Tourism boom drives real estate prices in Japan

Tokyo

Japan's tourism boom is driving demand for new hotels—and is driving up the price of land to build those hotels as well. 

According to a government survey, the overall price of land in Japan rose 0.4 percent in 2016 after rising 0.1 percent in 2015, according to the Ministry of Land, Infrastructure, Transport and Tourism.

Commercial land prices rose 1.4 percent last year, up from 0.9 percent the previous year, the ministry said. Residential land prices remained flat, after falling for the previous eight years. 

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"Demand for properties were strong, which helped land prices to improve steadily," Noritoshi Yasuoka, director of the ministry's Land Price Research Division, told Reuters, noting that international tourism was boosting the demand.

The number of foreign visitors to Japan rose 21.8 percent to a record 24 million last year, according to the Japan National Tourism Organization. Notably, internationa travelers went beyond the major cities like Tokyo and Osaka, but also visited regional cities, which helped land prices outside Tokyo and Osaka to rise.

Land prices in Fukuoka, Hiroshima, Sendai and Sapporo rose 3.9 percent. Prices in the regions surrounding Japan's three largest cities—Tokyo, Osaka and Nagoya—rose 1.1 percent. 

Still, it isn't all good news. Land prices for overall regional cities fell 0.3 percent in 2016—a slower fall than in 2015 but still marking 25 consecutive years of decline.

The ministry surveyed 26,000 locations nationwide.

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