trends concerning land in fy2010 basic measures …“trends concerning land in fy2010” and...

Trends Concerning Land in FY2010

Basic Measures in Relation to Land in FY2011

Abstract

June 2011

Ministry of Land, Infrastructure, Transport and Tourism

Contents “Trends Concerning Land in FY2010” ................................................................................ 1 Part 1 Trends Concerning Land ............................................................................................... 1 Chapter 1 Trends in Land Prices and Transactions in FY2010 .............................................. 1

Section 1 The Japanese Economic Situation Surrounding the Real Estate Market .............. 1 Section 2 Trends in Land Prices ........................................................................................... 2 Section 3 Trends in Land Transactions ................................................................................ 4 Section 4 Trends in the Real Estate Investment Market ...................................................... 6 Section 5 Trends in Land Use .............................................................................................. 7 Section 6 Perceptions of Land among Enterprises and Households .................................... 7

Chapter 2 Impact of the Great East Japan Earthquake and Challenges for Reconstruction ... 8

Section 1 Situation after the Great East Japan Earthquake .................................................. 8 Section 2 Challenges Concerning Land as a Premise for Reconstruction ............................10

Chapter 3 Real Estate Investment around the World, and the Future Real Estate Investment

Market in Japan ....................................................................................................15 Section 1 Trends in the Global Real Estate Investment Market after the Financial Crisis.....15 Section 2 Current State of Japan’s Real Estate Market ........................................................18 Section 3 The Role Played by the Securitization of Real Estate and Its Impact ..................20 Section 4 Challenges and Efforts for Stable Growth of the Real Estate Investment Market in

Japan ......................................................................................................................23 Part 2 Basic Measures in Relation to Land in FY2010 ............................................................27 “Basic Measures in Relation to Land in FY2011” ...............................................................28

“Trends Concerning Land in FY2010” and “Basic Measures in Relation to Land in FY2011” are created based on the provisions of Article 10, paragraphs 1 and 2 of the Basic Act for Land (Act No.84 of 1989).

1

“Trends Concerning Land in FY2010” Part 1 Trends Concerning Land Chapter 1 Trends in Land Prices and Transactions in FY2010

Looking back at Japan’s economic performance in fiscal 2010, in the first half we saw continued recovery from the major recession following the Lehman shock of September 2008 and the positive effects of the extremely hot summer in 2010. However, the economic recovery paused since fall due

to the sharp appreciation of the yen, the reaction to the hot-summer effects and so forth. In early 2011 there were some visible signs of recovery but in addition to the damages caused by the Great East Japan Earthquake and the accompanying tsunami, the electricity supply restriction, etc. that has followed may have an impact on the Japanese economy.

Section 1 The Japanese Economic Situation Surrounding the Real Estate Market (Changes in GDP)

The Japanese economy deteriorated sharply following the Lehman shock, but started to recover in the April–June quarter of 2009, and real GDP maintained positive growth from the previous quarter also in 2010 until the July–September quarter. In the July–September quarter, however, though consumption contributed to positive growth, net exports became negative. Then consumption

also turned negative in the October–December quarter, leading to a real GDP growth rate of −0.3%, a negative figure for the first time in five quarters.

Chart: Changes in Real GDP Growth Rates

0.3

-0.8 -1.3

-2.9

-5.4

2.6

-0.5

1.8 1.5

0.5 0.8

-0.3

-6 -5 -4 -3 -2 -1 0 1 2 3 4

I II III IV I II III IV I II III IV

2008 2009 2010

Consumption

Housing

Capital investment

Public Fixed capital formationOthers

Net exports

Real GDP growth rate

Source: “Preliminary Reports on Quarterly GDP,” Cabinet Office

(%)

(Quarter)

(Year)

2

(Corporate and household trends) Excessiveness in capital stock perceived by manufacturers, which had been gradually declining

since 2009, continued the declining trend also in 2010. Household consumption showed signs of

recovery due to the extremely hot summer in addition to such policy effects as the eco-car subsidy and eco points, but was weak in some areas, causing the Composite Index of Consumption Expenditures in the October–December quarter to be negative compared to the same period of the previous year.

(Trends in prices)

As the consumer price index has been continuously falling since 2009, the Japanese economy is still in a mild deflation.

Section 2 Trends in Land Prices

In the public notice of land prices in 2011, while land prices continued to fall since the Lehman shock in September 2008, the decline slowed for the first time in all regions (Tokyo, Osaka, Nagoya,

and Nonmetropolitan regions), showing signs of a change in the falling trend, though with remaining uncertainty over the economic situation. This move was more apparent in the metropolitan regions and residential land than in nonmetropolitan regions and commercial land, but the decline became slower in commercial land, with the rate of decline approaching that of residential land.

The reasons behind this may include policy effects, such as tax breaks for home buyers, low interest rates, and the expansion of the gift tax exemption, as well as rising demand due to affordable

house prices, leading to the change in the falling trend for residential land. As regards commercial land, there were investments from home and abroad against the background of rent adjustment in the rental office market, especially in urban areas, recovery in corporate profits, upturn in the financing environment and recovery of REIT stocks, for example.

3

Chart: Year-on-Year Percentage Changes

All purposes Residential land Commercial land

Up Unchanged Down Up Unchanged Down Up Unchanged Down

2011 PublicNotice

193 1,082 24,232 152 761 15,530 35 213 5,399

2010 PublicNotice

7 101 27,302 6 65 17,759 1 21 5,900

2008 PublicNotice

13,416 2,539 12,837 9,065 1,617 8,037 3,110 427 2,701

2011 PublicNotice

171 907 11,047 140 642 7,405 25 175 2,265

2010 PublicNotice

5 8 13,040 4 4 8,885 1 1 2,584

2008 PublicNotice

11,493 996 1,350 7,926 670 836 2,501 114 135

2011 PublicNotice

81 188 6,593 70 130 4,511 8 38 1,422

2010 PublicNotice

0 6 7,365 0 3 5,112 0 0 1,526

2008 PublicNotice

6,933 449 460 4,856 308 279 1,559 32 35

2011 PublicNotice

8 152 3,210 2 114 2,215 6 35 533

2010 PublicNotice

0 0 3,628 0 0 2,528 0 0 602

2008 PublicNotice

3,117 340 383 2,185 255 242 577 33 23

2011 PublicNotice

82 567 1,244 68 398 679 11 102 310

2010 PublicNotice

5 2 2,047 4 1 1,245 1 1 456

2008 PublicNotice

1,443 207 507 885 107 315 365 49 77

2011 PublicNotice

22 175 13,185 12 119 8,125 10 38 3,134

2010 PublicNotice

2 93 14,262 2 61 8,874 0 20 3,316

2008 PublicNotice

1,923 1,543 11,487 1,139 947 7,201 609 313 2,566

National

Three largestmetropolitan

regions

Nonmetropolitan

regions

Osakaregion

Nagoyaregion

Tokyoregion

Source: “Public notice of land prices,” Ministry of Land, Infrastructure, Transport and Tourism

4

Section 3 Trends in Land Transactions (Changes in the number of land transactions)

Land transactions in terms of registration of ownership transfer due to sale have been decreasing

in the last several years nationwide, including in the largest metropolitan regions and non-metropolitan regions, with the number of land transactions in 2010 reaching 1,154,000 (down 2.2% from the preceding year). On a quarterly basis, the decline has become smaller on a year-to-year comparison since early 2010, especially in nonmetropolitan regions.

