Ginza land prices jump 51% in four years

Bloomberg

Land prices in Tokyo’s central Chuo ward, home to the famous Ginza shopping district, have jumped by 51 percent in four years. In Osaka, they are up by nearly half. Booming construction of hotels, office buildings, shopping centers and apartments, financed by record lending for real estate by Japanese banks, has driven the gains. Now some investors surveying Japan’s property market are anticipating price corrections.
Satoshi Horino, president of Mori Trust Asset Management Co., said he is hearing stories about appraisers calculating returns based not just on purchase price and income, but by adding further price gains, a bold assumption in a country afflicted by price declines for years. He sees this as a contrarian indicator, another sign a reversal is coming. “It shows land prices have come to a pretty good level,” Horino said. “Prices will fall but I just don’t know when. There is an oversupply of properties — no doubt.”
The long period of rock-bottom interest rates that followed the global financial crisis fueled huge rises in property markets from Hong Kong to Sydney to London. In Japan, the gains began after the Bank of Japan launched its quantitative easing in early 2013, seeking to sink already-low interest rates and revive investors’ “animal spirits.”
As the yen fell, foreign visitors began rushing to Japan, their numbers about tripling from 2012 to a record 24 million last year, just as preparations began for the 2020 Olympic Games in Tokyo. It was a potent combination for the property market.

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