Land prices in Japan have seen the biggest drop in five years as more discouraged buyers and tighter markets cut off funding to developers. In the 12 months leading up to June this year the average price has dropped 4.4 percent. This reflects an 18 month spell of decline said the Ministry of Land, Infrastructure, Transport and Tourism in a report.
Some 22,435 locations in Japan were surveyed and each one experienced a decline in value. Some say the Japan is emerging from the biggest recession post-war which could result in a slowing down of the falling values.
Tokyo saw the end of an 18-month climb in office vacancies end last month and the total number of unsold condominiums on the market are down by 43 percent since December last year.
Takashi Ishizawa, Tokyo-based real estate analyst at Mizuho Financial Group Inc. said. “There are signs the decline in land prices in Tokyo and other big cities is coming to a halt. It’s possible Tokyo prices could even rise next year, but the regional districts will continue to see declines.”
Last year the value of commercial property dropped by 5.9 percent from the previous year. All of Japan’s 47 prefectures were affected by the fall in prices.
Tokyo’s most expensive piece of commercial real estate is situated in the Ginza shopping district. In this prestigious area land can cost as much as 25 million yen a square meter. In the space of 2008 to 2009 land value declined by 17 percent.
The Imperial Palace is situated in the Chiyoda ward of Tokyo, which boats the most expensive residential land even after values fell 11 percent to about 3 million yen a square meter.
In June the ministry announced that commercial property prices in the Tokyo metropolitan area were still at the same level than they were some 35 years ago.