(Enterprises’ perceptions of land transactions)

The diffusion index of enterprises’ perceptions of land transactions of their head office location (the ratio of corporations responding that transactions were “active” minus the ratio of corporations responding “sluggish”) in Tokyo and Osaka continued to improve in the beginning of 2010, with the DI for Tokyo standing at −40.0 and that for Osaka at −48.2 as of the end of March 2011.

Chart: Land Transaction Conditions DI

3.4

-56.0

-79.1 -68.8 -67.2

-53.4 -40.0

-10.0

-66.1

-83.5 -77.5

-68.1 -63.9

-48.2

-100

-80

-60

-40

-20

0

20

40

60

3 9 3 9 3 9 3 9 3 9 3 9 3 9 3 9 3 9 3

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tokyo's 23 special wardsOsaka Prefecture

Source: “Land Investment Trend Survey,” Ministry of Land, Infrastructure and TransportNote: DI = (Active ratio) − (Sluggish ratio). The unit is points.

(Month)

(Year)

(Trends in the office market)

Demand for rental offices continued to decline in 2010 as in the previous year, further disrupting

the office supply/demand balance. The vacancy rate of rental offices in Marunouchi, Otemachi and Yurakucho, three urban centers of Tokyo, showed signs of improvement in the beginning of 2010, but later rose again.

5

Chart: Changes in Office Building Rents and Vacancy Rates (Tokyo)

5.9

3.8 4.3

6.1

6.9 6.0

4.0

2.9

2.0 1.9 1.7 1.8 2.0 2.4 2.5

3.3

3.8 4.9

5.6

6.5 6.9

7.5 7.5 7.7 7.7

5.9

3.6

4.2

6.1

7.0

5.7

3.6

2.6

1.8 1.7 1.6 1.7 1.9 2.3 2.4

3.2 3.9

5.0 5.7

6.6 7.0

7.5 7.5 7.7 7.6

1.8

0.9

1.6

2.5

3.2

1.7

0.3 0.2 0.3 0.1 0.1 0.3 0.5 0.4 0.7

3.0

4.0 4.2

4.3

5.1

4.3 4.6

3.6 4.0

4.5

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

0

2

4

6

8

10

12

3 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rents in Tokyo's 23 special wards (right scale)Rents in five major Tokyo wards (right scale)Rents in Marunouchi, Otemachi and Yurakucho (right scale)Vacancy rate in Tokyo's 23 special wards (left scale)Vacancy rate in five major Tokyo wards (left scale)Vacancy rate in Marunouchi, Otemachi and Yurakucho (left scale)

(Yen/tsubo)

Source: CB Richard Ellis

(Month)

(Year)

(%)

(Trends in the residential market)

In 2010, sales of new condominiums came to 44,535 units in the Tokyo metropolitan region (up

22.4% from the preceding year) and to 21,716 units in the Kinki region (up 9.8%). The contract ratio of the new supply of condominiums in 2010 was above 70%, which is the level marking a strong market, with the contract ratio in the Tokyo metropolitan region rising to 78.4% and that in the Kinki region rising to 70.2%.

6

Chart: Inventory of Condominiums and Contract Ratio in the Tokyo Metropolitan Region and Kinki Region

4222

8014

11704

8783

6749

8583

10447

8330

9887

11107

8712 89039571

11611

9728

7900

5987

8173

10763

12427

7389

5600

1528

7330

8074

7636

5393

62756596

6185

7449 7224

5338

6118 6155

7168

5664

43443854

4671

57696344

5233

3971

77.4 73.9

58.3

72.8

83.3 85.4

78.5

83.1

75.1 71.2

79.0 79.6 78.1 75.4

78.1 79.0 82.5

78.3

69.7

62.7

69.7

78.483.9

70.8

55.1

66.6

79.8 83.0

76.6 81.3

74.8

70.8

78.5 75.7

74.3

70.8

71.9 76.4 76.9 72.9

68.0

60.4 61.3

70.2

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

0

2000

4000

6000

8000

10000

12000

14000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Inventory: Tokyo metropolitan region Inventory: Kinki regionContract ratio: Tokyo metropolitan region Contract ratio: Kinki region

Source: “Japan’s Condominium Market Trend,” Real Estate Economic InstituteNote: Tokyo metropolitan region: Tokyo, Kanagawa, Saitama and Chiba prefectures

Kinki region: Osaka, Hyogo, Shiga, Nara and Wakayama prefectures

(Units) (%)

(Year)

Section 4 Trends in the Real Estate Investment Market (Trends in the J-REIT market)

There were four cases of merger in fiscal 2010, leading to there being 35 different stocks as of the end of March 2011. The size of the J-REIT market in terms of the current aggregate value of the investment securities in circulation was 3,700 billion yen as of the end of March 2011. Following the announcement by the Bank of Japan to set up a fund to purchase assets including J-REITs under “the

comprehensive easy-money policy” on October 5, 2010, the trading value of J-REITs reached 28.679 billion yen (up 192% from the previous day) on the next day, October 6, and the Tokyo Stock Exchange REIT Index rose above 1,000 in November 2010 for the first time in the 14 months since September 2009.

7

Chart: Number and the Current Aggregate Value of the Listed J-REIT Stocks

0

5

10

15

20

25

30

35

40

45

0

1

2

3

4

5

6

7

8

Sep. 2001

Apr. 2002

Nov. 2002

Jun. 2003

Jan. 2004

Aug. 2004

Mar. 2005

Oct. 2005

May. 2006

Dec. 2006

Jul. 2007

Feb. 2008

Sep. 2008

Apr. 2009

Nov. 2009

Jun. 2010

Jan. 2011

Current aggregate value

Number of the listed stocks

(Trillion yen) (Number of the listed stocks)

Source: Tokyo Stock Exchange

Section 5 Trends in Land Use

As of the end of 2009, the total area of Japan was approximately 37.79 million ha (93.38 million

acres). About 80% of this total area was comprised of forestry (25.07 million ha, 61.95 million acres) and agricultural land (4.69 million ha, 11.59 million acres) (down 0.4% from the preceding year). The remaining land was divided into developed land (residential, industrial and other land of 1.89 million ha (4.67 million acres) (up 0.5% from the preceding year), roads of 1.35 million ha (3.34 million acres), surface water, rivers, canals of 1.33 million ha (3.29 million acres), and fields of 0.28 million ha (0.69 million acre).

