Land prices in Tokyo rose in 2005 for the first time in 15 years as Japan's steady economic recovery led to strong consumer demand for apartments and voracious demand from investors seeking commercial land, a government survey showed today.
Although nationwide prices slid for the 15th straight year and stood at one-third of their early-1990s peaks, the pace of decline in both residential and commercial land prices slowed in the year through January 1, the survey showed.
The price of property in the trendy Tokyo shopping district of Omotesando, where a new commercial complex called Omotesando Hills opened last month, jumped 30.5%.
On average, nationwide residential land prices and commercial land prices both fell 2.7% in 2005. In Tokyo, residential land prices rose 0.8%, while commercial land prices increased 2.9%.
Reflecting a healthy recovery in the economy, which expanded 2.7% in 2005, strong corporate demand for real estate investment and capital spending pushed up commercial land prices in the nation's three major metropolitan areas - greater Tokyo, Osaka, and Nagoya - for the first time in 15 years.
Property shares have been rising this week ahead of the release of today's survey on expectations that Japan's recovering economy had spurred demand for office space, driving rents higher and vacancy rates lower.
Since the bursting of the late 1980s 'bubble economy', land prices in Japan have fallen sharply. The index of commercial land prices in Japan still only stood at about 30 compared with its 1991 peak of 100, the survey showed.
Japan's residential land prices on average are still half of what they were in 1991 and those in greater Tokyo - home to about one-fourth of the total population - were about 41% of their 1991 levels.
