Chapter 2 Issues and Approaches for Realizing Effective Land Use (Government Policy on land)

It is necessary to realize "effective land use" outcomes that respond to the changing circumstances surrounding land, and that take account of the fact that land-markets in Japan are changing structurally. It is desirable in this regard that "effective land use" be realized through approaches　that enhance the utility-value of land, develop beautiful and attractive regions and use market mechanisms to achieve an effective allocation of resources. It is also necessary to promote market conditions that provide a high level of transparency and fairness.

1.	The Promotion of Cadastral Surveys

The cadastre is the most important information source regarding land (including information on property ownership, lot numbers, types of land, boundaries and area measurements). The cadastre plays a useful role in the facilitation of smooth land transactions and planning for the development of streets and sewage, and for quick disaster-recovery operations. However, the state of progress in completing cadastral surveys (as of end of Fiscal Year 2003) was only 46% across the whole of Japan, and a mere 18% in urban areas.

In order to further expand the cadastral survey, the "Basic Survey of Urban Sub-divisions Supporting Urban Renaissance" is promoted in urban areas from Fiscal Year 2004; as is the "Mountain Village Boundary Maintenance Project" for mountain village areas.

Area DID (Densely Inhabited District)	Subjectr Areas km2	Completed Areas km2	Progress Ratio %
Area DID (Densely Inhabited District)	12,255	2,266	18
Developed lands Framlands	17,793	8,551	48
Developed lands Framlands	72,058	48,947	68
Forestry	184,094	71,073	39
Total	286,200	130,837	46

Source:

Research conducted by the Ministry of Land, Infrastructure and Transport

Note 1:

Subject area is the total land area of Japan excluding central government owned forests and public waterways, such as lakes and ponds

Note 2:

DID stands for Densely Inhabited District. When a research zone with high population density (around 4,000 per square km by Census) is adjacent to another high-density research zone, and the total area encompasses a population of more than 5,000, the total zone is defined as a DID

Note 3:

Developed land, farm-land and forestry areas are classified as areas other than those designated as DID

＜Case study＞

Furukawa Cho, Hida City, Gifu Prefecture (the benefits of cadastral surveys in disaster recovery)

On 15th September 1999, Furukawa Cho (Hida City) incurred a huge amount of damage as a result of concentrated heavy rain associated with Typhoon No. 16. In areas where cadastral surveys had been conducted, recovery work at locations damaged by the disaster was conducted smoothly. On the other hand, in areas where cadastral surveys had not been conducted, it took a significantly longer amount of time to achieve recovery.

Chart 2-1-2

Differences in the Progress of Recovery Works after Disasters

2.	Utilization of Fixed-term Land Leases and Fixed-term Tenant Leases

(Significance of Fixed-term Land Leases) In fixed-term land leases and fixed-term tenant leases, contracts are clearly terminated at the end of a pre-determined contractual period. This has benefits for both lessors and lessees, and as such is expected to have an impact by making land use more effective through the increased supply of land achieved by using these types of land leases, etc.

(Status of Fixed-term Land Leases and Related Issues)
The treatment for tax purposes of lump-sum payments for fixed-term land leases has now been clarified. Nowadays, fixed-term land leases that function to separate "land possession" from "land use" have gained in importance. Also, the utilization of fixed-term land leases has been extended to logistic centers, outlet malls and various other schemes such as the rejuvenation of un-utilized and under-utilized land. Also, there are strong demands being made for an extension of the maximum period in fixed-term land leases for business use (currently not more than 20 years). It is important that we consider these issues, and try to improve such conditions.

＜Case study＞

Minami Aoyama Place (utilizing a "fixed-term land-lease for businessuse" to achieve effective utilization of irregular shaped land in the citycenter)

This 2,000sqm landsite is located in Minami Aoyama and enjoys a good location within city-center of Tokyo. However, the site has an irregular shape in that it faces onto Aoyama-dori (Aoyama Road) with a frontage of only 11 meters (around 7 meters if weexclude a privately-owned road) and was previously used as car parking space. Byestablishing development rights for this site under a "fixed term land lease for businessuse", a new commercial facility (Minami Aoyama Place), was developed, with a totalfloor area of 1800sqm.

3.	Progress in the Provision of Land-related Information

In order to establish land markets with a high level of transparency and fairness, where information disparities between transacting parties are minimized, it is essential that the presentation of land-related information be developed. These days there is an increased necessity to assess the utility-value of land and therefore the proper presentation of land-related information is required in order that transacting parties can judge the convenience and profitability of the land concerned. In order to meet this requirement, various approaches to the presentation of land-related information (for use by the general public) are being promoted by the private sector, Central Government and Local Governments utilizing new technologies, including the Internet. From Fiscal Year 2005, the Ministry of Justice will provide the Ministry of Land, Infrastructure and Transport with information about land sale and purchase transactions. With this information, the Ministry of Land, Infrastructure and Transport will conduct research into transaction prices for the transacting parties involved in the subject transaction; and (via the internet) will present the information derived from this research to the market as a whole (i.e. the System for Presentation of Land Transaction Prices).

4.	Factors supporting the Promotion of Real Property Securitization

The real-property securitization market is expanding rapidly and, with this, the types of investment-facilities, and areas of investment subject to securitization, are also expanding. One of the characteristics of real property securitization is its connection with financial markets. This connection is created by the fact that the profitability of properties, and cost of raising funds for them, is strongly influenced by interest-rates. From now on, it will be necessary to expand the current stable market by giving publicity to and promoting public understanding of real property securitization. This will be achieved by disseminating more detailed information and conducting education activities, and by developing investment-protection measures. The lack of information infrastructure for investors has also been pointed to as an issue. In particular, it is necessary to improve the provision of information concerning profitability, so investors can accurately understand the profitability of property investment markets.

5.	The Enhancement of Real Property Appraisals

The real property appraisal system plays an important role in support of the property market. From now on, it is expected that this role will be executed with precision on the basis of those amendments to the system that have been introduced so far.