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 condominiums and voracious demand from investors seeking commercial land, a government survey showed on Thursday.
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.
In one bright spot in the data, 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 percent.
On average, nationwide residential land prices and commercial land prices both fell 2.7 percent in 2005. In Tokyo prefecture, residential land prices rose 0.8 percent, while commercial land prices increased 2.9 percent. Reflecting a healthy recovery in the economy, which expanded 2.7 percent in calendar 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.
"There are signs of improvements in major cities, and we are starting to see a similar trend in some cities in the countryside," a senior official at the Ministry of Land, Infrastructure and Transport told reporters.
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 percent of their 1991 levels.
Still, the survey did include some bright signs.
In the greater Nagoya area in central Japan, where Japan's top automaker Toyota Motor Corp is based, commercial land prices rose 0.9 percent, reflecting a rise in demand after a new international airport opened and the Aichi Expo was held there last year.
Residential land prices in greater Tokyo have been boosted by consumer demand for condominiums, and traditionally upscale residential areas continue to attract those who seek better living environment, pushing up property prices in some areas by more than 20 percent.
As a sign of a spotty recovery, however, the pace of declines in property prices in the countryside in northern and southern Japan accelerated in 2005 partly because consumers continued to shift to suburban shopping centres from smaller local shops and residents moved to more convenient city centres.
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