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Evolution of urban land policy in postwar Japan Kobayashi, Yuji Jinnouchi 1989

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E V O L U T I O N OF URBAN LAND P O L I C Y IN POSTWAR J A P A N By Y U J I J I N N O U C H I KOBAYASHI B . A . , The U n i v e r s i t y o f W a s h i n g t o n , 1982 A T H E S I S S U B M I T T E D IN P A R T I A L F U L F I L L M E N T OF THE R E Q U I R E M E N T S FOR THE DEGREE OF MASTER OF ARTS THE F A C U L T Y OF ( S c h o o l o f C o m m u n i t y i n GRADUATE S T U D I E S a n d R e g i o n a l P l a n n i n g ) We a c c e p t t h i s t h e s i s a s c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d THE U N I V E R S I T Y OF B R I T I S H COLUMBIA S e p t e m b e r 1989 © Y u j i J i n n o u c h i K o b a y a s h i , 1 9 8 9 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. 1 further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. The University of British Columbia Vancouver, Canada Department DE-6 (2788) Abstract EVOLUTION OF URBAN LAND POLICY IN POSTWAR JAPAN Yuji Jinnouchi Kobayashi Japan achieved miracu lous , rapid economic growth a f te r World War II to become the second ranked major economic power in the wor ld . However, general housing cond i t ions and the standard of l i v i n g in large c i t i e s have not improved as expected. Japanese housing has been referred to as " r a b b i t hutches" by the O . E . C O . Extremely steep i n f l a t i o n in the p r ice of land, to an extent that is unprecedented in other developed na t ions , has la rge ly cont r ibuted to t h i s sorry s t a t e . This paper analyzes land p o l i c i e s and land use con t ro ls enacted in postwar Japan, examines the trends in land pr ice hikes a f t e r the war, and evaluates the s o c i a l impact of recent i n f l a t i o n in the pr ice of urban land. Chapter I descr ibes the purpose and ra t iona le of th is s tudy . Chapter n analyzes the land p o l i c i e s and land use cont-r o l s that have f a i l e d to contro l land pr ices and f a c i l i t a t e the e f f e c t i v e use of land. There are four fundamental reasons for t h i s f a i l u r e ! the absolute t rus t of p o l i c y makers in v i r t u a l l y unregulated market c a p i t a l i s m in urban land; a nat ional land planning process designed to support acce lera ted economic deve-lopment; the L ibera l Democratic P a r t y ' s p o l i c y of p ro tec t ing i i landowners; and the s o - c a l l e d "I and-standard economy." Chapter EI examines the trend toward land pr ice hikes a f te r the war. There have been three phases. The f i r s t phase (beg i -nning around 1960) began with pr ice increases for i n d u s t r i a l d i s t r i c t s . The second phase ( in the ear ly 1970s) witnessed s i g -n i f i c a n t land p r i ce increases not only in large c i t i e s , but a lso in other parts of the country . The t h i r d phase (s ince the mid-1980s) featured a sudden and dramatic jump in land p r i ces in cent ra l Tokyo and adjacent areas of the Greater Tokyo Metropo-I i tan. Chapter IV evaluates the s o c i a l impact of recent land p r i ce hikes centered in and around Tokyo. Soc ia l overhead c a p i -ta l programs have been delayed la rge ly due to land pr ice h ikes . The phys ica l c h a r a c t e r i s t i c s and s o c i a l f a b r i c of r e s i d e n t i a l areas have both been changing d r a s t i c a l l y and suddenly in the Tokyo a rea . The hikes in land p r i ces have even resul ted in the c l o s i n g of embassies of developing count r ies in Tokyo. Chapter V summarizes and concludes t h i s study. Table of Contents Page L i s t of Tables v i i L i s t of F i gures • i x Chapter I . I ntroduct ion • • • • l D e f i n i t i o n s 1 Rat ionale 3 II . Land P o l i c y and Land Use Control in Postwar Japan • • . . . . . . 8 1 . Land P o l i c i e s in Postwar Japan • • • • • • • • • 9 1-1. The F i r s t Phase (1945 to the mid-1950s) 13 1-2. The Second Phase (mid-1950s to the late 1970s) 14 1- 3. The Third Phase (1980s) 17 2 . Land Use Control in Postwar Japan! C i t y Planning Law of 1968 and National Land Use Planning Law of 1974 18 2- 1. C i t y Planning and C i t y Planning Law • • • • • 18 1) Process of Enacting the C i t y Planning Law of 1968 . . • . 