Market Trends

Residential Land Prices in Japan Inch Up Nationally in 2016: Masking Wide Disparities

By Jeff Wynkoop

For the first time since the 2008 Global Financial Crisis, the average price of Japanese residential land rose last year on a national basis. This is according to the Ministry of Land, Infrastructure, Transport and Tourism’s annual kouji jika survey.

Some may not find this surprising, given the negative interest rate environment and the expected and intended effects of Abenomics. However, year-on-year prices were only up 0.022%, an increase so insignificant that the MLIT announced on its website that prices were flat (横ばい).

From a bird’s eye view, growth in residential land prices in the main metropolitan areas is starting to push over the rate of deflation in Japanese regional land prices, but the pace of this change is slow.

The extreme bifurcation of Japanese land values continues, as desirable areas close to train stations and shopping venues continue to maintain or gain in price, offsetting the long-term decline in outlying metro area and regional land prices.

Greater Tokyo Metro Area

Residential land in the Greater Tokyo metropolitan area was up 0.7% in 2016, but collectively prices in Tokyo’s most central 23 wards were up 3%.

In wards such as Chiyoda-ku and Chuo-ku, prices were up 4.2%, but down from last year’s 4.6% growth in price, and in Shinagawa-ku and Meguro-ku, prices were up 2.8% compared to last year’s 2.9% increase.

For Tokyo’s central wards, growth in condo prices has skyrocketed over the last few years, but last year the total number of transactions was down as prices have risen to levels out of reach for most salarymen. As the number of new condo sales has started to decrease, generally, there is less competition among developers to acquire and develop sites for new condo buildings, and this seems to be gradually affecting local land prices.

Regional Cities: Sapporo, Sendai, Hiroshima, Fukuoka

Outside of the biggest metropolitan areas, residential land prices were down 0.4% year on year, which is less of a decrease than last year’s 0.7% drop, but still represents the 25th consecutive year that prices were down.

The four regional cities of Sapporo, Sendai, Hiroshima, and Fukuoka, however, are the silver lining to this dark cloud. Not only have residential land prices in these four cities shown positive growth since 2014, the rate of growth in 2016 (2.8%) was 0.5% higher than in 2015.

Sendai exhibited especially strong price growth in 2016 at 4%. In December 2015, the new Tozai subway line in Sendai started operating, and demand for land around stations for the new train line has been vigorous.

Fukuoka was up 3.5%, due at least in part to Fukuoka’s growing population, and fueled as well as by the recent redevelopments near the main Fukuoka train station.  

Osaka, Kobe and Kyoto

Central Osaka land prices also grew at a relatively high rate last year. Although the Greater Osaka metropolitan area had 0% growth, the six central wards of Osaka grew 3.4%.

Residential land prices in the eastern four wards of Kobe grew 1.8%, and the central five wards of Kyoto were up 1.6%.

The rate of growth in Osaka and Kyoto were higher than last year as well.

Condominium Market in Osaka and Kyoto

Compared to Tokyo, condo prices in central Osaka have grown much more slowly over the last few years, and the total volume of sales of new condos remained strong in 2016. There are many new condo buildings in Fukushima-ku and other central Osaka wards, and this supply is chasing the demand for more centrally-located residences near Umeda and downtown Osaka.

In Kyoto, over the last few years there have been many new luxury condo buildings marketing their centrally-located and expensive properties around town, which seems to have influenced how potential buyers (and developers) feel about the market.


The Greater Nagoya metropolitan area was up 0.6% in 2016, and Nagoya City was up 1.2%. Nevertheless, there are places in the Nagoya area that exhibited higher growth, for instance Toyota City (2.7%) and Nagakute City (3.1%). Not only have these places benefitted from a feeling of relative value vis-à-vis price levels in Nagoya City, in Nagakute City there is a new Aeon mall and a new Ikea store that is stimulating local housing demand.

Commercial Real Estate Values Affecting Residential

An important factor influencing residential land prices is the continuing growth in Japanese commercial real estate values. For example, in Tokyo commercial real estate was up 3.1% last year, which is 0.4% higher growth than the year before.

Commercial land in Tokyo’s central wards was up 6.8%, and in places where redevelopments are booming such as in Ginza, there are areas that were up 29% in price compared to 2015. It is interesting to note however that the five commercial land areas that had the most price growth last year are all in Osaka City.

Further, nationally prices are still only 80% of the 2008 peak for Japanese commercial real estate values.

Photo Credit: via Flickr