Land prices rose across Japan for a second straight year, with values in rural residential areas ending a three-decade decline, buoyed by low interest rates, factory construction and a tourism rebound.
(Bloomberg) — Land prices rose across Japan for a second straight year, with values in rural residential areas ending a three-decade decline, buoyed by low interest rates, factory construction and a tourism rebound.
Average prices nationwide climbed 1% in the year to July 1, accelerating from a 0.3% increase a year earlier, a report by the Ministry of Land, Infrastructure, Transport and Tourism showed. Residential land values gained 0.7%, while commercial sites jumped 1.5%.
A recovery from the bursting of a property bubble in the early 1990s is spreading from major cities to areas like the southwestern prefecture of Kumamoto, where chipmaking giant Taiwan Semiconductor Manufacturing Corp. is building a factory. Global real estate investors are attracted to Japan’s low borrowing costs, and some have have been plowing money into hotels as travelers return to the country.
“Relatively low interest rates in Japan compared to other countries are driving foreign investor appetite for Japanese real estate and will continue to play a role in driving up land prices,” Mori Trust Co. Chief Executive Officer Miwako Date said in a statement. “In regional areas, land prices could continue increasing with the boom in domestic and inbound tourism.”
In rural areas, average residential land prices rose 0.1%, the first increase in 31 years. Regions also saw values of commercial locations rise for the first time in four years.
The biggest gains in land for housing were seen in Chitose, a city in Hokkaido prefecture where government-backed startup Rapidus Corp. has begun building a cutting-edge chip foundry. An area near the train station saw a surge of 31%.
Increases in commercial land values were led by Otsu-cho in Kumamoto, near where TSMC is building a chip plant. The location saw commercial land prices jump 32%.
Building semiconductor factories requires a large number of human resources, and many people are expected to settle in the areas after the plants go online. Meanwhile, Japan has been enjoying a revival in inbound tourism since it removed pandemic-era border restrictions late last year.
Land prices jumped in parts of Okinawa Prefecture and Hakuba Village in Nagano Prefecture, spots that are benefiting from the travel recovery.
(Updates with comment from Mori Trust CEO in the fourth paragraph)
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