Foreign Buyers Help Land Values Rise for 5th Year; International Tourism Also a Factor in Tokyo, Kyoto

By Shingo Hashitani and Eriko Inoue / Yomiuri Shimbun Staff Writers

7:00 JST, March 20, 2025

The fourth consecutive increase in the official land values in 2025 has emphasized once again the recovery trend since the COVID-19 pandemic.

The increasing presence of foreign nationals in both urban and rural areas is a factor behind the rising land prices.

Against the backdrop of a weak yen, the number of foreign visitors to Japan has reached a record high, and investment in redevelopment projects by overseas investors is also becoming more conspicuous.

Among overseas visitors to Tokyo, the scramble crossing in Shibuya Ward is a favorite destination. There are often lines of foreigners taking photos around the iconic statue of the faithful dog Hachiko near Shibuya Station.

As the number of visitors increases, consumption in the area and its surroundings will be stimulated, and the profitability of hotels and commercial facilities will also increase. Such a trend encourages redevelopment projects.

In the 2025 official land values released by the Land, Infrastructure, Transport and Tourism Ministry, the value of a survey point in Sakuragaoka-cho, Shibuya Ward, about 400 meters south of the crossing, rose 32.7% year-on-year, the fifth highest rate of increase for commercial land in Japan this year.

This is the first time in five years that a survey point in Tokyo has been in the top 10. The upper rankings are usually filled with sites in regional areas that see large fluctuations in land prices.

There has been significant redevelopment around Shibuya Station in recent years, and there are more redevelopment plans for Sakuragaoka-cho in the works. Rikio Wada, the chair of a local community association said, “Progress is still going on.”

In Kyoto City, which is also popular with overseas tourists, the official land value in the area south of Kyoto Station, where a succession of foreign-affiliated hotels have opened, rose 21.9%.

An official of real estate company Alive said, “There is an increase in investment in restaurants and other places in anticipation of strong demand related to foreign visitors.”

In Miyakojima, Okinawa Prefecture, land values have also risen as the city has seen the development of resort facilities for visitors to Japan.

Investment by foreign investors is also pushing up land prices. In addition to hotels and commercial facilities, which are expected to be used by an increasing number of foreign visitors, they have started to show keen interest in office space. This is because rates of in-person office work are relatively high in Japan, and office rents are on the rise.

According to the NLI Research Institute, the value of domestic real estate transactions in 2024 was about ¥8.5 trillion, up 20% from the previous year and the highest since the 2008 Lehman Shock. Foreign capital accounted for ¥2.4 trillion, a 40% increase from the previous year.

Taking advantage of relatively low interest rates compared to those in Europe and the United States as well as the weak yen, there have been a number of large investments in anticipation of future increases in value. In Tokyo’s Ginza district, a Hong Kong-based investment fund acquired the Tokyu Plaza Ginza commercial facility for about $1 billion (about ¥150 billion yen) in February.

In February, U.S. investment fund Blackstone also acquired Tokyo Garden Terrace Kioicho, a mixed-use complex on the site of the now defunct Akasaka Prince Hotel in Chiyoda Ward, Tokyo, for about ¥400 billion. Daisuke Kitta, an executive of Blackstone’s Japan operations, said: “There are attractive real estate properties throughout Japan. We would consider investing even more than ¥1 trillion in such properties if we decide that’s profitable.”