Tokyo Land Prices Rise for the First Time in 13 Years

Tokyo Land Prices Rise for the First Time in 13 Years

Aug. 1 (Bloomberg) -- Land prices in Japan's capital, Tokyo, rose for the first time in 13 years in 2004, helping to slow the pace of declines in real estate values nationwide.
Land prices in Tokyo rose 0.4 percent to 460,000 yen ($4,097) per square meter, with prices in the capital's central 23 wards gaining 0.9 percent to 593,000 yen, according to a statement released by the National Tax Agency today. Nationwide land prices fell 3.4 percent to 112,000 yen per square meter, the thirteenth straight year of declines.
A recovery in Japan's real estate values may help prompt investments in home construction and spur consumer spending, which accounts for more than half of the world's second largest economy, as people buy furniture and other products for their new homes.
The 3.4 percent decline in national land prices last year was smaller than a 5 percent contraction in 2003 and a 6.2 percent fall in 2002. The value of land in Japan's most expensive spot on Chuo Avenue in Tokyo's Ginza district rose 9.9 percent to 15.12 million yen per square meter, the statement said.
Signs of emerging demand in central Tokyo have prompted investors to buy shares in real estate companies. Japan's Topix Real Estate sub-index of 45 property developers, including the nation's two largest, Mitsui Fudosan Co. and Mitsubishi Estate Co., has gained 9.2 percent in the past 12 months, compared with a 6.6 percent rise in the wider Topix Index.

Osaka, Nara

Land prices in the areas surrounding Tokyo slid, with Kanagawa and Chiba prefectures falling 4 percent, and Saitama prefecture, south west of the capital, declining 3.3 percent last year. Prices in Osaka, the largest city in western Japan, and its surrounding regions of Hyogo, Kyoto and Nara dropped 4.5 percent to 148,000 yen per square meter, the statement said.
Mitsubishi Estate rose 0.1 percent to end morning trading on the Tokyo Stock Exchange at 1,251 yen, while Mitsui Fudosan was unchanged from yesterday's 1,281 yen closing share price.

To contact the reporter for this story:
Tim Kelly in Tokyo at tikelly@bloomberg.net