Section 6 Perceptions of Land among Enterprises and Households

Households’ perception of land: of the responses regarding the tendency of the land price depending on a household’s evaluation of its own profitability and convenience, in fiscal 2005 43.8% were positive, including “very favorable” and “favorable,” whereas 53.3% were positive in the 2010 survey, the highest percentage ever since the start of the survey.

Enterprises’ perception of land: Ratio of enterprises that consider the “tenancy will be more advantageous in the future.” It had been increasing every year up to fiscal 2002, and thereafter it basically remained between 40% and 45%. It was 40.1% in the 2010 survey.

8

Chapter 2 Impact of the Great East Japan Earthquake and Challenges for Reconstruction

Around 14:46 March 11, 2011, an earthquake centered off the coast of Sanriku occurred with a magnitude of 9.0, the greatest Japanese recorded history. The earthquake and the tsunami caused by the earthquake inflected tremendous damages, especially in the Tohoku Region, and developed into an unprecedented disaster with the number of missing and dead exceeding 25 thousand.1

In addition to the huge number of human casualties, buildings and such life-line structures as roads collapsed or were tremendously damaged by the earthquake and tsunami. The transportation

chaos and power supply problems that followed also had a significant impact on Japan’s economic life. Furthermore, the problem at the Fukushima No.1 nuclear power plant is not only the major cause of the power supply crunch, especially in the Kanto Region, but is also having wider repercussions, including the evacuation of residents and the banning of shipping crops from the surrounding areas.

Section 1 Situation after the Great East Japan Earthquake (Damages caused by the Great East Japan Earthquake)

Human damages due to the earthquake include 14,508 deaths, 11,452 missing persons, and 5,314 injured persons as of April 27, 2011. The death tolls in Iwate, Miyagi and Fukushima prefectures, which suffered the most, are 4,234, 8,754 and 1,466 respectively.

In addition to such human suffering, the direct impact on stocks of social capital, houses, private

company facilities and so on is estimated by the Cabinet Office to be 16 to 25 trillion yen, greatly exceeding the 9.6 trillion yen of the Great Hanshin Awaji Earthquake (estimated by the National Land Agency).

Structural damages include 76,786 total collapses, 28,032 half collapses and 231,019 partial damages. Aftershocks that occurred later in many places around Japan also caused structural damages. Furthermore, the total area flooded by the tsunami caused by the quake reached 561km2 in

62 municipalities of 6 prefectures (Aomori, Iwate, Miyagi, Fukushima, Ibaragi and Chiba prefectures.) A large number of municipalities, including Ishinomaki City, Higashi-matsushima City, and Minami-soma City, experienced inundation damage due to the tsunami.

1 The description of the damages in this chapter are based on the Disaster Headquarters’ material, “About 2011 Great Tohoku Pacific Earthquake (Great East Japan Earthquake)” (April 27, 2011) and other materials.

9

Chart: Surface Areas Inundated by the Tsunami, by Municipality and Land Use

0

10

20

30

40

50

60

70

80

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vill

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Aomori Prefecture

Iwate Prefecture Miyagi Prefecture Fukushima Prefecture Ibaraki Prefecture Chiba Prefecture

Inun

date

d ar

ea

Rivers, lakes, and seashore and salt water areas

Paddy and other agricultural land, forests, wasteland, and golf courses

Other land (open space of air ports, ports, reclaimed land, etc.)

Land for arteria l tra ffic

Building land

(km2)

Source: Geospatial Information Authority of Japan (from a material published on April 18, 2011)

(Impact of the earthquake on the real estate market)

New construction of homes in March was down 2.4% from the same month the year before. The

impact of the earthquake was significant in Iwate (down 30.1%), Miyagi (down 13.9%) and Fukushima prefectures (down 21.0%.)

Looking at the office market, damages to office buildings are relatively small in Sendai where many buildings were built according to the new quake-resistance standard or had a seismic retrofit, bringing about almost no move to relocate offices to outside the region. Some say that the demand is increasing for relatively new properties.

The impact of the earthquake is not limited to the afflicted areas. Some companies (mostly foreign companies) temporarily moved from the Tokyo metropolitan region to Osaka, for example. Tokyo Stock Exchange narrow-based stock index (real estate) fell from the closing price of 875.49 on the day before the earthquake (March 10) to 686.37 on March 15, four days after the quake, and recovered only to 746.36 on March 31. On the other hand, Tokyo Stock Exchange REIT index also fell from the closing price of 1092.29 on the day before the earthquake to 926.83 on March 15, but

recovered relatively quickly to 1055.18 on March 31.

10

Chart: Changes in Investment Unit Price and Stock Price

0

200

400

600

800

1000

1200

1400

1/4 1/11 1/18 1/25 2/1 2/8 2/15 2/22 3/1 3/8 3/15 3/22 3/29 4/5 4/12 4/19 4/26

Tokyo Stock Exchange REIT indexTokyo Stock Exchange narrow-based stock index (real esta te)


(Impact of the earthquake on the real estate market)

The estimation by the Cabinet Office mentioned above also suggested the potential influence including the loss of production due to damaged private company facilities in the afflicted areas, its

impact on other areas through supply chain and the loss of production due to restricted power supply, although positive effects are expected from the concentrated investment in reconstruction of the stock.

In the real estate market, beside the impacts on the demand side, such as the concern about safety against disasters and the influence of electricity shortage on various economic activities, impacts on the supply side are also expected, which include those on the procurement of materials necessary to

build houses, offices, etc., and changes in financing in the realty business. In addition to the efforts for reconstruction after the quake, early recovery and stability of the real estate market are desirable. In this process, it is necessary to pay attention to the trends in land transactions in the afflicted areas as well as to facilitate reconstruction.

Section 2 Challenges Concerning Land as a Premise for Reconstruction 1. Establishing the boundary of land (Difference in rehabilitation/reconstruction efforts depending on the implementation of a cadastral survey)

While the areas affected by the earthquake, etc. require prompt efforts for

11

rehabilitation/reconstruction, whether or not a cadastral survey has been implemented in the area will make a significant difference in the time and cost required for reconstruction of houses and restoration of lifelines, for example.

In the case of the Mid-Niigata Prefecture Earthquake (2004), there is a report that, in the restoration work of a 2km-long major prefectural road, measurement was completed and construction works were ordered in about two months, whereas it took about one year in cases where a cadastral survey had not been implemented.

