Chapter 2 Trend in Land Demand from Business Enterprises and Individuals
　
Section 1 Land Demand from Business Enterprises
(Investment in Plants and Land)
　　　The socio-economic conditions surrounding land in Japan have undergone dramatic structural change due to the falling birthrate, the aging population and industrial restructuring. Such structural changes to the demographic and industrial landscape have led to a slackening of land demand, continuous drops in land price and an increase in unutilized/underutilized land in rural regions.
Chart: Price Trends in Locations Registering Land Price Rise (Published Land Prices)
Chart: Trend in Total Area Size of Plant Sites
　　　Due to the invigorated land demand from business enterprises, the average land prices in industrial areas in the whole of Japan rose for the first time in 17 years, according to the land prices published in 2008.
Chart: Year-on-Year Land Price Changes (Industrial Land)
　　　Strong land demand continues, with business enterprises showing increasing willingness to utilize land and buildings in the future.
Chart: Plans Regarding Land Purchases and Sales over the Next One Year and Plans Regarding Increase or Decrease of Land and Building Utilization over the Next One Year
(Office buildings)

　　　As enterprises have been expanding their business operations and workforces, demand has been growing for office buildings, primarily in the center of Tokyo.

　　　The vacancy rate of rental offices remains low, and there are signs of a halt to the decline in rents.
　　　In particular, rents for large-scale buildings in central Tokyo have been rising sharply since around the middle of 2006. Although the pace of rise in rents for large buildings slowed down somewhat in the second half of 2007, overall office building rents have continued to increase, with the uptrend spreading to small- and medium-size office buildings.

Chart: Changes in Office Building Rents and Vacancy Rates
Section 2 Land Demand from Individuals
(Number of housing starts)
　　　The number of housing starts in Japan decreased in 2007 after increasing for four straight years amid low interest rates and the economic recovery, as demand was dampened mainly by the effects of the enforcement of the revised Building Standards Act.

Chart: Trends in the Construction Starts of Residential Properties
(Condominium market)
　　　The condominium market has been invigorated, mainly in central Tokyo, due to factors such as the people’s increasing inclination to live in urban areas that offer a high level of convenience, and the release by business enterprises of land holdings suited for condominium development as a result of the disposal of non-performing assets, the review of asset portfolios and the consolidation of offices and factories.
　　　However, as the wave of corporate restructuring has run its course, the supply of land suited for new condominium development in urban areas is declining, signaling a change in the market condition.
　　　The new supply of condominiums for sale in the Tokyo metropolitan region exceeded 80,000 units for seven straight years from 1999 but fell below 75,000 units in 2006 and plunged to around 61,000 units in 2007.
In addition, the contract ratio fell sharply, leading to an increase in inventories.
　　　On the supply side, the supply of condominiums in areas with poor location convenience increased due to a decrease in land suited for condominium development and the sales prices rose amid the surge in land acquisition and construction costs, while on the demand side, consumers are rigorously examining location, convenience and price when evaluating condominiums.

Chart: Condominium Supply in Tokyo Metropolitan Region

Chart: Trends in Inventory of Newly Supplied Condominiums and
Contract Ratio (Tokyo Metropolitan Region)
Section 3 Changes in Perceptions of Land and Systematic Land Utilization Responding to Changing Conditions
(Business enterprises’ perceptions)
　　　In the “bubble economy” era, business enterprises registered huge net purchases of land in anticipation of a future price increase.
　　　Because of the prolonged downtrend of land prices following the bursting of the economic bubble and changes in the corporate management environment, their perceptions of land have changed drastically. 　　　　　After undergoing adjustments such as business restructuring and disposal of non-performing loans, business enterprises have in recent years focused on land ownership and utilization based on their actual demand.
　　　Moreover, there is a growing trend of enterprises opting for land lease and office rental, for strategic reasons or because of cost-consciousness, without necessarily seeking ownership.

