Industry
Update

The average price of land in Japan rose for the third consecutive year, returning to pre-pandemic levels on the back of the recovering economy and an increase in foreign visitors, government data showed Tuesday.

Land prices in all categories nationwide climbed 2.3 percent from a year earlier as of Jan. 1, compared with a 1.6 percent increase the previous year, according to the Ministry of Land, Infrastructure, Transport and Tourism.

Prices for residential-use land grew 2.0 percent on average, while commercial-use land prices rose by 3.1 percent.

In regional areas excluding the four major cities of Sapporo, Sendai, Hiroshima and Fukuoka, the ratio of places experiencing rising prices exceeded those seeing falling prices for the first time in 32 years, the data covering a total of 26,000 locations showed.

”The upward trend in prices has been strengthening on the back of a moderate economic recovery,” a ministry official said. ”(Prices) returned to a level prior to the coronavirus pandemic on a nationwide scale, excluding some regional areas.”

Prices rose in 65 percent of the locations covered in both the latest and the previous year’s surveys, the data showed.

In regional areas excluding the four major regional cities, prices climbed for 41 percent of them, lifted by solid demand for good-access housing and a recovery in demand for stores, backed by an increasing number of visitors to Japan.

On the other hand, prices dropped in 40 percent of the surveyed areas, with a shrinking and graying population among the causes, the annual ministry survey showed.

An assessment of six locations in Fukushima Prefecture has been suspended due to the effects of the 2011 nuclear accident at the Fukushima Daiichi nuclear power plant triggered by an enormous earthquake and tsunami.

Additionally, the impact of a powerful earthquake that struck the Noto Peninsula and surrounding areas in central Japan on New Year’s Day is not reflected in the latest survey results.

Residential land prices in the three largest metropolitan areas of Tokyo, Osaka and Nagoya grew 2.8 percent, while prices rose 7.0 percent in the four big regional cities and 0.6 percent in regional areas other than these cities.

As for commercial land, prices increased 5.2 percent in the three largest metropolitan areas, while they shot up 9.2 percent in the four major regional cities, creeping up 0.6 percent in regional areas excluding the four cities, with significant recovery seen in tourist spots and downtown districts as economic activity returned following the pandemic.

Furano in Hokkaido, northern Japan, saw the largest increase in residential land prices at 27.9 percent on the back of brisk land demand for vacation homes among foreigners.

As for commercial land, the town of Ozu in Kumamoto Prefecture, southwestern Japan, saw the biggest jump in prices at 33.2 percent, reflecting robust demand for the area where the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Co. opened its first plant in Japan in the neighboring town of Kikuyo.

By location, the land price of the main store of Yamano Music Co. in Tokyo’s Ginza shopping district was the highest among surveyed locations across Japan for the 18th straight year at 55.70 million yen ($368,000) per square meter.

The Nikkei stock index ended at a fresh closing high above the 40,000 mark Monday on firm technology stocks, reaching the milestone just over a week after hitting an all-time high for the first time in 34 years.

The 225-issue Nikkei Stock Average ended up 198.41 points, or 0.50 percent, from Friday at 40,109.23, after hitting a record intraday high of 40,314.64.

The broader Topix index was down 3.14 points, or 0.12 percent, at 2,706.28.

The benchmark Nikkei has gained over 1,000 points since Feb. 22 when it topped record highs marked in 1989, attracting domestic and foreign investment on strong corporate earnings, low interest rates and expectations for the economy emerging from deflation.

On the top-tier Prime Market, gainers were led by precision instrument and mining issues, while marine transportation and rubber product issues led decliners.

Although giving up some gains in the afternoon, the Nikkei remained above the 40,000 threshold, as technology issues such as Tokyo Electron and Advantest jumped tracking their U.S. counterparts on anticipation of robust demand for artificial intelligence.

Overseas investors continued to buy Japanese stocks as they are viewed as cheap compared with shares in other markets, analysts said.

”The market has been lifted by buying of undervalued large-cap stocks, while chip-related shares gained even further at the same time backed by the strength of their U.S. peers,” said Seiichi Suzuki, chief equity market analyst at the Tokai Tokyo Research Institute.

While the 40,000 mark likely reflects the upbeat performance of Japanese companies, whether the Nikkei index will be able to sustain its upward momentum in the near term is uncertain given its rapid advance, brokers said.

The Japanese stock market fell into a prolonged slump after reaching its previous all-time closing high of 38,915.87 at the end of 1989 during Japan’s asset-inflated bubble economy.

After the bursting of the bubble economy in the early 1990s, the index closed at the all-time low of 7,054.98 in March 2009 following the global financial crisis triggered by the bankruptcy of U.S. investment bank Lehman Brothers Holdings Inc.

Stocks regained upward momentum on the back of the Bank of Japan’s aggressive monetary easing under the ”Abenomics” economy-boosting program pursued by the late Prime Minister Shinzo Abe.

On the currency market on Monday, the U.S. dollar moved little mostly in the lower 150 yen range in Tokyo amid a lack of trading incentives.

At 5 p.m., the dollar fetched 150.30-32 yen compared with 150.08-18 yen in New York and 150.49-50 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.0853-0854 and 163.13-17 yen against $1.0835-0845 and 162.64-74 yen in New York and $1.0811-0813 and 162.70-74 yen in Tokyo late Friday afternoon.