Chart: Effect of a cadastral survey in post-disaster construction

(a case after the Mid-Niigata Prefecture Earthquake (2004))

2km-long major prefectural road was damaged and required prompt restoration

Area where a cadastral survey had been implemented

Area where a cadastral survey had not been implemented

Measurement, etc. was completed in a short time in the areas where a cadastral survey had been implemented, enabling an early start of restoration work

Approx. 2 months

Approx.12 months

Approx. 10 months<Time period for measurement, site acquisition, etc.>

In another case, the cadastral survey rate in the municipalities of Hyogo Prefecture was about

10% (at the end of 1994) just before the Great Hanshin Awaji Earthquake of 1995. In one area of the prefecture, where a cadastral survey had not been implemented, the area’s residents set up a committee to lead the restoration of boundaries for cadastral development. The preparation for setting up the committee and the measurement costs imposed a tremendous burden on the residents

and concerned parties who were forced to live as evacuees. In light of this experience, Hyogo Prefecture has been promoting cadastral surveys by explaining their usefulness to the municipalities where none have yet been implemented. As a result, almost all municipalities of the prefecture implemented a cadastral survey in fiscal 2010 (the execution rate was 19% as of 2009, with 40 of the 41 municipalities having started a cadastral survey).

(Cadastral status of the areas affected by the Great East Japan Earthquake)

The cadastral survey execution rate is high in Aomori, Iwate, Miyagi, Fukushima and Ibaragi Prefectures, which were heavily damaged by the Great East Japan Earthquake. A cadastral survey was implemented in about 90% of the areas flooded by the tsunami, which greatly exceeds 49% of the entire country. This earthquake caused massive land deformations up to about 5.4 m in the

12

horizontal direction and about 1.2 m in the vertical direction, leading to a gap between the results of a cadastral survey and the actual status of the site. It is hoped to create an environment for prompt post-disaster rehabilitation/reconstruction taking advantage of cadastral survey results after an early

correction of the gap.

13

Chart: Implementation Status of Cadastral Survey in the Affected Areas

Flooded area where a cadastral survey was implementedFlooded area where a cadastral survey was not implementedArea where a cadastral survey was implemented

Designated area based on Article 19, paragraph 5Area where a cadastral state was made relatively clear through a land readjustment project, etc.Land owned by the public sector

National forests

Legend

Source: Geospatial Information Authority of Japan

14

Chart: Moved boundary stake (a case in Uonuma City following the 2004 Mid-Niigata Prefecture Earthquake)

A boundary stake that was moved by the quake

A stake that was restored based on the data before the quake

20cm

Source: Ministry of Land, Infrastructure, Transport and Tourism

In the areas where a cadastral survey was not implemented, just a clear boundary between the major private land of the area and road, etc. (public-private boundary) will contribute to smoother

post-disaster rehabilitation/reconstruction. Because this earthquake disaster caused over 25 thousand deaths and missing persons, great difficulty is expected for adjustment concerning land boundaries and rights due to missing land owners, for example. However, early determination of public-private boundaries in the affected areas where cadastral surveys have not been implemented would play a major role in the future reconstruction.

2. Valuation of land in the affected areas

Appropriate valuation of land in accordance with the character of the area/city is essential for the smooth reconstruction and recovery of economic activities, including private real estate transactions in the affected areas. In this light, the Ministry will provide full support to the development of basic guidelines, etc. for land valuation conducted by professional property evaluators (real estate appraisers) in the afflicted areas and, based on this work, make deliberations on the real estate

appraisal standard and the valuation methods, etc. of the public notice of land prices and the prefectural land price research implementations that serve as guidelines for land valuation in the private sector.

15

Chapter 3 Real Estate Investment around the World, and the Future Real Estate Investment Market in Japan

In this chapter the impact of the global financial crisis on the global real estate investment market and the subsequent market recovery will be analyzed with a focus on Asian countries, including Japan. In addition, the current situation of Japan’s real estate investment market, the significance of the market expansion and so forth will be analyzed. Based on these analyses, challenges for the development of a real estate investment market with the potential for steady growth will be sorted out and the current efforts to address them will be introduced.

Section 1 Trends in the Global Real Estate Investment Market after the Financial Crisis

The global real estate investment market had been expanding in the context of the globalization

of the economy, etc., but rapidly shrank due to the failures of large financial institutions and investment funds, and due to the credit contraction in the world financial market (global financial

crisis) following the exposure of the subprime loan problem. Later, the coordinated large-scale fiscal and monetary policies taken by developed countries, including the United States, and emerging countries made the world economy bottom out in 2009. Along with this development the real estate investment market also started to recover.

Chart: Investment in Commercial Properties by Region and the Percentage of Asia

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

50

100

150

200

250

300

350

400

450

First half Second half







2004 2005 2006 2007 2008 2009 2010

(Billion dollars)

North America Europe Asia Percentage of Asia

Source: Jones Lang LasalleNote: “Europe” includes European, Middle Eastern and African countries. “Asia” includes Asian countries and Australia.

16

Dividing the real estate investment market of the world roughly into five regions (Asia, Oceania, Europe, the Middle East and North America) and looking at the flow of investment among the regions in 2007, 2009 and 2010, we see that the investment dropped from 2007 to 2009 on an equal

basis[uniformly]. The reduction of the investment from North America was particularly large, with investment toward Europe falling by about 56 billion dollars and that toward Asia by about 20 billion dollars. The investment from North America toward Oceania and the Middle East also experienced a sharp drop of 100%. On the other hand, the investment from Europe and North America toward Asia as well as that from Asia toward North America and Europe increased from 2009 to 2010.

Chart: Cross-border investment cycle among regions (2007)

697 113

22

29

15 227

1

120

140 35

90 65

77

53 122

2 124

0

0

(100 million dollars)

Source: Real Capital Analytics


134 32

15

1

5 20

3

44

1 4

46 16

2

10 0

0 2

0

0

(100 million dollars)


17


173 23

0

3 19

9

11 35

0

30

3 3

57 41

2

4 6

1 13 (100 million dollars)


Now, let us look at four major Asian regions: rapidly growing China; Hong Kong and Singapore, which are growing as international financial capitals, and Japan. Looking at the investment in real estate of these four regions on a quarterly basis since 2007, we see that the investment in any of them declined after peaking in the latter half of 2007 (3rd quarter to 4th quarter). However, while the investment recovered significantly in the other three regions after bottoming out in the 1st quarter of 2009, recovery was slow in Japan. Investment especially recovered in China, where now it far

exceeds the level seen before the global financial crisis under the influence of the hectic transaction of domestic land for development since the latter half of 2009.

Looking at the flow of the investment funds of the four regions the other way around—that is, looking at the regions as sources of investment—we see that Hong Kong and Singapore, which are small as investment destinations, are making huge investments. In terms of the breakdown of the investment destinations of each region, while a large part of the investments from Japan is made in

the West, they include investment in Asia, such as in China and Hong Kong as well. The investments from China toward overseas regions are small and include those in Australia, Singapore and Hong Kong. Hong Kong is the largest investor in this group and most of its investments are made in China. The investments from Singapore include a certain amount of investments in Japan and Australia in addition to those in China.

