Japan land prices see biggest rise in more than 30 years

The average land price in Japan has jumped by the biggest amount in more than three decades. The shift continues a gradual revival from the long period of stagnation that followed the Bubble-era economy.

The land ministry said Tuesday the average price of land in Japan in 2024 is up 2.3 percent year-on-year. The figure is based on a survey of roughly 26,000 residential, commercial and other sites taken on January 1.

Japanese land prices famously shot up by double-digit percentages in the final years of the Bubble, which burst in 1991. What followed was a drawn-out era of deflation and loss.

Analysts say one factor in the revival is the rebound in economic activity following the initial shock of the coronavirus pandemic. They also credit the surge in inbound tourism, which they say is driving up demand for real estate by restaurant and hotel operators.

Ide Takeshi is a senior researcher at real estate research firm Tokyo Kantei. He says there's a big disparity between areas enjoying a bump in land prices and areas experiencing a slump.

Ide said, "More people are moving to Tokyo again and also heading to other large cities such as Osaka, Nagoya and Fukuoka. The disparity between cities that have excellent public transportation and convenience and those that don't is also widening. There has been a polarization in the past, but it is becoming a more serious and clear one."

Ide says the weaker yen is also driving up land prices in tourist destinations. Many of the areas that recorded the sharpest price rises are resort towns.

Ide says the exchange rate has boosted the purchasing power of overseas buyers. Foreigners are capitalizing on this to buy holiday homes in areas with easy access to leisure activities, and that's pushing up demand for land in select places far from the big cities.