19 2) Land Use Control by C i t y Planning Law of 1968 « . . • • . . . . . . . 23 3) Issues in the C i t y Planning Law of 1968 28 2-2. National Land Use Planning Law 33 i v 1) Process of Enacting the National Land Use Planning Law • • • • • • • 33 2) R e s t r i c t i o n of Land Use by the National Land Use Planning Law * * * * * * * 34 3) Issues of the National Land Use Planning Law • • • • • 38 DI. Urban Land Pr ice Trends in Postwar Japan . . • • • 54 1 . The Fundamental Reasons for Land Pr ice Increases In Postwar Japan . . . . . . . . . . . 54 2 . The Trends of Urban Land Pr ices and Main Causes of Land Pr ice Increases in Postwar Japan • 55 2-1 . The F i r s t Phase (Around I960): Land Pr ice Increase in the Ear ly Stage of Rapid Economic Growth . . . . . . . 60 2-2. The Second Phase (Ear ly 1970s): the Second Land Pr ice Hike Af ter the War • * • * • • 64 2-3. The Third Phase (Since the mid-1980s): Skyrocket ing Urban Land Pr ice S t a r t i n g from the CBO of Tokyo 65 IV. Soc ia l Impact of Skyrocket ing Land Pr i ces • • 93 1 . F a i l u r e in Soc ia l Overhead Capi ta l Pol icy * • 93 2 . D i s t o r t i o n s from Increased Inheritance Tax due to Steep Rise in Land Pr ices . . . . . . 97 1 ) Abnormal Family Registers 97 2 ) Dest ruct ion of a Japanese Garden Ci ty 99 3 ) Steep Increase in Apartment Bu i ld ings in Res ident ia l Areas of Tokyo . . . . . . . . 101 v 3 . En larged Commuting Zones * * * * * * * * * * * * 102 4 . Sma l l e r Houses • • . • • • . 103 5 . D e t e r i o r a t i o n of R e s i d e n t i a l Environment • » • • 105 6 . D e s t r u c t i o n of Communities in Cen t ra l Par t of Tokyo due to S k y r o c k e t i n g Land P r i c e s • • • 106 1 ) Maneuvers of Land P r i c e R a i s e r s * * * * * * * 106 2 ) D e s t r u c t i o n of Communities by S k y r o c k e t i n g Land Pr i i c e s • • • 107 7 . Growing Gap Between Rich and Poor* 109 8 . C l o s i n g the Embassies of Develop ing C o u n t r i e s • . . 109 9 . The Spread of R i s i n g Land P r i c e s Abroad • • • • 109 V . Summary and C o n c l u s i o n • 116 B i b1i ography v i T a b l e s T a b l e P a g e II - 1 . C o n t e n t s o f C i t y P l a n s . • . • 24 n - 2 . D e s i g n a t i o n o f C i t y P l a n n i n g A r e a s • • • • • • 27 n - 3 . C l a s s i f i c a t i o n a n d P u r p o s e o f U s e Z o n i n g • 29 II — 4 . C o m p a r i s o n o f t h e S i x t h R e p o r t o f B u i l d i n g L o t C o u n c i l a n d t h e C i t y P l a n n i n g Law o f 196 8 • • 31 II - 5 . T h e N u m b e r a n d A r e a o f L a n d T r a n s a c t i o n s R e p o r t e d t o t h e L o c a l G o v e r n m e n t s a c c o r d i n g t o t h e N a t i o n a l L a n d U s e P l a n n i n g Law • . * . • 37 EI - 1 . C h a n g e s i n L a n d U s e b y C a t e g o r y ( 1 9 7 5 - 8 5 ) . . • . . 56 AT— 2 . C h a n g e s f r o m t h e P r e c e d i n g Y e a r i n t h e P r i c e I n d e x o f U r b a n A r e a s 60 DI - 3 . R e s u l t s o f N a t i o n w i d e L a n d U s e f o r R e s i d e n t i a l U s e , I n d u s t r i a l U s e , N o n r e s i d e n t i a l B u i l d i n g s , a n d P u b l i c U s e . . . . . . . . . . . . . . . 63 DI - 4 . C h a n g e s i n L a n d P r i c e E v a l u a t e d a n d A n n o u n c e d b y t h e N a t i o n a l L a n d A g e n c y ( K o j i C h i k a ) f r o m t h e P r e v i o u s Y e a r by R e g i o n a n d U s e Z o n i n g . . . . . . . 6 7 DI - 5 . C h a n g e s i n L a n d P r i c e o f t h e T o k y o M e t r o p o l i t a n R e g i o n f r o m P r e v i o u s Y e a r b y U s e Z o n i n g 6 9 HI - 6 . C h a n g e s i n L a n d P r i c e ( K o j i C h i k a ) o f C o m m e r c i a l D i s t r i c t s i n W ard A r e a o f T o k y o f r o m P r e v i o u s Y e a r . . . . . . . . 70 v i i DI - 7 . Changes in Land Pr ice (Koji Chika) of Res ident ia l D i s t r i c t s in Ward Area of Tokyo From Previous Year • • 71 DI - 8 . Annual Increase in the Number of Firms having Head O f f i c e in Tokyo • • • • • 73 I D - 9 . Number of Major Firms moving Head O f f i c e from Outside of Tokyo to the Ward Area of Tokyo by Ward (September 1979 - September 1985) 74 DI — 1 0 . Number of Major Firms moving Head O f f i c e Inside of the Ward Area of Tokyo by Ward (September 1979 -September 1985) . . . . . . . . 