18

Chart: Breakdown of each country/region’s foreign investment and its destinations (2008–2010)

China3%

US23%

UK10%

Other55%

44 15

577

181

0

100

200

300

400

500

600

Japan China Hong Kong Singapore(10 million dollars)

Hong Kong15%

Singapore11%

Australia14%

US4%

UK15%

Other41%

China91%

Singapore3%

US1% Other

4%

Japan10%

China45%

Hong Kong3%

Australia12%

UK3%

Germany4%

Other20%


Section 2 Current State of Japan’s Real Estate Market The progress of the securitization of real estate has built a tight connection between the real

estate investment market and the financial market, with the trends in the two markets influencing each other. However, the securitized assets of 33 trillion yen are just approximately 0.6% of the total monetary assets (5,786 trillion yen) or approximately 1.4% of the total real estate assets (2,310 trillion yen). It is necessary to continue to nurture a real estate investment market that matches the size of the real estate and financial markets.

19

Chart: Overview of Japan’s Real Estate/Financial Assets and the Real Estate Investment Market (2008)

Financial assets5,786 trillion yen

1,252 trillion yen

Including foreign currency deposits: 33 trillion yen

Cash and deposits

Investment assets

Beneficiary certificate of securities investment trust: 76 trillion yenBond-liquidation-related products: 32 trillion yen(CMBS: approx. 7 trillion yen) etc.

Domestic equities (publicly traded stocks): 265 trillion yenDomestic bonds (ex. public/corpora te bonds): 1,057 trillion yenForeign stocks/bonds: 317 trillion yen

Traditional four assets: 1,639 trillion yen

- Insurance, annuity reserve, due from banks, etc.

Other assetsLoans by private financial institutions:

724 trillion yen

Investors

Households: 1,451 trillion yen

Private nonfinancial corporations:

742 trillion yen

Institutional investors

Pension funds: 119 trillion yen

Insurance: 360 trillion yen

Banks, etc.: 1.464 trillion yen

Other assetsNatural resources,

intellectual property rights, etc.

5 trillion yen (4%)

616 trillion yen (42%)


Real estate assets2,310 trillion yen

Rental properties owned by corporations (excluding housing)96 trillion yen

Rental housing

28 trillion yen

Securitized assets

Approx. 33 trillion yen (J-REIT: approx. 7

trillion yen)

Equity financeApprox. 11 trillion yen

Domestic unlisted stocks/investments: 225 trillion yenFinancial derivatives: 90 trillion yen

Alternative assets

Debt financeApprox. 22 trillion yen

(nonrecourse loan: approx. 19 trillion yen)





Real-estate-related assets

* Created based on various materials including: “National Accounts of Japan” of the Cabinet Office, “Basic Survey on Land” and “Survey on Real Estate Securitization” of the Ministry of Land, Infrastructure and Transport, “Housing and Land Survey” of the Ministry of Internal Affairs and Communications, “Flow of Funds” of the Bank of Japan, and “Overall Condition of Trust” of the Trust Companies Association of Japan

Land: 1,260 trillion yenBuilding, etc: 1,050 trillion yen

In the future, J-REIT companies, real estate funds and other investors are expected to pay more

attention to the safety aspect of the properties they will acquire, and the territorial distribution of property stock could become more important than ever as information for investment decisions.

Because how we overcome such a great disaster and develop a stable market in the future could change how investors at home and abroad evaluate the entire Japanese market, we need to consider these points when working on the future expansion of the real estate investment market.

20

Chart: Risks that will weigh heavily in the future real estate market

11.1%

12.6%

28.4%

37.5%

50.6%

56.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Building/land ownership

Overconcentration in Japan

Nuclear plant/radioactive contamination

Power shortage/blackout

Earthquake/tsunami

Overconcentration in Tokyo

Source: “Impact of the Great East Japan Earthquake on the Real Estate Market,” NLI Research Institute (Real Estate Investment Report, April 2011)

Section 3 The Role Played by the Securitization of Real Estate and Its Impact 1. The role of the securitization of real estate

The securitization of real estate has fulfilled such roles as: (1) creating new buyers in the market; (2) promoting urban development; (3) improving the quality of the properties to be securitized; (4) providing new investment products; (5) stimulating related businesses, and; (6) improving the transparency of the market.

In terms of improving the transparency of the market, J-REIT, in particular, contributed significantly to the improvement of the market by providing a variety of information concerning

properties including purchase price, rate of capitalization at the time of purchase, and repair costs.

21

Chart: Significance and roles of the securitization of real estate

69.6

54.8

51.0

68.6

61.9

70.5

62.7

61.6

30.4

45.2

49.0

31.4

38.1

29.5

37.3

38.4

0% 20% 40% 60% 80% 100%

Diversification of financing methods

Dispersion of development risk

Formation of good stock

Separation of owned properties and their provision to the market

Streamlining of operation and improvement of utilization efficiency

Stimulation of new businesses, such as AM (asset management) and PM (property management)

Transparency improvement of the market and greater openness/stability of price formation

Market participation by mid- and long-term investors

Yes No

Source: “Real Estate Investor Questionnaire Survey,” Ministry of Land, Infrastructure and Transport

2. Real estate prices that are formed based on profitability

The Ministry grouped the representative commercial land for public notice across the nation into

clusters of similar price change patterns for the period from 2002—when the securitization of real estate progressed—to 2010 in comparison with the prices during the 1980s (the period of rising land prices) up to the collapse of the bubble. Analysis and comparison of the attributes of these clusters show that, for the period from 2006 to 2008, land prices in the three largest metropolitan regions and the centers of Sapporo, Sendai, Hiroshima and Fukuoka rose during the same period in 2006 followed by the rise of the land prices in the surrounding towns in 2007 but the rise did not spread to

other parts of the nonmetropolitan regions. Looking at the details of each cluster’s attributes for the period from 2002 to 2010, we found that

clusters 1 and 2, which showed large price volatility, mostly consisted of the central cities of the three largest metropolitan regions and had attributes of high land prices and large J-REIT trading volumes and values, which indicates a strong link between the trends in securitization and the trends in land prices.

22

Chart: Geographical Distribution of the Clusters Fukuoka/Hiroshima urban areas

Three largest metropolitan regions

-0.20

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1984 1985 1986 1987 1988 1989 1990 1991

12345

Land

pric

e ch

ange

s

Classification

(1984–1991)

Three largest metropolitan regions

Fukuoka/Hiroshima urban areas

-0.20 -0.15 -0.10 -0.05 0.00 0.05 0.10 0.15 0.20 0.25 0.30

2002 2003 2004 2005 2006 2007 2008 2009 2010

12345

Land

pric

e ch

ange

s

Classification

(2001–2010) 3. New roles of real estate investment

We need to ensure the sustainability of buildings and infrastructures as the social foundation for the next generation. For this purpose, it is important that private investment funds are used

effectively and converted to real properties that respond appropriately to environmental and social issues.

