TOKYO (Reuters) – Japan’s land prices dropped for the first time in six years in 2020 as the coronavirus pandemic hurt demand for hotels and houses.
Prior to the pandemic, an influx of foreign tourists and low interest rate had helped boost land prices not only in big cities but also in some regional areas.
But with borders closed to foreign tourists and emergency steps to contain the virus, economic activity has slowed significantly.
Average land prices slipped 0.5% last year, down for the first time since 2015, according to the land ministry’s survey.
In 2019, the land prices grew at the fastest pace since 2008.
Commercial land prices fell 0.8% in 2020, falling for the first time in seven years, while residential land prices slipped 0.4%, down for the first time in five years, the survey showed.
The ministry surveyed about 26,000 locations nationwide.
“Demand for shops and hotels has declined and uncertainty over the outlook prompted buyers to became cautious about prices, resulting in overall commercial land prices falling,” said the survey.
Residential land transactions softened as wages and employment weakened, it said.
“It is too early to conclude that the trend for the land prices has changed. The coronavirus pandemic is the reason behind the price falls but we will need to monitor more,” a land ministry official told reporters.
The broader decline has extended to the country’s prime real estate markets, the survey found, with Japan’s most expensive location, a spot in Tokyo’s Ginza shopping district, posting its first price decline in nine years.
The cost per square metre in the location, which hosts Yamano Music and sells musical instruments, fell 7.1% to 53.6 million yen ($492,511).
($1 = 108.8300 yen)
(Reporting by Kaori Kaneko; Editing by Sam Holmes)