Introduction

Summary of White Paper on Land (2003)
Introduction

This is a translation of the “White Paper on Land (2003)” by the Ministry of Land, Infrastructure and Transport, of the Government of Japan In this report, we use the term "real property", which indicates "real estate" and "property", so that this report is easily understood by readers in the US , the UK and other parts of the world. The real property system in Japan might be difficult for non-nationals to understand. So the following are a few basic factors about the Japanese real property system which should be highlighted at the outset:

(1)	In Japan, land is regarded as a separate asset from buildings. Therefore, the term “Land Price” is normally used instead of “Property Price”, not only for agricultural land but also for developed land. Also, the term “Land Market” is often used instead of “Real Property Market”, and the “Land Market” refers to the market which determines the “Land Prices”.
(2)	Freehold is the only type of property ownership in Japan . There is no equivalent system of leasehold property ownership but there is a property holding system called “land lease”: the ownership of a building only, excluding the land. A land lease is only granted under a provision that the building is owned by a different party from the actual landowner.
(3)	In most other countries, land price is a residual of property price, calculated by the income approach: net income divided by yield, minus building cost. However, in Japan , property price, including that for income producing properties, usually comprises land price plus building price, which are calculated separately. Land prices are normally determined by market comparisons utilising land price indices prepared by the Government; such as those within the “Land Price Publication” by Ministry of Land, Infrastructure and Transport, whilst building prices are normally determined in the market through the cost approach.
(4)	Currently, due to the continued land price declines and the spread of real property securitisation, property prices are beginning to be determined by reflecting the income from the subject properties, where real property assets are considered as a whole, using the income approach.