The yield on the benchmark 10-year Japanese government bond was down 0.005 percentage point from Friday’s close at 0.710 percent.

The Nikkei stock index briefly topped the 37,000-point threshold for the first time in 34 years on Friday, buoyed by a weaker yen and robust earnings, although gains were limited as some investors moved to lock in recent gains.

The 225-issue Nikkei Stock Average ended up 34.14 points, or 0.09 percent, from Thursday at 36,897.42, its highest close since Feb. 19, 1990. The broader Topix index finished 4.75 points, or 0.19 percent, lower at 2,557.88.

On the top-tier Prime Market, gainers were led by oil and coal, and nonferrous metal issues, while marine transportation, and textile and apparel shares led decliners.

The U.S. dollar hovered in the lower-149 yen range in Tokyo, keeping its strength after briefly hitting its highest level since late November at 149.48 yen in New York overnight amid diverging central bank policies between the United States and Japan.

At 5 p.m., the U.S. dollar fetched 149.39-40 yen compared with 149.28-38 yen in New York and 148.71-73 yen in Tokyo at 5 p.m. Thursday.

The euro was quoted at $1.0780-0781 and 161.05-09 yen against $1.0772-0782 and 160.91-161.01 yen in New York and $1.0780-0781 and 160.32-36 yen in Tokyo late Thursday afternoon.

The yield on the benchmark 10-year Japanese government bond rose 0.025 percentage point from Thursday’s close to 0.720 percent, after the debt was sold tracking the overnight gain in U.S. Treasury yields.

The Nikkei climbed over 400 points at one point, but momentum waned after the index surpassed 37,000 due to a lack of fresh trading cues.”

The yen’s depreciation lifted shares of export-related companies, whose overseas earnings get a boost from the weaker currency when repatriated. Chip stocks also rose, taking a cue from their U.S. counterparts.

A surge for SoftBank Group further bolstered the Nikkei, spurred by the tech investor’s announcement of its first quarterly net profit in over a year the previous day.

”The current buying trend is fueled by positive domestic earnings results. However, to sustain this momentum, new catalysts are required,” said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, noting attention is focused on the earnings forecasts of U.S. companies for insights into the demand for regenerative artificial intelligence and semiconductors.

Japan’s debt reached a record 1,286.45 trillion yen ($8.6 trillion) at the end of 2023, government data showed Friday, reflecting its heavy reliance on borrowing to meet spending needs to fight the COVID-19 pandemic and rising prices.

The debt, more than twice the size of the Japanese economy, increased 29.45 trillion yen from December 2022. The world’s third-largest economy continues to face an urgent need to restore its fiscal health, the worst among developed countries.

The debt includes government bonds, borrowing and financing bills.

Japan has seen growth in tax revenue in recent years, but it has been far exceeded by spending.

The government aims to reduce fiscal expenditures, which increased significantly during the pandemic and ongoing cost-of-living crisis, to pre-emergency levels. However, the state budget for fiscal 2024, starting from April, remains the second-largest on record at 112.57 trillion yen.

After years of keeping borrowing costs at rock-bottom levels to support households and businesses, the Bank of Japan is seen as gradually moving away from its ultraloose monetary policy. The shift would increase debt-servicing costs for Japan.

As of Dec. 31, the total debt consisted of 1,146.06 trillion yen in government bonds, 48.09 trillion yen in borrowing, and 92.30 trillion yen in financing bills, the Finance Ministry data showed.

Japan’s gross domestic product was roughly 600 trillion yen in nominal terms, according to the government’s data currently available for the July-September quarter.

Japan’s new car sales in January fell 12.4 percent from a year earlier to 334,838 units, industry data showed Thursday, marking the first drop in 17 months as Daihatsu Motor Co.’s shipment halt following a safety test rigging scandal brought small car sales to a record low.

Mini-vehicle sales, where the small-car unit of Toyota Motor Corp. holds a large share, fell 22.9 percent to 117,912 units, the lowest figure for the month since comparable data became available in 1999, according to the Japan Light Motor Vehicle and Motorcycle Association.

Sales of such cars at Daihatsu plunged 62.2 percent to 19,346 units. Toyota and Subaru Corp. also saw their numbers plunged 51.2 percent and 64.3 percent, respectively, as some of their models were made by Daihatsu and subjected to the shipment halt.

The current standard for mini-vehicles was established in October 1998, and the January sales figure was the lowest for the month since then, the association said.

New car sales, excluding mini-vehicles, fell 5.5 percent to 216,926 units. Daihatsu logged a 69.5 percent drop to 897 vehicles, with Toyota seeing a decrease of 14.4 percent to 103,975 cars, according to the Japan Automobile Dealers Association.

The latest data was released as Daihatsu, one of the biggest mini-vehicle makers in Japan, was unable to ship its cars domestically during the entire duration of the month.

Daihatsu stopped all shipments at home and abroad in December, saying that a third-party investigation found that most of its cars were affected by data rigging in safety tests.

The automaker said Wednesday it will partly resume domestic production on Feb. 12 and domestic shipments from Monday, as Japan’s transport ministry lifted a shipment ban on some of the vehicles affected by the scandal.

The company has already restarted operations in Indonesia and Malaysia in December after obtaining approval from local authorities.