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Japan's 2019 land prices power higher, but Covid-19 clouds outlook

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An increase in foreign tourist numbers boosted demand for hotel properties and retail space, while low interest rates supported strong office demand.

Tokyo

JAPAN'S land prices grew for a fifth straight year last year, helped by foreign tourism and low interest rates, with some regions posting their best gains since the country's property crash of the early 90s.

A boom in tourism has been pushing up land prices, especially among destinations popular with foreign visitors such as northern Hokkaido, southern Okinawa and Japan's ancient capital of Kyoto.

Prices rose 1.4 per cent, the fastest gain since 2008, the survey showed.

Despite the rise, the novel coronavirus pandemic has clouded the outlook as the outbreak caused a tourism slump and supply-chain disruptions and crimped consumer spending, raising risks of a recession.

The survey was conducted before Covid-19 became a global pandemic in the first quarter of 2020, so the results did not reflect the hit to prices from the virus, an official of the land ministry said.

"Overall, Japan's land prices have been improving," said the official. "It is hard to gauge how the impact from the coronavirus will affect the land prices at the moment."

Commercial land prices in regional Japan, excluding metropolitan areas surrounding Tokyo, Osaka and Nagoya and some other major cities, rose 0.3 per cent - up for the first time since Japan's asset-inflated bubble burst 28 years ago.

Residential land prices in those areas have also stopped falling - the first time it has done so since 1996.

An increase in foreign tourist numbers boosted demand for hotel properties and retail space, while low interest rates supported strong office demand.

Redevelopment projects and maintenance of transportation also helped increase commercial land prices, which rose 3.1 per cent, up for a fifth straight year, while residential land prices rose 0.8 per cent, rising for the third year in a row, the survey found.

The biggest rises in both residential and commercial land prices were in the town of Kutchan, a popular ski resort in Hokkaido, jumping 44 per cent and 57.5 per cent respectively. REUTERS