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Official Land Prices of Japan in 2016 – Large increase of price rise in Tokyo Commercial and Residential Areas Japanese of this page

Post: Wednesday March 30, 2016

On March 22th the Ministry of Land, Infrastructure, Transport and Tourism announced the official land prices as of January 1st, 2016. The data points to a 0.1% increase to the nationwide price average (for all land usage) which is a turn around to the first increase in 8 years since 2008. A brief overview shows that a rise in the land price in the central business districts of the major cities has influenced the price of other major cities to go up.

The prices in residential areas nationwide dropped 0.2% on average continuing the positive trend of a decreasing drop rate for the 6th consecutive year. The trend shows that real estate investments have increased due to the large scale monetary easing by Bank of Japan and an inflow of overseas money due to the weak yen. As a result, real estate transactions continue to be very active around the major cities.

Official land price in 2016

In Tokyo, the rate of rising prices has increased for 3 consecutive years in the residential, commercial, and industrial areas and therefore the same increase in the price rise can be seen in the average of all combined areas. The commercial areas in Tokyo have shown the 2nd largest price increase by prefectural comparison, just falling under the first place Osaka where the increase has jumped up from the last year. The prices of residential areas in Tokyo also have continued with a small but steady increase.

The commercial areas in Tokyo have had an increase of 4.1% which is the 2nd largest increase by prefectural comparison, just short of the 4.2% increase seen in Osaka, and is significantly higher by 1.2% compared to the 2.9% rise of last year. In the 23 wards of Tokyo, prices rose by 4.8%, which is also a significant 1.4% increase from the 3.4% rise of last year.

The highest price increases from the last year within the 23 wards is a 9.6% (7.4% last year) increase in Chuo-ku, followed by 7.6% (5.6%) in Minato-ku and 7.4% (5.7%) in Chiyoda-ku. This year’s official land price ranking of commercial properties below shows that all of the 10 highest prices are in Tokyo. Some of the outstanding highlights that represent the recent land price increases in Tokyo are: the Ginza area, always crowded with many foreign visitors has marked the highest land price point in Japan for 40 million yen per 1 sqm which is more than the price level during the bubble economy period; Toranomon - Shinbashi area and the area around Shibuya Station where large scale redevelopment works are going on; and Marunouchi – Otemachi area where office space is in constant demand.

The background to these trends are 1) the increase in demand for store properties and the resulting increase in rental prices due to the economic recovery and an increase of foreign tourists, 2) decreasing office vacancies and an increase in rental prices due to active office relocation demand, 3) active large scale redevelopment projects and infrastructure improvement works in the central Tokyo areas, increasing the land prices in those areas.

In the residential areas, the price increase is 1.6% this year compared to an increase of 1.3% last year, while the Tokyo 23 wards average of 2.8%, is a significant 0.9% increase from the 1.9% increase of last year. The highest increase from the last year within the 23 wards has been marked as 9.7% (6.4% last year) in Chuo-ku, followed by 9.4% (6.3%) in Chiyoda-ku and 6.9% (2.9%) in Meguro-ku. This year’s official land price ranking of residential properties below shows that all of the 5 highest prices have resulted in properties in Tokyo. The highest price point in Japan is at “6-1, Rokubancho” in Chiyoda-ku which is the same as the last year and marked for 3.48 million yen per 1 sqm. The 10 highest price points in Japan are all in Central Tokyo and consist of 5 points each in Chiyoda-ku and Minato-ku.

The background of the trends are 1) steady demand in Central Tokyo due to continuous business confidence, low interest rate and expansion of tax reduction for home loans, house acquisition support policy and a system the Japanese government introduced, including “Sumai Kyufukin (literally means House Benefit)” and Tax-free measures for gifts, capital transfer or donations received for house acquisition, 2) strong demand for luxurious condominiums in central Tokyo by wealthy class and foreign investors, due to tax-saving effect, weak yen, and high stock prices, 3) large scale condominiums selling well in the bay area due to the expectation of infrastructure improvements towards the Olympic Games which will be held in 2020 and in the Shinagawa area where a new station will be constructed for the Linear Chuo Shinkansen, and consequently the land prices are going up in these areas.

2016 Official Land Price Ranking by Property Nationwide

(Commercial Properties)
  Address (all 10are in Tokyo) JPY/sq.m Fluctuation
(% from 2015)
1 4-5-6, Ginza, Chuo-ku
(Main store of Yamano Music Co.)
40,100,000 18.6
2 5-3-1, Ginza, Chuo-ku
(Ginza Sony Building)
34,700,000 18.0
3 2-4-1, Marunouchi, Chiyoda-ku
(Marunouchi Building)
32,800,000 7.2
4 7-9-19, Ginza, Chuo-ku
(ZARA)
28,800,000 18.5
5 2-6-7, Ginza, Chuo-ku
(Meidi-ya Ginza Building)
28,700,000 18.1
6 3-807-1, Shinjuku, Shinjuku-ku 26,300,000 15.4
7 3-30-11, Shinjuku, Shinjuku-ku
(Shinjuku Takano Building No.2)
25,500,000 15.9
8 2-2-1, Otemachi, Chiyoda-ku
(Shin Otemachi Building)
25,100,000 7.3
9 3-3-1, Marunouchi, Chiyoda-ku
(Shin-Tokyo Building)
23,500,000 7.3
9 1-7-2, Otemachi, Chiyoda-ku
(Tokyo Sankei Building)
23,500,000 7.3
(Source: 2016/03/23 NIKKEI Newspaper)

2016 Official Land Price Ranking by Property Nationwide

(Residential Properties)
  Address (all 5 are in Tokyo) JPY/sq.m Fluctuation
(% from 2015)
1 6-1, Rokubancho, Chiyoda-ku 3,480,000 10.5
2 1-14-11, Akasaka, Minato-ku 3,350,000 12.8
3 6-25, Sanbancho, Chiyoda-ku 2,670,000 9.9
4 16-3, Ichibancho, Chiyoda-ku 2,610,000 -
5 2-3-25, Kudan-kita, Chiyoda-ku 2,520,000 10.5
(Source: 2016/03/23 NIKKEI Newspaper)
What is Official Land Price?

Based on the Public Notice of Land Prices Act, the Land Appraisal Committee of the Ministry of Land, Infrastructure, Transport and Tourism selects the points of land, evaluates the price of each point of land as of January 1st every year, and announce it as a benchmark price for land transactions. The total selected points of land in Tokyo as of year 2016 are 2,531 points (369 points increase from last year's); the number of points per each purpose are 1,673 points for residential areas, 823 points for commercial areas, and 35 points for industrial areas respectively.

 

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