Photo/Illutration Osaka's popular Dotonbori district is packed with tourists on March 16. (Daisuke Matsuoka)

The trend of rising land prices spread to regional areas from urban areas last year, according to government data released on March 22.

Land prices rose 8.5 percent in Sapporo, Sendai, Hiroshima and Fukuoka, compared to 2.1 percent in Tokyo, Nagoya and Osaka as large-scale redevelopment projects are under way at the centers of the regional cities.

Prices rose sharply in Sapporo and the surrounding areas in particular. 

The biggest increase in land prices was at a site in Kita-Hiroshima, the neighboring city of Sapporo, which rose 30 percent.

The highest land price was recorded at the main store of Yamano Music Co. in Tokyo’s Ginza shopping district for the 17th year in a row, at 53.8 million yen ($410,000) per square meter, up 1.5 percent from the previous year.

The land ministry’s data of officially assessed land values as of Jan. 1 shows the impact of the economic recovery from the COVID-19 pandemic also spread to other regional areas.

Prices of residential land in “other regional areas,” which excludes the three largest urban areas and the four regional cities, rose for the first time in 28 years.

For example, land prices in areas surrounding Kikuyo, Kumamoto Prefecture, rose almost 20 percent last year, driven by demand for residential properties and offices due to the building of a plant for the world’s largest chip producer, Taiwan Semiconductor Manufacturing Co.

Prices of land for any purpose--including commercial, residential and industrial--in other regional areas rose 0.4 percent from the previous year.

The data also shows that across Japan, the average price of land for any purpose increased 1.6 percent from the previous year and for the second consecutive year.

The data highlights the recovering demand for residential properties and shops last year, which had slumped during the COVID-19 pandemic.

The ministry assessed the land prices of 25,591 sites across Japan, as it did the previous year.

Land prices in 58 percent of the sites rose from the previous year, it found.

By comparison, land prices fell at 27.1 percent of these from the previous year, while they didn’t change at 14.9 percent.

Prices rose 1.8 percent from the previous year for commercial land, which is mostly shopping districts that are seeing customers return following the lifting of COVID-19 restrictions.

Land prices in popular tourist destinations such as Osaka's Dotonbori district also rose again after continuously dipping as demand for travel in Japan is gradually returning to pre-COVID levels. The hope is that relaxed border controls will lead to even more foreign tourists.

Prices for residential land rose 1.4 percent across Japan in 2022.

Demand for residential properties is steadily increasing, helped by low interest rates and the government’s policy of tax cuts for mortgage borrowers.

Last year, residential land prices rose more or fell less than in the previous year in all prefectures except for Tokushima Prefecture.

Preferred locations in suburbs, such as those closer to train stations, also saw demand for residential land rising, meaning rising prices for residential land are radially spreading out, with urban areas at the center.

Prices for industrial land rose 3.1 percent last year, the first time the figure topped 3 percent since the “bubble economy” burst in 1992.

It marked the seventh year in a row of price increases. 

The demand for such land is partly driven by the popularity of internet shopping, which is leading to a construction boom of large logistics facilities in areas close to major roads or airports.

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