Commercial land prices in Japan’s three biggest cities rose for a fourth year, as a record influx of tourists boosts demand for shops and hotels.

The price of commercial land in Tokyo, Osaka and Nagoya rose 2.9 percent on average in the year ended July 31, up from a 2.3 percent gain the previous year, the Ministry of Land, Infrastructure, Transport and Tourism said in a report Tuesday. Nationwide land prices, which have been in decline for 25 years, posted their smallest drop since 2007, falling 0.6 percent.

Demand for commercial property has risen along with Japan’s tourism boom. Visitor numbers are set for a record year, with tourist arrivals rising 27 percent to 14 million in the first seven months, according to the Japan National Tourism Organization.

Hotel investment in Japan rose to $2.2 billion in the first half of the year, accounting for more than half of the total in Asia, according to Jones Lang LaSalle Inc. Four new hotels opened in July alone, including Hoshino Resorts’ traditional ryokan-style resort in Tokyo’s commercial district, and DoubleTree by Hilton Hotel in Naha, Okinawa.

Nagoya, Ginza

Land near Nagoya train station posted the biggest gain, surging 32 percent to 4.3 million yen ($42,000) per square meter. The precinct is being developed ahead of the opening of a super-fast magnetic-levitation train line to Tokyo in 2027.

Tokyo’s Ginza shopping district retained the title of Japan’s most expensive land, jumping 25 percent. Land in the area, home to luxury brands including Gucci, Hermes and Armani, can fetch as much as 33 million yen per square meter.

Residential land values in Japan’s three biggest metropolitan areas rose 0.4 percent in the year, the same as the year before, the land survey showed.

The town of Kutchan, near ski resorts in western Hokkaido, posted the country’s biggest gain in residential land values, rising 27 percent, on demand from foreign powderhounds.

The Topix Real Estate Index, which includes 59 developers, has fallen 24 percent this year, while the Tokyo Stock Exchange REIT Index, which consists of 53 real estate investment trusts, has gained 3.7 percent.

–With assistance from Katsuyo Kuwako To contact the reporter on this story: Kathleen Chu in Tokyo at [email protected] To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at [email protected], Peter Vercoe

©2016 Bloomberg L.P. This article was written by Kathleen Chu from Bloomberg and was legally licensed through the NewsCred publisher network.

Tags: japan, tokyo
Photo Credit: Tourists wearing traditional Japanese kimonos rest on a bench in front of a store near Sensoji Temple in Tokyo. Japan's record tourism numbers are having an impact on real estate prices, making it that much more expensive for hotel developers to build sorely needed properties to accommodate demand. Shizuo Kambayashi / Associated Press