If investments in buildings/infrastructures that meet the needs of the next generation are compatible with the pursuit of economic benefits, such investments may be chosen and may help to enhance the sustainability of the social foundation. Contribution to a sustainable society through real estate investment may be a new role expected of the real estate investment market.

In an attitude survey targeting companies that use office buildings, more than 60% of the companies answered that they would consider the environmental performance of a building they would move into now or in the future, expecting economic benefits, such as cost reduction including utility costs, and improved amenity and productivity.

In order to build environmentally sustainable stocks with high environmental value (green property,) it is important that their value is recognized by various market players, such as tenants,

developers and investors, and that a good fund flow for green properties is created in the market.

23

Chart: Investors’ Attitude toward Responsible Property Investment

60.0

40.0

76.7

38.3

45.0

0% 20% 40% 60% 80% 100%

“Social and environmental issues will become more important in the future”

“My organization goes beyond minimum legal requirements to address social and

environmental issues”

“Environmental capital investment will have a positive impact on mid- and long-

term profitability.”

Strongly agree(Relatively or partially) agree(Partially or relatively) disagreeStrongly disagree

Will have a positive impactWill have a negative impactDon’t know

Source: “Survey of Responsible Property Investment (RPI),” the Ministry of Land, Infrastructure and Transport (March 2010)

Chart: Attitude survey of companies on environmental office buildings

Consider36%

Don't consider

now but may in the future

31%

Don't consider

33%

Do you consider efforts for the environment when moving to a rental office building?

(N=353)

93.7%222

57.4%136

47.7%113

33.8%80

15.2%36

11.4%27

7.6%18

2.5%6

2.1%5

0.4%1

0% 20% 40% 60% 80% 100%

Cost reduction, including utility costs

Improved amenities and productivity

Response to stricter environmental regulations/risk avoidance

Appeal to customers

Better reputation among investors/shareholders

To secure excellent human resources

To avoid the risk of not being selected by business partners

To obtain a subsidy from the government, etc.

To obtain loans from financial institutions on favorable terms

Other

Reasons for considering the efforts for the environment when moving to a rental office building

(N=237 multiple answers allowed)

Source: “Attitude Survey of Companies on Environmental Office Buildings,” Ministry of Land, Infrastructure, Transport and Tourism (FY2010). Section 4 Challenges and Efforts for Stable Growth of the Real Estate Investment Market in Japan 1. Challenges for the Real Estate Investment Market (Evaluation by foreign investors)

In a questionnaire survey of foreign investors2 conducted in 2010 concerning the current

2 Conducted targeting foreign investors (ex. pension funds, institutional investors) based in the US, EMEA (Europe, the Middle East and Africa) or Asia during the period from January 11 to February 28, 2011. There were 213 valid responses.

24

assessment of the Japanese market, nearly 70% of respondents answered “very good” or “good” for “the scale of the real estate market,” and more than 50% did so for “stability of the real estate market,” “liquidity of the real estate market” and “stability of the real-estate-related systems,”

whereas “plenitude of information related to real estate investment,” “average yield in the real estate market” and “availability of information related to real estate investment” are not much appreciated, and “growth potential of the market” was rated especially low.

Chart: Current assessment of Japanese market

0% 20% 40% 60% 80% 100%

Stability of the real estate market

Level of the real estate investment risk

Growth potential of the real estate market

Liquidity of the real estate market

Plenitude of information related to real estate investment

Average yield in the real estate market

Stability of the real-estate-related systems

Scale of the real estate market

Availability of information related to real estate investment

Availability of funds for real estate investment

The state of credible partners

Incentives such as tax benefits for real estate investment

Diversity of products (properties) in the real estate market

Very good Good Average Poor Very poor

Source: “Questionnaire Survey of Overseas Investors,” Ministry of Land, Infrastructure, Transport and Tourism

(Evaluation by domestic investors)

In a questionnaire survey of domestic investors conducted by the Ministry of Land, Infrastructure, Transport and Tourism concerning the assessment of the Japanese market, the “depth of investors” and “level of incentives including tax benefits” were both rated very low in FY2007 and FY2009 surveys. There have been some improvements in “transparency and reliability of the market,” “development of real-estate-investment-related systems” and “availability of information related to

real estate investment.” However, “very insufficient” and “rather insufficient” exceed “sufficient” and “basically sufficient” in all items, showing the need to continue efforts for further improvement of investors’ opinion.

25

Chart: Changes in the Reputation of Japan’s Real Estate Market

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

収益性

市場の持続的な成長

市場の透明性や信頼性

不動産投資関連制度の整備

投資関連情報の入手のしやすさ

投資家層の厚さ

市場規模の大きさ

税制優遇等の

インセンティブの充実度

投資対象の多様性

プレーヤーの多様性

市場の流動性

（4）日本の市場に対する現状評価（平成21年）充分である概ね充分やや不充分きわめて不充分

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

収益性







税制優遇等の



プレーヤーの多様性

市場の流動性

（2）投資決定上の重要度（平成21年）大いに重要やや重要あまり重要でない重要でない

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

収益性







税制優遇等の



不動産投資に精通した利益重視の

運用機関等の増加

日本市場が他国に比べて

相対的位置づけが優位にあること

（3）日本の市場に対する評価（平成19年）充分である概ね充分やや不充分きわめて不充分

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

収益性







税制優遇等の



不動産投資に精通した利益重視の

運用機関等の増加

日本市場が他国に比べて

相対的位置づけが優位にあること

（1）投資決定上の重要度（平成19年）大いに重要やや重要あまり重要でない重要でない

Profitability

Sustainable growth of the market

Transparency and reliability of the market

Development of real-estate-investment-related systems

Availability of investment-related information

Depth of investors

Size of the market

Level of incentives including tax benefits

Diversity of investment choices

Diversity of players

Liquidity of the market

Profitability





Depth of investors

Size of the market



Increase of asset man agement institution s ex perienced in real-estate in vestment and

focused on profits of inv estors

Superior position of Japanese market compared with other markets

(1) Importance for investment decisions (2007)No t v ery imp ortantVery impo rtant Imp ortant Not impo rtant

(2) Importance for investment decisions (2009)Not very imp ortant

Very impo rtant

Importan t Not importan t

(3) Assessment of Japanese Market (2007)

Profitability





Depth of investors

Size of the market



Increase o f asset manag ement in stitutions exp erienced in real-estate inv estmen t and

focused on profits of investors

Superior position of Japanese market compared with other markets

Rather insufficientSufficient Basically sufficient

Very Insufficien t

(4) Assessment of Japanese Market (2009) Rather insufficientSufficient Basically

sufficien tVery In su fficient

Profitability





Depth of investors

Size of the market



Diversity of players

Liquidity of the market

Source: “Questionnaire Survey of Real Estate Investors,” Ministry of Land, Infrastructure, Transport and Tourism

2. Efforts for the Development of a Real Estate Investment Market That Promises Steady Growth

For the stimulation and steady growth of Japan’s real estate investment market, in addition to efforts for the sustained growth of the economy itself, it is important to continue efforts to improve information provision and develop a solid market—which are challenges for the real estate investment market—, while taking advantage of the scale of the market. (Committee on Real Estate Investment Market Strategy)

In December 2010, the Committee on Real Estate Investment Market Strategy, a private consultative body to the Minister of Land, Infrastructure, Transport and Tourism, with the aim of indirectly supporting the efforts to change the domestic industrial structure and take advantage of Asian growth, divided the issues surrounding the real estate and financial markets as follows and recommended concrete measures for each issue: (1) the issue of debt market; (2) the issue of

26

J-REITs; (3) the issue of private placement funds; (4) the issues unique to the real estate market; (5) the issues related to tax/accounting; and (6) the issue of the circulation system for the real estate investment market and finance.

