Industry
Update

The number of foreign visitors to Japan topped 36 million in 2024 in a new all-time high, boosted by a weak yen and the resumption of flight routes to Japan following the COVID-19 pandemic, while their spending surpassed 8 trillion yen ($50.8 billion) for the first time on record, government data showed Wednesday.


Foreign tourists spent a total of 8.14 trillion yen on accommodation, shopping and other expenses in 2024, surpassing the previous record of 5.31 trillion yen set in 2023, preliminary figures from the Japan Tourism Agency showed.


A record 36.87 million foreign tourists visited Japan in 2024 as peak travel periods, including the seasons for cherry blossoms and autumn foliage, contributed to annual visitor numbers from 20 markets setting new record highs, according to the Japan National Tourism Organization.


Cumulative figures from January to November last year had already surpassed the previous full-year high of 31.88 million set in 2019, before the pandemic.


The largest number of travelers in 2024 came from South Korea at 8.82 million, followed by China at 6.98 million, up almost three-fold from 2023, and Taiwan at 6.04 million.


Chinese visitors spent the most amount of money at 1.73 trillion yen, comprising 21.3 percent of the overall total, followed by 1.09 trillion spent by Taiwanese and 963.2 billion by South Koreans.


The largest portion of total spending at 33.6 percent, or 2.74 trillion yen, went on accommodation, followed by shopping expenses at 29.5 percent and dining at 21.5 percent.

Visitors to Japan spent around 227,000 yen per person on average, with Britons spending the most at around 383,000 yen, closely followed by Australians at 382,000 yen and Spaniards at 370,000 yen.


In December alone, the number of visitors to Japan stood at 3.49 million, up 27.6 percent from a year earlier and hitting a record high for a single month. The surge was driven by travel demand during the school holidays, as well as the Christmas and New Year holiday seasons in many countries, the JNTO said.


Tourism spending is now second only to the 17.2 trillion yen generated by automobile exports in 2023, surpassing the 5.4 trillion yen from semiconductors and 4.5 trillion yen from steel, according to the Finance Ministry’s trade statistics.


The government aims to attract 60 million visitors a year and increase their annual spending to 15 trillion yen by 2030, but faces issues related to overtourism and labor shortages in the hospitality sector.


Efforts are also under way to attract more high-end travelers as well as encourage visitors to venture beyond major cities by improving access to regional airports.

The yen fell below the 154 line against the U.S. dollar on Monday in New York for the first time in nearly 34 years on receding expectations that the U.S. Federal Reserve will cut interest rates soon amid signs of persistent inflation.

The value of the Japanese currency depreciated against the dollar after Tokyo trading and hovered in the lower 154 range throughout the day in New York, levels last seen in June 1990, after hitting 154.45.

Investors have been selling the yen for the dollar amid the wide rate differential between Japan and the United States, as their central banks have been pursuing divergent ultraloose and tight monetary policies, respectively.

The yen was quoted at 154.22-32 per dollar at 5 p.m. Monday in New York, compared with 153.90-91 late Monday in Tokyo.

While caution over a potential yen-buying intervention by Japanese authorities has persisted, comments on Monday in Tokyo by Finance Minister Shunichi Suzuki reiterating the possibility of such a move did little to stop the yen’s downward trend.

The yen has already weakened past levels where Japan previously intervened in October 2022 to arrest its rapid decline, when it inched near the 152 level.

The Bank of Japan recently hiked interest rates for the first time in 17 years, but it has signaled it will maintain an accommodative stance for the time being.

Meanwhile, the U.S. central bank has kept its benchmark interest rate at a 23-year high. A stronger-than-expected economic indicator for March, released earlier Monday, further diminished expectations the Fed will begin cutting rates as early as June.

The yen briefly hit a 34-year low near the 152 line against the U.S. dollar Wednesday in Tokyo on renewed expectations the Bank of Japan will maintain its accommodative stance even after raising interest rates for the first time in 17 years.

The yen fell to 151.97 per dollar, its lowest level since 1990 after Bank of Japan board member Naoki Tamura said short-term interest rates would remain near zero for the time being, despite the central bank ending negative interest rates last week.

”Mr. Tamura was considered one of the more hawkish members among BOJ policymakers, but his comments suggested that he is not as eager as expected to hike rates,” said Takuya Kanda, senior researcher at the Gaitame.com Research Institute.

However, the Japanese currency regained some ground later in the day after Finance Minister Shunichi Suzuki vowed to take ”decisive steps” against excessive weakness in the yen, leaving investors wary of possible intervention by authorities.

The last time Japan stepped into the market was in October 2022, when it bought the yen against the dollar to defend its currency, which had fallen to 151.94.

”Given there is a precedent and the fall to 34-year lows, it was inevitable for the market to be cautious about a possible intervention,” said Kanda, noting that the minister appeared to have elevated his warning over the yen’s decline.

At 5 p.m., the dollar fetched 151.70-72 yen compared with 151.50-60 yen in New York and 151.32-34 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.0827-0828 and 164.25-29 yen against $1.0825-0835 and 164.10-20 yen in New York, and $1.0841-0843 and 164.05-09 yen in Tokyo late Tuesday afternoon.

The yield on the benchmark 10-year Japanese government bond fell 0.020 percentage point from Tuesday’s close to 0.715 percent, as the debt was bought on expectations of prolonged monetary easing by the BOJ.

Stocks started higher and extended gains throughout the day as the yen’s depreciation boosted export-related issues, and investors scooped up shares to secure dividend rights before the end of the fiscal year, analysts said.

The 225-issue Nikkei Stock Average ended up 364.70 points, or 0.90 percent, from Tuesday at 40,762.73. The broader Topix index finished 18.48 points, or 0.66 percent, higher at 2,799.28.

On the top-tier Prime Market, gainers were led by real estate, miscellaneous product and insurance shares.

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.