Post: Monday October 3, 2016
Standard Land Price for Tokyo in 2016 sees a 4 year consecutive increase; redevelopment projects and office building constructions are active and price rise is increasing in commercial area.
On Sept.20 the Ministry of Land, Infrastructure, Transport and Tourism announced the standard land prices for the designated points nationwide. On the same day Tokyo Metropolitan Government also announced the land prices in Tokyo. The standard land price (*later explained in more detail) is the price of land per 1 square meter for each selected point as of July 1st every year.
The average increase in price for land (for all usage) in Tokyo is +2.5% from last year. This is a 4 year consecutive increase and is 0.5 points higher than the last year's increase.
Increase of foreign tourists and various redevelopment projects in preparation for Olympic Games in 2020 are considered as the background of the price increase.
The average price rise in Tokyo is +4.1% and is 0.8% higher than last year’s increase. The average price rise in the 23 wards of Tokyo is +4.9% which is also higher than last year’s 4.0% increase from the previous year.
The highest price increase has been marked at 27.1% at 6-chome 8-3, Ginza, Chuo-ku; top 5 price rise rankings have been occupied by Ginza areas with luxury shops; the average increase of Chuo-ku has also marked the increase of 10.4% which is the highest in the 23 wards of Tokyo. The opening of new hotels is continuing in Ginza area for accommodating the increasing foreign tourists. In Minato-ku and Shibuya-ku with luxury shops high increase rate of more than 6% has been recorded. The other high increase rates have been marked in the area of Shinjuku with many foreign tourists; and along Shintora-Dori in the area of Toranomon with various on-going redevelopment projects; 7.3% increase has been marked in Chiyoda-ku where office relocation demands are strong and large scale redevelopment works are going on in Marunouchi and Otemachi.
The highest price point is Meijiya Ginza Building at 2-6-7, Ginza, Chuo-ku which was the same as last year. The price, ¥33,000,000 per square meter (¥26,400,000 in 2015) is more than the price in the year 2008 before the Lehman shock (¥30,000,000), and is becoming close to the peak price in the bubble economy period (¥38,000,000).
The average price increase in Tokyo is +1.5% which is 0.2% increase from the last year. The highest increase by the municipality has been marked in Chiyoda-ku by 10.0%, and followed by Meguro-ku and Chuo-ku. Tokyo Metropolitan Government's finance department discloses the observation that the high land price areas is becoming higher and the price rise is spreading to the outskirts.
The average standard land prices for residential area in Tokyo has shown 4 year consecutive increase, but also showing variation in the increase rate in the various areas.
The price increase is slowing down in Chuo-ku and Minato-ku while the price is rising more than the last year in Meguro-ku and the outskirts in Tokyo. A private real estate research company explains about the recent market, “The residence demands in Tokyo are composed of the dual structure that are the actual demands and the demands by the investment purposes. But the recent high property price makes the actual demands harder to buy; the rising Yen and high market price results in lower profitability and losing attractiveness of the properties in Tokyo among both domestic and international investors.” In response to these market situations, the major real estate companies are planning to build more compact-sized condominiums in Central Tokyo for higher profitability while they are going to build more housings in the outskirts for families with a reasonable price.
There is an observation that the recent up-ward trends of the real estate market led by the investment money and consumption by foreign visitors is peaking out. According to a private research institute, the amount of the real estate transaction during January to August this year has decreased 20% compared to the amount of the same period in the last year. It is the first decrease since the second Abe Administration started at the end of the year 2012.
It is also observed that domestic and international real estate companies are now reluctant to buy new properties. It is due to the background that the price went up too high in Central Tokyo and it is hard to make profit in that situation. A higher yen trend is becoming stronger and the sense of undervalued real estate in Japan is fading away in terms of international investors. There is another trend that the price increase is slowing down in Central Tokyo.
Foreign tourists are still increasing, but there is the statistics that the expenditure per tourist decreased in nearly 10% during April to June this year compared with the same period last year. The competition for real estate properties which counts on the expansion of consumption by foreign visitors may not continue forever.
In spite of these observations on a recent market trend, there is a forecast that the land prices will be moderately going up by the year 2020 Olympic Games.
Ranking by Amount of Price Increase Top 5 points (23 Wards)
|No.||Address of Price Point||Price (¥1,000/m2)||Fluctuation (%)|
|1||6-8-3, Ginza, Chuo-ku||22,500||27.1|
|2||2-6-7, Ginza, Chuo-ku||33,000||25.0|
|3||3-2-9, Ginza, Chuo-ku||10,500||20.0|
|4||7-11-14, Ginza, Chuo-ku||5,900||15.7|
|5||2-12-14, Ginza, Chuo-ku||5,870||15.1|
|No.||Address of Price Point||Price (¥1,000/m2)||Fluctuation (%)|
|1||6-1, Rokubancho, Chiyoda-ku||3,630||11.3|
|2||9-4, Sanbancho, Chiyoda-ku||2,650||11.3|
|3||12-10, Nibancho, Chiyoda-ku||2,020||10.4|
|4||2-18-26, Jiyugaoka, Meguro-ku||1,010||8.5|
|5||5-13-1, Roppongi, Minato-ku||1,960||7.1|
(Source: Nihon Keizai Shimbun *Round off to one decimal place)
* Reference source: Nihon Keizai Shimbun
*What is Standard Land Price?
The standard land price stro is the price of land per 1 square meter that is evaluated for each selected point of land as of July 1st every year. The Prefectural Governments are responsible for its survey and Ministry of Land, Infrastructure, Transport and Tourism releases the nationwide results. It is one of the two major representative data that shows the fluctuation of land price along with the official land price that is announced on Jan.1 every year. The official land price is mostly intended within city planning area whereas the standard land price is intended also for residential area, commercial area, industrial area, and forest land outside of city planning area.
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