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Japan’s land prices fall as COVID-19 hurts tourism, domestic demand By Reuters


© Reuters. FILEPHOTO: This is a construction site in Tokyo’s residential areas, Japan. August 21, 2016. REUTERS/Kim Kyung-Hoon/Files

By Kantaro Komiya

TOKYO (Reuters) – Japanese land prices fell for the second straight year as the country’s closed borders and state of emergency curbs to combat the coronavirus pandemic hit demand for new restaurants and hotels, an annual government survey showed.

The pandemic has been reshaping Japan’s economy. However, industrial land prices rose again for the fourth consecutive year due to booming demand from warehouses for electronic equipment and other products for stay-at home consumers.

The world’s third largest economy saw its property prices drop 0.4% from the previous year, after a 0.6% decrease in July. This was according to a Tuesday land ministry survey.

According to the survey, residential land prices fell 0.5% in July after falling 0.7% the year before.

This contrasts with a worrying rise in home prices in other industrialized nations like Australia. Home prices rose 6.7% between April and June despite the low rate of economic growth.

Japan saw its commercial property values fall 0.5%. That’s more than 0.3% in a single year. The pandemic forced Japan to restrict economic activity and close off foreigners from Japan.

According to the survey, Osaka is Japan’s second most populous tourist destination and the 2nd-largest metropolitan area. The 0.6% decline was the first in 9 years.

A land ministry official said that prices are continuing to fall due to declining profitability, shrinking demand and a worsening outlook.

However, the prices of industrial land (which is used mainly by plants and logistics centers) rose 0.8% in the country compared to a year prior, reflecting robust goods demand.

Rakuten and Amazon (NASDAQ) both the largest Japanese online commerce platforms, had announced earlier in the year plans to open distribution centers due to the continuing boom in the delivery of services.

Japan’s land values had increased before the pandemic, partly due to the wall of money that was pumped out of the central bank by former prime minister Shinzo Abe’s stimulus programs. Also, there has been a boom in hotel construction to accommodate an influx foreign tourist.

21430 sites were surveyed by the ministry.

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