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Economy

Commercial land may have hit bottom

Commercial real estate values are rebounding in Japan's urban centers, thanks to a stronger economy and interest from foreign investors.

TOKYO -- Prices of commercial land in Japan have stopped falling for the first time in seven years, with the overall pace of land value decline continuing to slow, the latest official survey shows.

     As of Jan. 1, the nationwide average market value of commercial land remained unchanged from the previous year, the land ministry reported Wednesday. Last year's survey had shown a 0.5% decline.

     Cities saw most of the appreciation in commercial land value. In Japan's three major metropolitan areas of Tokyo, Osaka and Nagoya, the increase averaged 1.8%. Big second-tier cities -- Sapporo, Sendai, Hiroshima and Fukuoka -- logged a 2.7% gain. Foreign and domestic companies, real estate investment trusts, and foreign investment funds have been active players in the commercial property market of late.

     Kanazawa, a city of about 460,000 on the Sea of Japan coast west of Tokyo, marked the biggest rise in commercial land value, 17.1%, thanks to a new bullet train connection to the capital.

     For a ninth straight year, Japan's most valuable piece of commercial land remained the site of the Yamano Music store in Tokyo's posh Ginza district. It climbed 14.2% to 33.8 million yen ($282,000) per square meter.

     Residential land values fell an average of 0.4% on the year, an improvement of 0.2 percentage point from the 2014 survey. Land values overall were down an average of 0.3%, marking a fifth straight year of shrinking declines.

     Land values outside big cities have been slow to recover. The average land value in the three major metropolitan areas rose 0.7%, with appreciation in both residential and commercial property. But the rest of Japan suffered a 1.2% decline, losing ground in both categories.

     Metropolitan residential land gained value for a second straight year, but growth slowed to 0.4% from 0.5%. Two-track markets have emerged within these areas, with centrally located properties seeing faster value growth than suburban land. A slowdown in home construction also took a toll. Housing starts fell for the first time in five years last year, hit by the April 1 consumption tax hike.

(Nikkei)

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