(Efforts for information provision for the market) (1) Providing information on real estate transaction prices

The Ministry of Land, Infrastructure, Transport and Tourism started the survey of real estate transaction prices, etc. with a focus on the government ordinance-designated major cities in the three largest metropolitan regions in fiscal 2005 and expanded the survey to cover the entire country.

Since the start of the announcement in April 2006 up to January 2011, the Ministry provided 1,045,986 pieces of information with the website traffic reaching approx. 150 million (67 million hits in 2010, about 5.5 million per month). (2) Development of real estate price indices, etc.

In response to the move toward the development of guidelines for the development of real estate

transaction price indices (Handbook on Residential Property Price Indices (RPPI)) by international organizations, the Ministry set up “a study group on the development of indices for property price trends” in June 2010 and has been working on the development of real estate property indices corresponding to the RPPI Handbook in collaboration with relevant ministries and agencies.

The Ministry will initiate the preparation of a system for the application of the indices in fiscal 2012 and start full-scale application promptly after the completion of trials.

Since April 26 of this year, the Tokyo Stock Exchange has been announcing on a trial basis “Tokyo Stock Exchange Residential Index,” which indicates the trends in the price levels of existing condominiums.

27

Chart: Tokyo Stock Exchange Residential Index

0

50

100

150

200

250

June

199

3

Dec

embe

r

June

199

4

Dec

embe

r

June

199

5

Dec

embe

r

June

199

6

Dec

embe

r

June

199

7

Dec

embe

r

June

199

8

Dec

embe

r

June

199

9

Dec

embe

r

June

200

0

Dec

embe

r

June

200

1

Dec

embe

r

June

200

2

Dec

embe

r

June

200

3

Dec

embe

r

June

200

4

Dec

embe

r

June

200

5

Dec

embe

r

June

200

6

Dec

embe

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June

200

7

Dec

embe

r

June

200

8

Dec

embe

r

June

200

9

Dec

embe

r

June

201

0

Dec

embe

r

Tokyo metropolitan areaTokyoKanagawaChibaSaitama

End of January 2000=100


(3) Enhancing the provision of information in public notice of land prices

For the public notice of land prices, land appraisers jointly conduct various analyses and deliberations in 193 separate meetings, etc. across the nation before the final price judgment. In the

2011 public notice of land prices, as a part of the efforts to enhance the information provision to the public, the Ministry compiled and announced the price formation factors (factors that had a major impact on land prices) discussed in the separate meetings, etc. for 13 prefectures in the three largest metropolitan regions, etc., where characteristic land price trends were observed. Going forward, the Ministry will further improve its information provision.

Part 2 Basic Measures in Relation to Land in FY2010 (Omitted)

28

“Basic Measures in Relation to Land in FY2011” (excerpt) Chapter 1 Dissemination of Basic Philosophy on Land

During the “Land Month” of October (October 1 is “Land Day”), the Ministry will actively work to disseminate the basic philosophies on land and introduce various measures and systems concerning land in collaboration with relevant organizations.

Chapter 2 Enhancement of Information on Land Section 1 Systematic Maintenance of Land Information

In order to systematically maintain information on land ownership, utilization, transactions, prices and so forth, the Ministry will conduct public notice of land prices and land register surveys, as well as provide real estate transaction prices. The Ministry will also conduct preliminary surveys for the “Basic Survey on Land,” which is conducted every five years as part of organizing statistical data. Section 2 Promotion of National Land Survey

The Ministry will promote land register surveys, land classification surveys—including a land use history survey based on the 6th 10-Year National Land Survey Plan (fiscal year 2010 to 2019)—and water surveys. Section 3 Promotion of Enhancement of National Land Information

As for digital national land information, the Ministry will revise public notices of land prices and prefectural land price surveys, and will continue to organize advanced information on land

utilization by means of more detailed land use classifications. The Ministry will also promote advanced utilization of geospatial information and land survey administration. Section 4 Enrichment of Land Registration System

The Ministry will further promote the use of computers in registration procedures and will continue to focus on the intensive mapping of urban areas whose lot numbers are not registered in accordance with Article 14, paragraph 1 of the Real Property Registration Act.

Chapter 3 Accurate Understanding of Land Price Trends Section 1 Promotion of Public Notice of Land Prices

The Ministry will make public notice of land prices at 26,000 sites in 2012. The Ministry will also continue to publish the results of analyses of land price trends based on land price surveys conducted by prefectural governments in 2011.

Section 2 Provision of Real Estate Transaction Prices The Ministry will continue to conduct surveys on real estate transaction prices across the country

and publish the information on transaction prices obtained in the surveys on the Internet on a quarterly basis. The Ministry will also work on the development and deliberation of real estate price indices based on the trends of international organizations and user needs at home toward trial and

29

full-scale application from the fiscal year ending March 2012. Section 3 Enhancement of Real Estate Appraisal

As regards the appraisal of properties for securitization, the Ministry will add real estate

appraisal for preparation of financial statements to the monitoring targets. The Ministry will also study how the appraisal should function in the future in light of the changes in circumstances surrounding the real estate appraisal. Section 4 Balanced and Proper Land Appraisal by the Public Sector

In order to promote proper land-price formation and taxation, the Ministry will continue to strive for balance and reasonableness in public land appraisals for prices that are used in assessing fixed

property tax and inheritance tax.

Chapter 4 Improvement of Real Estate Market Section 1 Improvement of Real Estate Transaction Market

In addition to promoting the proper application of the Building Lots and Buildings Transaction Business Act and improvement of the real estate trading market utilizing the Real Estate Information

Network System, the Ministry will operate a portal site on sustainable properties utilizing the Internet and a database of contaminated-land information in order to promote the formation of a real estate market focused on environmental values and facilitate transactions of soil-contaminated land. Section 2 Improvement of Real Estate Investment Market

In order to ensure transparency of the market, promote development of a market in which investors can participate without undue worries, and revitalize the Japanese real estate investment

market, the Ministry will develop new real estate securitization methods, implement efforts toward development and announcement of a housing price index based on transaction prices, and conduct a survey on the actual situation of real estate securitization. Section 3 Land Tax Measures

In the FY 2011 tax system revision, under the special measure for the tax base of the tax on acquisition of property acquired by a real estate investment corporation (J-REIT) or a Specific

Purpose Corporation (SPC), the reduction shall be the amount equivalent to three fifths of the property’s price, and other measures shall be taken, including the two-year extension of the application time limit.