Chart: Trend in Value of Land Purchases/Sales

Chart: Purposes of Land Purchases or Planned Land Purchase (Multiple choices are allowed)

(Land utilization consistent with corporate strategies)
　　　Some business enterprises have conducted a comprehensive review of their assets with due consideration of their financial strength and management strategies and actively reshuffled their asset portfolios, including real estate holdings.
[Case] Real estate sale as a result of an asset review (Toshiba)

　　　Toshiba Corporation has decided to sell the land and building of its former head office, which has been used as a leased commercial and office complex building, in order to maximize the value of its assets and boost its corporate value.

　　　It is necessary to continue collecting and providing information useful for business enterprises to accurately assess the profitability of, and judge the utility of, individual real estate assets and support rational ownership and utilization of real estate by business enterprises.

(Individuals’ perceptions)
　　　Although the number of households is expected to continue increasing for a while, household size is shrinking as a result of the rising ratio of single-member households.
　　　In addition, as the people’s values and lifestyles become increasingly diversified, their perceptions of land and housing are changing.
Chart: Trend in Household Numbers by Household Type and
Average Number of Household Members
　　　For example, when selecting their residences, the people are showing increasing inclination to put priority on factors other than housing size and floor plan, with some people choosing to live in urban areas for traffic convenience and others preferring suburban areas because of their priority on the surrounding natural environment. Moreover, the people are seeking increasingly high standards with regard to residential quality elements such as the street appearance, townscape, amenities and security.
　　　The people’s way of choosing residence location is expected to continue evolving in line with changes in the household structure and their perceptions of land and housing, and they are expected to show an increasing tendency to proactively select their residences in light of their lifestyles as well as the utility value and price of land and houses.
Chart: Priority Items for Residence Location Choice (Three Items Prioritized)
Chart: Interest in Improving or Conserving Town Landscapes
(Proactive land utilization by local communities with due consideration of environment friendliness)
　　　Now that the people are satisfied with housing quantitatively, they are increasingly interested in residential quality elements such as street appearance and townscape. Reflecting this trend, various efforts by local residents are under way in order to make their communities attractive by creating a comfortable living environment and seeking harmony with the natural environment.
Chart: Desired Elements for Own Area of Residence (Multiple Choices Allowed)


○Efforts to protect a pleasant appearance of streets
[Case] Aoba-Utsukushigaoka-Chubu District (Aoba Ward, Yokohama City)
　　　This district is engaging in efforts to protect a favorable living environment through voluntary area management by local residents, such as community building promoted in line with a guideline for the street appearance set by a community building assessment committee, as well as a community plan for protecting a living environment.
Street appearance of Utukushigaoka
○Efforts led by landowners and shopping malls to make communities attractive
[Case] Marugamemachi shopping mall, Takamatsu (Takamatsu City, Kagawa Prefecture)
　　　A company for community building established by local residents is managing overall community building efforts and promoting the revitalization of the whole community through various approaches suited to the local circumstances, including securitization schemes.
○Joint efforts by NPOs (non-profit organizations) and various other entities to build eco-friendly communities
 [Case] Kobunaki Ecovillage Project (Ohmihachiman City, Shiga Prefecture)
　　　Through cooperation between various entities, including NPOs, companies, universities, local residents and the local government, efforts are underway in the Kobunaki Ecovillage to establish a favorable living environment and increase the attractiveness of the community by taking advantage of the characteristics of local resources. For example, eco-friendly houses with vegetable gardens, parks and stores for agricultural products are have been setup in order to create harmony with the surrounding landscape and create a leisurely and comfortable living environment.

　　It is necessary to continue to provide information necessary for making rational judgment of the condition of the real estate market, and for setting real estate prices. It is also necessary to support proactive efforts by local communities to maintain and enhance a favorable local living environment and utilize land with due consideration of environment friendliness, such as eco-friendly community building efforts.

　

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