Japan land prices fall for 13th year despite economic recovery - government survey
Monday, March 22, 2004 8:54:09 AM
fxstreet.com
TOKYO (AFX-ASIA) - Japanese land prices fell for the 13 consecutive year in 2003 despite clear signs of a recovery in the world's second-largest economy, a government survey shows
Commercial property prices as of Jan 1, 2004 were 7.4 pct lower than year-earlier levels, the Land, Infrastructure and Transport Ministry said in a survey, which is used as the yardstick for the real-estate sector
Residential property prices fell by an average 5.7 pct during 2003
The report came as the Japanese economy grew a strong 2.7 pct in 2003 after a 0.4 pct contraction in 2002
"Land prices have not hit a bottom yet," said Toshio Sumitani, economist at Tokai Tokyo Research Centre. "There will be a lag of a year or so until an economic recovery leads to an upturn in land prices
"People do not pursue land deals only because they see good economic signs as trading land is always accompanied by risks," he said
Sumatani said 2004 could show a rise in land prices, although many companies are still putting property up for sale as part of their restructuring
He added that Japanese land prices were unlikely to shoot up as many companies are expanding globally, building factories in other countries and so depressing land demand in Japan
"Demand for residential areas is also unlikely to rise sharply, considering the population composition," he said
Japan's population, currently at 126.7 mln, is forecast to peak by 2006, according to government reports
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