File photo. City skyline and harbour are seen at sunrise from a quarantine bus window during the Tokyo 2020 Olympic Games in Tokyo, Japan on Jul 24, 2021. (Photo: Reuters/Maxim Shemetov)
TOKYO: Japanese land prices rebounded in 2021, after a drop in the previous year, as the property market recovered from the COVID-19 pandemic’s hit to the economy, a government survey showed.
While Japan’s prolonged coronavirus-led border control kept demand for tourism-reliant areas stagnant, the rise of the stay-at-home lifestyle helped housing and logistics facility land prices recover, the survey found.
Overall, average land prices gained 0.6 per cent in 2021, data from Japan’s land ministry showed on Tuesday (Mar 22), following a 0.5 per cent drop in 2020, which marked the first decline in six years.
Residential land prices rose 0.5 per cent in 2021 after a 0.4 per cent drop in the previous year. A recovery in consumer sentiment and persistently low interest rates contributed to the first rise in two years, a land ministry official said in a media briefing.
Japan’s real gross domestic product grew 1.6 per cent in 2021 after a 4.5 per cent contraction in 2020, as the Bank of Japan kept interest rates very low.
Residential land prices in four major regional cities — Sapporo, Sendai, Hiroshima and Fukuoka — rose 5.8 per cent on growing demand for condominiums in undervalued suburban areas, the official said. Tokyo area’s housing land prices increased 0.6 per cent.
The figures, however, were modest compared to other advanced economies such as the United States, where housing cost’s double-digit growth is among the inflationary pressures tormenting policymakers.
Japan’s commercial land prices increased 0.4 per cent in 2021. The reading was not strong enough to cover the 0.8 per cent fall in the previous year, which reflected weaker property demand from tourist-oriented hotels, shops and restaurants due to a strict border shutdown.
The number of foreign visitors to the country last year was the lowest since 1964, according to Japan National Tourism Organisation.
Osaka, Japan’s second-largest metropolitan area and a popular tourist destination, saw its commercial property prices remain flat in 2021, while Tokyo’s grew 0.7 per cent.
“Osaka’s commercial lands had highly depended on foreign inbound (tourists), so their disappearance left a huge impact,” the official said, adding the blow to Osaka was deeper than other tourist spots such as Kyoto, where returning domestic visitors have filled in the gap caused by border control.
Meanwhile, nationwide prices of industrial lands for plants and warehouses rose 2 per cent in 2021, marking the sixth year of growth, following a 0.8 per cent gain in the previous year.
Demand for large logistic facilities near expressway exits are driving up prices due to surging e-commerce volumes, said the official.