The decline in Japanese land prices have slowed down for the first time since 2007, as the country emerges from recession and credit conditions ease.
The nationwide average price tumbled 3.7 percent in the 12 months ended June 30, compared to the 4.4 percent decline in 2009, according to a report released by the Ministry of Land, Infrastructure, Transport and Tourism.
The decline in land values may continue to ease as developers and homebuyers return to the market. Condominium prices in the Japanese capital climbed to a 20 month high in March, a sign of recovery in the sector, said Yoji Otani, a property analyst at Deutsche Bank AG in Tokyo.
Keiji Kimura, chief executive of Mitsubishi Estate Co, said, “We’re starting to see a significant pick-up in land acquisitions, signalling that prices are bottoming out in Tokyo.”
The Topix Real Estate Index climbed 1.2 percent to become the second-best performer among the 33 industry groups comprising the benchmark.
Japan’s direct commercial real estate investment also surged 35 percent to $5.8 billion in the second quarter of 2010 over the same period in 2009, said Jones Lang LaSalle.
Acquisitions made by Japan’s 37 publicly traded real estate investment trusts increased more than twice to $4.38 billion in the first half over a year ago, said Tokyo-based research company IB Research and Consulting Inc.
“We are already on a recovery trend although the pace is very slow,” said Otani. “Japan’s market is big so we can’t expect a sudden turnaround.”
Declines in value in three main metropolitan areas – Osaka, Nagoya and Tokyo, slowed to 3.2 percent from 6.1 percent in 2009, according to the report. Prices in rural districts dropped 3.9 percent from a decline of 3.8 percent the previous year.
The report also showed that nationwide commercial land prices dropped 4.6 percent in 2009, while residential land values fell 3.4 percent.