and Japanese customers is expected to increase. We want to develop more hotels, if good business opportunities arise.”
In Tokyo, new hotels are popping up one after another ahead of the 2020 Olympic and Paralympic Games. The new data reveal that commercial land prices in the city’s 23 wards rose by more than 7 percent.
The nation’s priciest plot lies in Tokyo’s Chuo Ward. It’s occupied by the Meiji-ya Ginza Building. Anyone looking to buy would need to pay about 373,000 dollars per square meter. That’s a record high driven by demand for space to open duty-free shops and other retail outlets.
Tourism is also pushing up prices in greener pastures. On the island of Nao-shima in Kagawa Prefecture, they rose for the first time in a quarter-century.
The island touts itself as a modern art destination. About half-a-million people visit each year, mostly to see works such as this, by Yayoi Kusama.
As tourism booms, more and more people are moving to the island to set up shop.
Elsewhere, some foreigners are less interested in tourism. Instead, they’re seeking their own slice of Japan’s real estate pie.
In Osaka, a Chinese man bought a one-room condo, slapping down about 53,000 dollars in cash.
He also bought a flat one year ago and is eyeing more to earn him a steady income.
He said, “I’m an ordinary person, not a millionaire.
For regular people, Osaka is the most practical place to make an investment.”
The latest data show that commercial land prices rose in 40 percent of Japan’s prefectures. Yet in others, they continued to fall. Some experts are sounding the alarm.
Tomohiko Sawayanagi of Jones Lang LaSalle said, “I expect land price gaps to widen between areas with gains and those with declines. Future prices could hinge on whether localities can attract people from overseas.”
No man’s land or land of opportunity. As tourism booms, it seems the stakes are only getting higher.