Chapter 5 Improvement and Enhancement of Land Utilization Plan Section 1 Promotion of Land Use Plan

Based on the 4th National Land Use Plans, the Ministry will take measures necessary for promotion of overall management of national land utilization and will also promote proper and reasonable land utilization by appropriately employing the general plan of land use. Section 2 Ensuring Proper Utilization of Land in City Planning

The Ministry will promote the appropriate implementation of “Policy for Improvement,

30

Development and Preservation of City Planning Areas” (master plan), which is laid out in each city planning area, and formulation of “Basic Policy Concerning Municipal City Planning” (municipal master plan). The Ministry will also promote appropriate utilization of city planning systems to meet

various policy challenges. Section 3 Coordination with National Land Policy

The Ministry will promote efforts for realizing a new form of national land, or more specifically, for “creating national land to enable diverse wide-area blocks to develop independently and forming beautiful and comfortable national land to live in.” Such efforts are called for in the National Spatial Strategies (National Plan), a policy guideline for the comprehensive formation of national land. The

Ministry will also promote the formation of regional centers and industrial location policies.

Chapter 6 Promotion of Housing Measures Section 1 Promotion of Housing Measures

The Ministry will continue to promote the diffusion of environment-friendly houses through the housing-version eco-point system, under which points that can be exchanged for various

goods/services will be issued for the construction of eco-houses and the reform of houses (for insulation of windows, exterior walls, roofs and ceilings, for example).

The Ministry will also continue to promote securitization support businesses (buyout type and guarantee type) through the Japan Housing Finance Agency in order to support the provision of long-term and fixed-rate housing loans provided by private financial institutions. The Ministry will also lower interest rates on loans under the good-house acquisition support system, utilizing the

framework of the securitization support businesses. In the FY2011 tax revision, the Ministry will take special measures concerning income tax,

corporation tax, real estate acquisition tax and fixed asset tax on “serviced housings for elderly people” that have a barrier-free structure, etc. to support elderly people in cooperation with nursing care/medical care services. Section 2 Creation of Favorable Living Environment through Provision and Management of Good

Residential Land The Ministry will support efforts to revitalize new towns where residents are aging and buildings

and facilities have become decrepit as safe and comfortable residential areas, by redeveloping houses and dwelling environments, including through the introduction of barrier-free design, and by attracting welfare facilities.

Chapter 7 Promotion of Effective Utilization of Land Section 1 Promotion of Local Community Invigoration and Urban Renewal

Under the Regional Invigoration Headquarters, the government as a whole will promote efforts to achieve integrated and effective local revitalization, including urban renewal, designated structural reform districts, local regeneration, and city center vitalization, while working on the creation of a designated general district system.

31

The Ministry will also promote efforts such as the utilization of the Act on Special Measures concerning Urban Renaissance, which was decided by the Urban Renaissance Headquarters, to stimulate private investment in urban development, and the creation of super blocks based on “the

Super Block Guidelines” developed in 2010, to strengthen the international competitiveness of large cities and renovate local cities. Section 2 Promotion of Development of Urban Infrastructure and Disaster Countermeasures in cities

In order to promote urban infrastructure development, the Ministry will promote the utilization of civilian capabilities as well as aerial and underground regions, and will also promote the development of disaster countermeasures in towns by enhancing the disaster prevention in urban

housing areas, roads and sewage systems. Section 3 Promotion of Utilization of Underutilized/Unused Land

The Ministry will promote the redevelopment of underutilized/unused land, such as former factory sites and reclaimed land, through various projects. In order to vitalize city centers, the Ministry will also provide intensive support to the areas designated as eligible for the basic plan for city center vitalization.

Section 4 Development of Comfortable Residential Environment by Utilizing Farmland The Ministry will promote the provision of residential land with a good living environment by

utilizing farmland through the farming and residence association system. Section 5 Utilization of Land Owned by the Public Sector

The Ministry will promote the effective/advanced utilization of land owned by the public sector by promoting the efficient use of the current government buildings and the development of joint

government buildings. Section 6 Facilitation of Public Land Acquisition

In order to produce the effects of public work projects at an early stage, the Ministry will promote land acquisition in line with the “Land Acquisition Management,” under which bottlenecks in land acquisition are examined and analyzed before the start of public projects, careful preparations are made with an eye to all stages from planning of projects to their future use, and schedule control

is ensured.

Chapter 8 Promotion of Environmental Conservation Section 1 Promotion of Measures Concerning Environment Conservation

The Ministry will take measures necessary to promote the formation of local communities conducive to the prevention of global warming and revise guidelines for business operators in order

to appropriately and smoothly enforce the revised Soil Contamination Countermeasures Act. The Ministry will also promote land-related measures for environment conservation and give consideration to environment conservation in various land-related policies and when selecting and implementing projects. Section 2 Conservation of Farmland and Development of Attractive Farming and Mountain Villages

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In order to prevent and resolve abandoned agricultural land, the Ministry will promote such measures as the improvement of land conditions through infrastructure development projects for facilitating the implementation of compensation of individual-household income as well as the

support for community-wide farmland conservation activities. Section 3 Ensuring Appropriate Conservation and Utilization of Forests

In order to maximize the multi-functionality of forests, the Ministry will provide guidance and advice to local governments and forest owners on the systematic improvement of forests based on the forest planning system provided by the Forest Act, as well as implement measures necessary for the promotion of the use of domestic lumber in public buildings, etc.

Section 4 Proper Conservation of River Basins In special river basins for comprehensive flood control measures, the Ministry will establish river

basin conferences made up of the river divisions of the national, prefectural and municipal governments, and other divisions related to city, housing and land, as well as create river basin improvement plans to promote the encouragement of proper land use in river basins and the control of rainwater runoff. The Ministry will also promote comprehensive sediment disaster prevention

measures and flood control measures for cities. Section 5 Proper Protection of Cultural Property and Promotion of Favorable Landscape Creation

As for historic villages and streetscapes, the Ministry will provide guidance and advice to municipalities regarding the preservation and utilization of conservation zones for clusters of traditional structures, and will select important conservation zones for clusters of traditional structures. The Ministry will also promote the creation of favorable landscapes.

Chapter 9 Measures for Recovery/Reconstruction from the Great East Japan Earthquake The Ministry will take various measures designed from the perspective of proper land use, etc.

toward the earliest possible full recovery/reconstruction of the areas afflicted by the Great East Japan Earthquake, which occurred on March 11, 2011.

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