The pandemic has, yet again, claimed another victim as land demand for commercial operations declined
For the first time in three years, the median rate for land in Japan in 2020 declined by 0.6 percent from last year as the pandemic caused land demand for commercial operations like hotels and shops to drop, reported The Japan Times.
Data by the Land, Infrastructure, Transport and Tourism Ministry showed that 60.1 percent of prices dropped as f 1 July among the 21,519 sites that they evaluated throughout the country.
Prices grew by 21.4 percent of the total sites from a year before, but the ministry explained that the rates for most of these sites echoed the pre-pandemic market conditions. In 18.5 percent of surveyed areas, prices were flat.
The survey conducted considered the median rates for all types of land in the country, including residential, industrial and commercial.
Fortunately, with the investments in tourism such as for hotel construction, the growth in commercial property rents and the arrival of foreign tourists, the median land rate in Japan is slowly recovering.
If economic conditions don’t see a substantial improvement in the next few months, the director of private think tank Urban Research Institute Shigeo Hirayama said that more places will witness a drop in land prices from the start of 2021 as the value of real estate indicate future demand.
“Standard land prices are determined based not so much on actual prices at which transactions were made, but more on expectations for a deterioration in profitability resulting from lowering of rents and other factors,” said Hirayama.
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