For the first time in six years, land prices in Japan’s largest cities have increased due in part to Prime Minister Shinzo Abe’s ‘Abenomics.’ However, other areas continue to decline in an uneven growth of the real estate industry. Tokyo, Osaka and Nagoya are the three major cities with a booming property market as confidence in the economy grows back.
The real estate industry saw a continuous decline since the collapse of Japan’s asset bubble in 1990. But recent months show positive movement in the upscale Ginza shopping district in Tokyo, and the areas near Toyota Motor Corp. and central train station in the heart of Nagoya. Other provinces also saw a slight upward movement of property prices such as the city of Kanazawa at the northern coast of Japan. Improvement in transportation such as plans of setting up a Shinkansen bullet-train service by 2015 attracted more interest in the region.
Hiroshi Okubo, head of reserach for Japan at CB Richard Ellis, a U.S.-based commercial real estate firm noted that, “One major redevelopment project or something similar can provide a spark, but if there isn’t anything like that then the gap between areas is likely to widen further.” Another real-estate analyst from Mizuho Securities, Takashi Ishizawa warned against looking too much into the recent positive results. “In some regional areas where the population is declining, the pace of land price falls could slow, but the chance of prices turning higher is quite slim,” he said. While the land prices increased by 0.7% in the three big cities, a low 0.6% was registered for other provinces and locations in fiscal 2013.