Market Trends

Tokyo neighborhoods where residential land prices are on the rise: MLIT LOOK 2018 Q2

Residential land prices in bell weather central Tokyo neighborhoods have chalked up marked annual gains in the latest government land survey. This is according to Japan’s Ministry of of Land, Infrastructure, Transport and Tourism (MLIT) in its Q2 (April 1 to July 1) 2018 LOOK Report, which surveys land price trends for intensively used commercial and residential land in major cities throughout Japan.

Importance of the LOOK Report

The LOOK Report is closely watched as a lagging indicator of land price trends. The MLIT surveys 100 locations throughout the country: 43 in Tokyo, 25 in Osaka, 9 in Nagoya, and 23 in regional cities. Thirty two (32) locations are residential and 68 are commercial.

Residential land prices in Tokyo turning a corner?

One of the important takeaways from the Q2 report is that several key central Tokyo neighborhoods were assessed as having increased in land value on a year-on-year basis.

This is significant because for the past several years, these blocks were given the lowest assessment, of having flat (0%) growth. The neighborhoods below have all put in positive land price increases on a year-on-year basis. However, it is important to note that the “o% to 3%” growth rating given to these areas is the second to the lowest (the highest rating being “6%+”), so these are not the hottest residential neighborhoods nationwide, but are important for showing positive numbers after years of languishing at zero growth.

Bancho, Chiyoda Ward, Tokyo

This is a prestigious residential neighborhood located west of the Imperial Palace, consisting mainly of the residential blocks from Ichi Bancho to Roku Bancho. Shinjuku Dori (Avenue) forms its southern boundary and Yasukuni Dori (Avenue) forms its northern boundary, with the Chuo Main Line lying on its western boundary. In the map above, the pink area shows the Ichi Bancho neighborhood.

In this quarter’s survey, Bancho was assessed at having grown at “0% to 3%”, versus a flat (0%) rating last quarter and flat in the 2017 Q2 survey.

Tsukuda /Tsukushima, Chuo Ward, Tokyo

This is a neighborhood on the island of Tsukushima, a man-made island in Tokyo Bay.

In this quarter’s survey, Tsukushima was assessed at having grown at “0% to 3%”, versus a flat (0%) rating last quarter and flat in the 2017 Q2 survey.

Minami Aoyama, Minato Ward, Tokyo

Minami Aoayama is an upscale residential area in Minato Ward, home to prestigious neighborhoods such as Omotesando and Gaienmae.

In this quarter’s survey, Minami Aoyama was assessed at having grown at “0% to 3%”, versus a flat rating in the 2017 Q2 survey. This is the second consecutive quarter in which Minami Aoayama has scored a positive growth assessment.

Futako Tamagawa, Setagaya Ward, Tokyo

This is a popular residential area in Setagaya Ward, located on the banks of the Tamagawa (River). In 2015, the opening of the  Futako-Tamagawa Rise complex, an upscale retail shopping area with several new apartment buildings and cultural amenities near the station, gave the neighborhood a popularity boost among people looking to buy or rent in Setagaya Ward.

In this quarter’s survey, Futako Tamagawa was assessed at having grown at “0% to 3%”, versus a flat rating in the 2017 Q2 survey. This is the second consecutive quarter in which Futako Tamagawa has scored a positive growth assessment.

Kichijoji, Musashino-Shi, Tokyo

Kichijoji is a popular neighborhood in the city of Musashino, just west of Tokyo’s 23 central wards, with easy access to Shibuya. It is relaxed, creative and bohemian, and especially popular with young people. It is regularly voted as one of the most desirable places to live in Tokyo. For an in-depth area guide, please see: Kichijoji Area Guide.

In this quarter’s survey, Kichijoji was assessed at having grown at “0% to 3%”, versus a flat (0%) rating last quarter and flat in the 2017 Q2 survey.

Ariake, Koto Ward, Tokyo

Ariake is a neighborhood in Koto Ward. It is best known as the region adjacent to and directly east of Odaiba.

Ariake is unique in the list of Tokyo neighborhoods which have shown positive growth this quarter because it has been consistently rated in the “0% to 3%” growth category for the past few years.

Strong growth nationwide

As a whole, land prices in Japan are continuing on an increasingly strong upward trend.

Overall, prices rose in the three major metropolitan regions (Tokyo, Osaka, and Nagoya), as well as the major regional cities of Sapporo, Sendai, Kanazawa, and Fukuoka.

In the second quarter, land prices rose in 95 of the 100 locations surveyed, compared to 86 locations in the 2017 Q2 LOOK report. In five locations, prices were flat and in no location did prices decrease.

Factors driving growth

The report pointed to four main factors driving growth in land prices:

  • Low office vacancy rates
  • Pick-up in economic activity in neighborhoods due to re-development projects
  • Growth in consumption and lodging demand due to inbound tourism
  • The three factors above have led to an increase in demand in residential neighborhoods deemed as being convenient, which has spurred continued investment in office space, shops, hotels, and condominium buildings.

High-Growth Locations

The MLIT ranks surveyed sites into several growth categories:

  • Flat (0% growth)
  • 0% to 3% Growth
  • 3% to 6% Growth
  • More than 6% Growth (no locations were given this ranking in the current survey)

In this quarter’s survey, thirteen total locations (versus nine in the 2017 Q2 report) were given the next-to-highest ranking (3% to 6% growth) assessment. Only one residential site (the area near Fukushima Station in Osaka) was seen to grow in this range.

The other twelve areas which experience 3% to 6% growth were commercial neighborhoods.

Strong nationwide growth in residential areas surveyed

In the 32 residential locations surveyed nationwide, 29 were assessed as growing, compared to 22 in the 2017 Q2 survey.

Please see details for 32 residential blocks surveyed below.

You may also be interested in: Variable rate mortgages in Japan hit all-time high

Top photo: Chidorigafuchi (Imperial moat), Chiyoda Ward, Tokyo