TOKYO -- Average land prices in Japan grew for the first time in 27 years as growing tourist traffic fed demand for new shops and hotels, signaling that the country is one step closer to escaping decades of deflation.
The price for residential, commercial and industrial land increased 0.1% in the year through July 1, according to an annual survey published Tuesday by the Ministry of Land, Infrastructure, Transport and Tourism. This is the first positive growth since a 3.1% jump in 1991, right before Japan's asset bubble burst.
Much of the boost came from four midsize cities popular with tourists -- Sapporo, Sendai, Hiroshima and Fukuoka -- where average commercial land prices surged 9.2%. Other tourist destinations enjoyed a boost as well, like the district of Niseko in Hokkaido, known for its ski resorts.
Niseko has seen a boom in construction of luxury condominiums rivaling the high-rise apartment buildings of Tokyo's central Minato Ward. About 60% of those buying the new condos hail from elsewhere in Asia, including Hong Kong and Singapore, according to Tokyu Resort.
The benefits of the tourism boom have spread beyond Niseko itself. The value of one commercial plot in the neighboring town of Kutchan swelled 45.2% -- the sharpest rise reported this year.
Commercial land logged a 1.1% increase nationwide, with 19 of Japan's 47 prefectures seeing positive growth.
The most expensive plot of land in the survey was the Meijiya Ginza building, located in one of Tokyo's swankiest shopping districts. It was valued 7.7% higher than a year earlier at 41.9 million yen ($373,000) per sq. meter, beating the bubble-era high of 38 million yen for the second year in a row.
Residential land values did not fare as well, falling for a 27th straight year by 0.3% nationwide. Roughly 55% of the plots surveyed lost value.
Still, the overall rate of decline slowed for a ninth year. Low mortgage interest rates have fed demand for housing, which in turn raised prices for a larger number of plots, especially those with easy access to transportation. Eleven prefectures saw an increase, up from eight a year ago.
The total value of land assets in Japan came to 1.18 quadrillion yen in 2016, up for a third straight year, according to the Cabinet Office. The figure declined steadily after topping out at 2.48 quadrillion yen in 1990, but has begun recovering in recent years.