Official Average Roadside Land Prices of Tokyo 2018

Poste date: Saturday, July 7, 2018

On July 2nd, the National Tax Agency released its annual average roadside land prices for 2018 (calculated from January 1st). The national average for the average roadside land price has risen by 0.7% since the previous year making this the 3rd consecutive year it has risen. The prefectural average for this year shows that out of 47 prefectures, 18 (including Tokyo, Osaka, Aichi) have experienced a rise in price far above that of the previous year (13 prefectures in 2017).

It has been observed that this trend is due to the demand for office space pushing up the land price in metropolitan districts. While domestic and overseas investment money for hotel development is pushing up the prices in some local areas that have many foreign travelers, other areas are experiencing an opposite effect (downward trend) in with the average of their land price. Tokyo has seen an increase of 4.0% (3.2% in 2017) in its prefectural average price marking the 5th consecutive year the price has increased.


When comparing the nationwide fluctuation of the prefectural land price average, Okinawa’s increase of 5.0% was the largest increase over the previous year, followed by Tokyo with an increase of 4.0% and Miyagi with an increase of 3.7%. Based off 10 consecutive years of records showing an increase in foreign travelers, it has been concluded that Okinawa’s average land price increase is in part due to its growing demand for hotels and resort developments. In Tokyo, the highest roadside land prices in each of its 47 neighborhoods that are covered by a local tax office have risen. A steady demand for office space and an increase in foreign visitors has helped Central Tokyo maintain its land prices. Based on growing residential demands and developments, the rising of land price is spreading to the suburbs in areas that are convenient for living and transportation such as Setagaya, Shinagawa, and Adachi.

For the past 33 years consecutively, the land in front of “Kyukyodo” on Ginza Chuo-Dori Street in Chuo ward has had the highest roadside land price in Tokyo. This year the land space in front of “Kyukyodo” was priced at 44,320,000Yen per square meter. This is the second consecutive year that the price per square meter of land has risen above the previous record of 3,650,000Yen (in 1992 during the bubble economy). This year, the price of land spaces in front of “Ginza Mitsukoshi” and “Ginza Place” have risen to match that of “Kyukyodo”.

The rate at which the land prices in Central Tokyo have been inflating has slowed down mostly due to the completion of large-scale redevelopment projects such as those in Ginza. However, continuous land price increases can still be seen in Shinjuku, Shibuya, and Aoyama. Many places throughout Tokyo are experiencing a decrease in the rate of land price inflation when compared to the previous year.

There is a growing in efforts among many companies for making a comfortable workspace based on strong corporate performance and government-led work style reform. These efforts have been spurred, in part, by the past and recent trends of the average roadside land price in Central Tokyo. It has been observed that office relocation and expansion demands are strong. Domestic and overseas investment money is continuously coming into the market. According to statistics provided by a private real estate company specializing in office rentals, the average rent per square meter in May for 5 wards in Central Tokyo (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya) was 20,019Yen. This value reflects the 53 month consecutive price increase and is the first time since July 2009 that the price has risen above 20,000Yen.

The average vacancy rate in the 5 Central Tokyo wards mentioned above is 2.68% which is far below the standard supply-demand balance ratio of 5%. It has been observed that upon a tenant’s vacancy, the vacant office space is occupied soon after by an existing tenant’s company as a floor expansion. According to Urban Research Institute Corporation, a research institute specializing in real estate, the amount of real estate purchasing and selling by stock-listed companies in 2017 (publicly disclosed information) is approximately 5 trillion yen. That is a 20% rise from 2016 and 3rd highest ever recorded. Urban Research Institute Corporation says that the purchasing and selling of large office buildings and rental apartments is actively taking place along with purchases by foreign investors, such Chinese real estate funds, are frequently seen in the market.

Some market participants believe that the recent inflation of the average roadside land price in Central Tokyo is based off of actual demand and not a bubble economy situation. It is also expected that the current level of investment willingness will drop in Central Tokyo where the land prices have risen too high and the rate of inflation has slowed down. They say that while the development of apartments becomes more active the land prices in suburbs will rise, especially in those areas that have easy access to transportation.

 

Highest Roadside Value in major Tokyo tax office in 2018

(Per square meter per 1000Yen, the rate rise in % shown in parentheses, in order by tax office)
Local tax office Roadside Name Roadside Value
1. Kyobashi 5-Chome, Ginza, Chuo-Ward
Ginza Chuo-Dori Street
44,320
(9.9)
2. Shinjuku 3-Chome, Shinjuku, Shinjuku-Ward
Shinjuku-Dori Street
27,600
(12.7)
3. Yotsuya 3-Chome, Shinjuku, Shinjuku-Ward
Shinjuku-Dori Street
25,600
(12.3)
4. Kojimachi 2-Chome, Marunouchi, Chiyoda-Ward
Daimyoukouji Street
25,120
(9.0)
5. Shibuya Udagawa-cho, Shibuya-Ward
Shibuya Station Side Dori Street
24,000
(11.1)
6. Nihonbashi 1-Chome, Yaesu, Chuo-Ward
Sotobori-Dori Street
18,480
(5.0)
7. Azabu 3-Chome, Kita-Aoyama, Minato-Ward
Aoyama-Dori Street
13,520
(15.8)
8. Shiba 2-Chome, Shimbashi, Minato-Ward
Shimbashi Station West-exit Square Dori Street
12,400
(9.2)
9. Toshima 1-Chome, Higashi-Ikebukuro
Toshima-Ward Green-Odori Steet
10,040
(11.8)
10. Tokyo, Ueno 4-Chome, Ueno, Taito-Ward
Chuo-Dori Street
7,660
(8.2)
(Source: 2018/07/04 NIKKEI Newspaper)

What is Average roadside land price?

The standard price of land per square meter facing major streets as of January 1- released by the National Tax Agency. The price is used as a standard for calculating inheritance taxes and gift taxes in Japan. The number of locations assessed for the Average roadside land price is greater than those for the standard land price that is announced by Ministry of Land, Infrastructure, Transport and Tourism. The average roadside land price also provides a more detailed picture of the actual market land prices. The average roadside land price is generally about 80% of the standard land price and is calculated using actual business transactions.

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