TOKYO -- Popular tourist destinations helped lift Japan's official land prices by 1.2% as tracked on Jan. 1 for a fourth straight annual increase.
Commercial real estate prices nationwide gained 2.8%, beating the 1.9% increase the prior year, land ministry data released on Tuesday shows. The three major metropolitan areas of Tokyo, Nagoya and Osaka jumped 5.1%, their greatest growth since the 2008 financial crisis. The value of all real estate nationwide returned to 40% of its peak before the country's property bubble burst in 1991.
Land prices in areas other than major metropolises climbed for a second straight year, as residential real estate there increased for the first time in 27 years. Real estate investment and individual home purchases have been underpinned by low interest rates.
In addition to prefectural capitals, growth was led by tourist areas as visitors to Japan topped 30 million for the first time in 2018. Tourist destinations like Hokkaido and Okinawa have become regulars on the list of fastest-growing real estate markets.
Land prices in the Hokkaido town of Kutchan grew the most nationwide at 58.8%, benefiting from proximity to Niseko, an area known for ski resorts. An influx of skiers from Australia has contributed to new construction, including condominiums. Ranking second was the area around Osaka's Kuromon Ichiba market, a spot popular with tourists.
As Japan's population ages and declines, land prices in the country's more out-of-the-way areas continue to fall. Overall land values dropped in about half of all locations outside the biggest cities. Many areas impacted by flooding in western Japan last year suffered the most severe plunge in prices, followed by the shrinking industrial town of Yubari in Hokkaido.
Brisk land prices appear to be detached from the economy, however. Warning signs suggest the market for apartments is reaching a plateau as the supply of new properties tapers while investors and consumers grow wary of higher prices.
The most expensive plot was Yamano Music's main store in Tokyo's Ginza district, which rose 3.1% to 57.2 million yen ($513,000) per square meter. But that growth slowed from 9.9% in the prior year.
The flow of overseas money into Japan's real estate market also dwindled. Foreigners sold about 480 billion yen worth of Japanese property from April to February and bought about 300 billion yen, diving from over 1 trillion yen for each in fiscal 2017, according to the Urban Research Institute.
New apartment sales in the Tokyo area last month retreated 6.7% to 2,323 units, according to the Real Estate Economic Institute, falling for the second straight month and at a faster rate than in January.
"Sales volume will decelerate except for properties that are located in the best areas or that have the best features as polarization continues," said Tatsuhiko Hisamitsu, president of real estate consultancy Total Brain.