Land prices in Japan drop as COVID-19 hurts tourism and domestic demand

* Land prices nationwide -0.4% during the year until July 1

* Residential land prices -0.5% vs -0.7% the previous year

* Price of commercial land -0.5% vs -0.3% the previous year

* Border closures, weak demand weigh on property prices

By Kantaro Komiya

TOKYO, Sept.21 (Reuters) – Japanese land prices have fallen for the second year in a row as the country’s border closures and state of emergency to combat the coronavirus pandemic have affected demand for new restaurants and hotels, according to an annual government survey.

A sign that the pandemic is reshaping the economy, however, land prices for industrial estates have risen for the fourth year in a row amid surging demand for warehouses to stock up on electronics and other goods that meet requirements. the demand for people at home.

Overall house prices in the world’s third-largest economy fell 0.4% in the year through July after last year’s 0.6% drop, which was the first drop in three years, revealed Tuesday an investigation of the Ministry of Lands.

Residential land prices, which have been falling for nearly three decades due to a shrinking Japanese population, fell 0.5% after falling 0.7% the previous year, according to the survey.

The drop contrasts with a worrying rise in house prices in many other industrialized countries such as Australia, where house prices rose a record 6.7% in April-June despite weak economic growth .

Commercial real estate prices in Japan fell 0.5%, more than a 0.3% drop from a year earlier, as the pandemic forced the country to close its borders to foreign tourists and to impose restrictions on economic activity.

In Osaka, Japan’s second largest metropolitan area and among its most popular tourist destinations, they fell 0.6% to mark the first decline in nine years, according to the survey.

“We continue to see prices plummet as profitability collapses, demand declines and the outlook darkens due to the pandemic,” a Land Department official said in a briefing.

In contrast, industrial land, which is mainly used by factories and logistics facilities, saw prices rise 0.8% nationwide from the previous year, reflecting strong demand for goods.

Rakuten and Amazon, two of the largest e-commerce operators in Japan, announced plans to open several fulfillment centers earlier this year, given the continued boom in delivery services during the pandemic.

Land prices in Japan had risen before the pandemic thanks in part to a wall of money pumped out by the central bank as part of former Prime Minister Shinzo Abe’s “Abenomics” stimulus policies and a construction boom hotel management to respond to an influx of foreign tourists.

The ministry surveyed 21,430 locations nationwide. (Reporting by Kantaro Komiya; Editing by Kim Coghill)

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