Land Values in Big Cities Continue to Fall Amidst Coronavirus Effect: October 2020 Look Report

Land prices dropped in 45 of 100 of locations surveyed by Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) in its Q2 2020 LOOK Report, which surveys land price trends for intensively used commercial and residential land in major cities throughout Japan.

The Q2 survey, which was conducted from July 1 to October 1, showed that coronavirus-related social distancing measures, telecommuting, and strict border controls are continuing to have a widening negative effect on land prices.

In the previous survey (conducted from April 1 to July 1) 38 locations had a drop in value, which was itself a significant stat because it was the first time in eight years that the number of locations with falling value outnumbered those with rising land value.

In the quarterly LOOK survey, a selected 100 commercial and residential land plots throughout the country are rated as to whether land values are rising, flat or falling. In the 2020 Q2 survey, of the 100 locations surveyed, only one (a commercial district in Sapporo’s Chuo Ward) saw positive growth; this was similar to the Q1 survey, except that in the previous survey it was a commercial district in Aoba Ward of the city of Sendai.

Land values stayed flat in 54 locations, versus 61 in the previous survey.

From flat to declining

Land values fell in 45 locations, versus 38 in the previous survey. Several of the seven new locations that were rated as having falling land values are well-known commercial districts. The seven that went from having “flat” land value to “declining” value were:

  • Marunouchi, Chiyoda Ward, Tokyo (Commercial)
  • Yurakucho/Hibiya, Chiyoda Ward, Tokyo (Commercial)
  • Shibuya, Shibuya Ward, Tokyo (Commercial)
  • Ikebukuro Higashiguchi, Toshima Ward, Tokyo (Commercial)
  • Katsura, Nishikyo Ward, Kyoto (Residential)
  • Vicinity of Shimotori, Chuo Ward, Kumamoto (Commercial)
  • Kenchomae, Naha, Okinawa (Commercial)

The report noted that office vacancy rates have been climbing in Shibuya as many IT companies have shifted to telecommuting. In Okinawa, land values have been affected by stores closing due to a decrease in tourist traffic.

Big cities

Seventy seven locations were surveyed in major metropolitan areas.

  • Of the 43 Tokyo locations, none rose in value (same as for the previous period), 34 were flat (v. 38 in the previous survey), and 9 were falling in value (v. 5 the previous period).
  • Of the 25 Osaka locations, none rose in value (same as for the previous period), 7 were flat (v. 8 in the previous period), and 18 were falling in value (v. 17 in the previous period).
  • Of the 9 Nagoya locations, none rose in value (same as for the previous period), none were flat (same as for the previous survey), and 9 were falling in value (same as for the previous survey)

In major urban areas, about half of locations fell in value, versus about 40 percent in regional areas, meaning that the land value declines are more concentrated in the big cities.

Commercial areas hit hard by social distancing measures

Overall, about 60 percent of commercial areas saw declining land values, versus 20 percent of residential areas. Eighty percent of residential locations were assessed as having flat growth. Basically, people are heeding calls to refrain from going out, which has hit retailers, restaurants, and drinking establishments especially hard.

The government put the brakes on the GoTo Travel campaign last week due to rising coronavirus infection rates, but even before then, the number of tourists was significantly lower than last year. In small- and medium-sized buildings catering to commercial tenants vacancy rates have been rising as a result.


Source: MLIT, Q2 2020 LOOK Report (PDF in Japanese)

Lead photo: Shibuya Crossing, iStock