Japan's Nikkei share average rose 1.4 percent on Wednesday to end at a new five-year closing high as builders including Kajima Corp and property shares gained after data underscored the economy's strength.
A rise in the dollar helped Sony Corp, Toyota Motor Corp and other exporters, while Hitachi Ltd and Toshiba Corp advanced on news of talks to jointly produce next-generation system chips with Renesas Technology Corp.
Analysts said industrial production data for November, which although slightly weaker than expected was the fourth month of growth, and strong housing data released on Tuesday underlined healthy business activities.
Fujio Ando, Chibagin Asset Management's senior managing director, said personal spending was strong, citing upward earnings forecast revisions by department store Takashimaya Co Ltd.
"People are buying coats because of the cold weather, and luxury goods are selling well," he said. The Nikkei rose 225.21 points to 16,194.61, its highest since September 2000. The broader TOPIX index climbed 0.98 percent to 1,653.92.
Data released Tuesday showed housing starts in Japan rose 12.6 percent in November, helping builders.
Among major general contractors, Kajima Corp jumped 4 percent to 684 yen and Obayashi Corp rose 3 percent to 866 yen.
Property stocks also gained, with top property developer Mitsui Fudosan Co Ltd rising 1.9 percent to 2,375 yen and No 2 Mitsubishi Estate Co Ltd up 2.3 percent at 2,420 yen.
Kenji Kobata, managing director in research department Ace Securities Co Ltd, said land prices are likely to continue rising in coming years, pushing up share prices of companies with property assets, such as department stores and warehouses.
"It would not be sufficient to buy stocks just by looking at their earnings," Kobata said. "I think property is key next year."
In the technology sector, Hitachi gained 0.3 percent to 792 yen and Toshiba rose 1.2 percent to 695 yen after the two firms and Renesas Technology Corp said on Wednesday they were in talks to jointly produce next-generation system chips.
Auto stocks rose as the dollar held on to sharp gains against the yen, fetching at 117.35 yen
Industry leader Toyota Motor Corp rose 1 percent to 5,990 yen while second-ranked Nissan Motor Co Ltd edged up 0.9 percent to 1,194 yen.
Some retail stocks gained, with Takashimaya, Japan's biggest department store operator, up 2.6 percent at 1,845 yen after raising its full-year profit estimate by 15 percent.
But Seven & I Holdings fell 2.2 percent to 4,920 yen after hitting a lifetime high of 5,300 yen on Tuesday. It gained 14 percent during the previous two sessions after announcing plans to buy a domestic department store group.
Meanwhile, shares in Internet and communications conglomerate Softbank Corp ended up 3.2 percent at 4,380 yen after surging as high as 4,680 yen in earlier trade.
Shares in the company underwent a 3-for-1 split on Wednesday, and under a new rule introduced this week investors are allowed to sell shares on the day of the split. Trade volume fell to its lowest level since August 31, with 1.65 billion shares changing hands on the exchange's first section. Advancers outnumbered decliners 1,212 to 352.