Regional land prices rose for the first time in 27 years on tourist boom
The average price of all types of land in Japan’s regional areas rose for the first time since 1992 last year, as the growing influx of foreign tourist rejuvenated real estate investment, according to the government.
In regions outside of Tokyo, Osaka and Nagoya, the average price for land of all categories including commercial, residential and industrial grew 0.4% from a year earlier as of January 1st aided by redevelopment projects and investment in such cities as Sapporo, Sendai, Hiroshima and Fukuoka. However, land prices in depopulated areas continued to fall, underlining polarization in regional land prices in the country.
As of January 1st, 2018, the average regional land price was unchanged from a year ealier, according to the nationwide survey by the Ministry of Land, Infrastructure, Transport and Tourism covering some 26,000 locations. Regional residential land prices edged up 0.2% from a year earlier, marking the first rise in 27 years, while commercial land prices went up 1.0% for the second straight year of increase. But land prices dropped at 48% of regional survey spots and remained flat in 19% of them as land price growth was mostly limited to tourist sites and areas with improved access due to redevelopment. Among the major regional cities, Fukuoka observed the largest increase in commerical land prices at 12.3%, followed by Sendai at 10.7%, Sapporo at 8.8%, and Hiroshima at 5.8%. Residential land prices rose 4.4% in the four cities on average.
Major net brokers are likely to post declined profits
Japan’s four major internet securities companies are expected to report lower profits for the fiscal year ended March 2017, due largely to an uncertain global political environment that has pared down trading by retail investors.
Matsui Securities’ nonconsolidated net profit is seen at about JPY 11 billion($101 million), down 25% from the previous year, while Kabu.com Securities’ net profit is estimated at JPY 6.5 billion, a 19% decrease. Both companies were likely hurt by a downturn in stock brokerage commissions from trading by individuals. Monex Group’s consolidated net profit, based on international accounting standards, seems to have dropped 86% to around JPY 500 yen. Earnings were weighed down in part by increased costs from renovations of its core system. SBI Securities’ earnings remained solid, with its group net profit apparently falling only slightly to about JPY 28 billion. Operating revenue excluding financial revenue likely hit a record. Revenue from foreign exchange margin trading commissions evidently rose and its corporate division performed well, thanks to underwriting initial public offerings.
Online brokerages have used low commission fees to boost market share and now control about 90% of trading done by individuals in Japan. Their earnings are thus greatly impacted by individuals’ enthusiasm for buying and selling stocks.But trading by retail investors has decreased every year since its fiscal 2013 peak, when hopes grew for Prime Minister Shinzo Abe’s economic policies, including deregulation. Stock trading by individuals shrank 16% in fiscal 2016, based on data from the Tokyo Stock Exchange.
Japan’ｓworking-age population faces a sharp decline.
Japan’s working-age population is facing a steep decline, leaving the country’s future vitality precarious barring major improvements in social security and labor productivity. The National Institute of Population and Social Security Research published new statistics on Japan’s population on April 10th, showing projected levels for each of the 50 years from 2015 to 2065. The working-age population, ages 15 to 64, is to plunge 40% from 2015 levels by 2065. The figure probably will drop to 59.78 million around 2040, undershooting the current count by more than 20%.
In such sectors as construction, transportation and nursing care, open positions already outnumber applicants by more than three to one. Industries that require lots of labor may not be able to sustain themselves if the population keeps shrinking at this rate, and urgently need advances in productivity or technological innovation.
Nursing care has seen progress in information technology and robotics, but the labor force numbers probably will fail to keep pace with demand nonetheless as the population ages. Some logistics industry players have adjusted their strategies to address the labor squeeze, such as by discontinuing home delivery scheduling services. But unless package volume decreases, they will have a hard time maintaining their present level of service.
Japan’s city gas retail market is liberalized.
On April 1st, Japan freed the city gas retail market. All consumers, including households ad shops, are able to choose a gas provider and its service plan from a variety of options. It allowed major electric power companies to enter the market and enhance competition with gas company rivals in the industry. Actually competition is expected in the Kansai region, but not in the Tokyo metropolitan area. And the consumers planning to change the provider represented only less than 1% of total consumers.
Official land prices as of January 1st 2017 rise.
On March 21st, the Ministry of Land, Infrastructure, Transport and Tourism (”MLIT”) announced the official land prices as of January 1st 2017. The data points 0.4% increase in nationwide price fluctuation average which has resulted in 2 year consecutive increase. The trend shows that openings of new hotels and stores are active in response to the increase in incoming foreign visitors and it has brought to result in two consecutive years rise in the commercial areas. Another trend shows that the residential areas has turn to show a flat status escaping from the nine years consecutive falls thanks to the government support policy such as tax reduction for home loans. In Tokyo, the rate of the rising prices has increased for 4 consecutive years in the residential, commercial and industrial areas and the same result has been also made for the average of all areas. The commercial areas in Tokyo has shown the 2nd largest price increase by prefectural comparison, followed by the same areas in Osaka, and prices of residential areas also have continued a steady increase.