Land prices announced by the government Thursday revealed a drop in the value of property in prime locations, including Ginza and Omotesando in Tokyo, which had experienced a substantial increase during a period of rising land prices that lasted until 2008.
Many designer brand shops closed down and offices have scaled back in commercial locations while condominium sales remain sluggish in residential areas. The latest survey of prices as of Jan. 1 indicates land prices, which again started to decline following the global financial crisis in autumn 2008, have been falling at an accelerated pace.
Land prices dropped in most residential locations with prices in Ichikawa and Urayasu, both in Chiba Prefecture, registering more than 10 percent falls. These areas were popular because of their convenient location--within 20 kilometers of JR Tokyo Station--and land prices there increased an average of more than 5 percent in 2008.
"The supply of homes in those areas increased during the mini-bubble period and expensive homes now remain unsold," said Takashi Ishizawa, chief real estate analyst at Mizuho Securities Co. This has had repercussions for home prices in some areas. In Koto Ward, prices of some new homes were cut by 20 percent from the initial offering, according to Ishizawa.
In some areas, however, land prices increased. In Midori Ward, Nagoya, land prices rose at five locations ahead of the opening of a new train station on the Sakuradori subway line in March next year. The new station will be linked to JR Nagoya Station, giving residents in the areas better access to the city.
Land prices increased also in two locations in Nagaizumicho, Shizuoka Prefecture. This is because the areas are close to JR Mishima Station on the Tokaido Shinkansen line and populations rose as many high-tech companies were invited to relocate to the area with the Shizuoka Cancer Center as its core.
The price of land near JR Ikebukuro Station's East Exit in Toshima Ward, Tokyo, significantly narrowed its margin of fall from last year. This is because the number of shoppers in the area increased after major department store chain Mitsukoshi, Ltd. closed its outlet and was replaced by major electrical appliance retail chain Yamada Denki Co. in October, triggering an "electrical appliance war" with nearby Bic Camera Inc. stores.
Although the rate of decline in land prices is large compared with figures a year ago, land prices in popular residential areas and some other places showed signs of picking up in the latter half of 2009.
For example, "Style House Meguro Midorigaoka" homes in Tokyo's Meguro Ward, which were developed by Mitsubishi Estate Co., sold out on the first day they went on sale in October despite costing between 70 million yen and 79 million yen.
According to the Land, Infrastructure, Transport and Tourism Ministry, land price declines slowed from 3.2 percent in the first half of last year to 2 percent in the second half in Tokyo and its surrounding areas when compared with land prices as of July 1 last year reported in another survey.