Tokyo: Funds are returning to real estate investment in anticipation of a favourable impact of the Abenomics economic policy put forth by Prime Minister Shinzo Abe.
This is evident in findings of a nationwide survey of posted land prices as of January 1 this year, which was released by the Land, Infrastructure, Transport and Tourism Ministry on Thursday.
The survey clearly shows the downtrend in land prices is coming to an end across the country. Factors behind this are an increase in the demand for condominiums in major urban areas and brisk redevelopment of large-scale commercial facilities.
Another contributing factor is the progress of reconstruction projects in areas devastated by the March 11, 2011, Great East Japan Earthquake and tsunami, such as moving houses to higher ground. Despite high expectations in urban areas, it is uncertain whether land prices will turn upward in regional areas where there is concern about the drop in population and the possibility of a major disaster in the future.
The national average posted land price as of January 1 fell 1.6 per cent in residential areas and 2.1 per cent in commercial areas from a year before. This marked a drop in the year-on-year decline rates compared with 2012 when the comparative figures were 2.3 per cent in residential areas and 3.1 per cent in commercial areas.
The all-inclusive average land price, including land for industrial and other uses, fell 1.8 per cent from a year before, which saw a decline of 2.6 per cent.
The price represented a year-on-year decrease for five years in a row in each category, but the rate of decline shrank for the third straight year. Of 24,735 land lots where prices can be compared with last year's, prices increased in 2,008 spots, about 3.8 times the figure recorded a year before.
Eight of the top 10 spots in terms of price increase rate in residential land were in Iwate, Miyagi and Fukushima prefectures, which were hard-hit by the March 11, 2011, disaster.
Sanyo Housing Nagoya, a real estate development firm in Aichi Prefecture, is enjoying strong sales of newly built homes. "Housing purchases by young couples aged around 30 have been increasing," said an employee of the firm's Kariya branch office.
The average posted residential land price in Aichi Prefecture rose 0.1 per cent over the previous year, moving into positive growth along with Miyagi Prefecture, which saw a 1.4 per cent improvement. While Miyagi Prefecture's turnaround was spurred by reconstruction demand, that of Aichi is attributable to the brisk housing purchases by people working for Toyota and other automotive companies.
Land prices went up 1.1 per cent in Toyota, where the company's head office is located. Prices soared 3.7 per cent and 3.3 per cent, respectively, in Anjo and Kariya — areas within commuting distance of Toyota's head office. These compare with two per cent growth recorded a year before.