74 ID - 11. Current State of Designated Land Pr ice Moni tor ing Area • 78 D I - 1 2 . Number of Reported Land Transact ions according to the System of Land Pr ice Monitor ing Area . . . . . . . . . . . . . . 85 I D - 1 3 . Resul ts of Land Pr ice Trend Survey of Tokyo, Kanagawa, Saitama, Chiba 87 v i i i F i gu res F i g u r e Page n - 1 . D e t e r m i n a t i o n P r o c e d u r e of a C i t y P l a n n i n g . . . . . 25 II — 2 . Land T r a n s a c t i o n C o n t r o l by the N a t i o n a l Land Use P l a n n i n g Law 39 m - 1 . Changes f rom the P r e c e d i n g Year in the P r i c e Index of Urban Areas of S i x M e t r o p o l i s e s • • 58 DI - 2 . Changes f rom the P r e c e d i n g Year in the Land P r i c e E v a l u a t e d and Announced by the N a t i o n a l Land Agency ( K o j i C h i k a ) . . . . . . 59 m - 3 . Map of Japan 61 DI - 4 . M e t r o p o l i s of Tokyo and S u r r o u n d i n g P r e f e c t u r e s • 68 DI - 5 . The A d m i n i s t r a t i v e Areas of the M e t r o p o l i s of Tokyo 72 ID - 6 . Changes in O f f i c e F l o o r Space Per O f f i c e Worker in Tokyo . . . . . . . . . . . 76 IV — 1 . R a t i o of Land C o s t f o r S t r e e t C o n s t r u c t i o n . . . . . 94 IV - 2 . P r o c e s s of A d o p t i o n 98 I V - 3 . F l o o r P l a n of 10 Tsubo (33m) House • • • 104 i x This work is dedicated to my parents and Shinoko. x Chapter I . INTRODUCTION This paper analyses evo lu t ion of urban land p o l i c y and land use c o n t r o l , examines trends in urban land pr ice increases , and d iscusses the s o c i a l in fu lence of land pr ice hikes in postwar Japan. DEFINITIONS 1) Land PoIi cy P o l i c y , according to Ham and H i l l , is the "output of a 1 p o l i t i c a l process" as well as the process i t s e l f . Hence, land p o l i c y is the p o l i t i c a l process and i t s output concerning land. Char les Abrams a lso def ines land p o l i c y as a p o l i c y concerning land i n s t i t u t e d by a governmental body. According to Abrams land p o l i c y assumes va i rous forms such as a planned in tervent ion , hands-off p o l i c y and o t h e r s . Mot ivat ions of a government body for i n s t i t u t i n g a land p o l i c y are many such as to regulate spe-c u l a t i v e land t r a n s a c t i o n s , to supply housing, to prevent i l l e -gal occupat ion , to e l iminate substandard housing and slums, to r e v i t a l i z e abandoned a reas , to suppress increases in land pr ices 2 and o t h e r s . 2) Land Use Control Land use means a possession or usage of land in order to gain returns or other b e n e f i t s . Land use is a lso the l e g a l l y c o n t r o l l e d usage of land for achiev ing the most b e n e f i c i a l and 1 3 e f f i c i e n t development of a community. Hence, land use contro l can be def ined as a regu la t ion or governmental e f f o r t to e s t a b l i s h an e f f i c i e n t use of land to benef i t a community and to develop a community e f f i c i e n t l y . According to Yukio Noguchi, land use contro l based on the C i t y Planning Law, the National Land Use Planning Law and re la ted l e g i s l a t i o n is one of the methods for ca r ry ing out land p o l i c y : others are the c r e a t i o n of housing s i t e s and land 4 reclamat ion areas by the pub l ic sector and land t a x a t i o n . 3) Urban Land P r i c e Land is a n a t i o n ' s common basis support ing the economic and s o c i a l a c t i v i t i e s , and urban land is genera l ly defined as 5 the land in urban areas . Land pr ice is c l o s e l y re la ted to land use and they a f f e c t each o ther . In g e n e r a l , land is used e f f i c i e n t l y and inten-s i v e l y in an area where land pr ices are h igh , and i t is used more c a r e l e s s l y in low pr iced area . This becomes obvious when the cond i t ions of a cent ra l part of a large c i t y and of a rural 6 area are compared. In Japan there are four o f f i c i a l land p r i c e s : the land pr ice evaluated and announced by the National Land Agency (Land Pr ice P u b l i c a t i o n or Koji Ch ika ) ; the prefectures standard land p r i ce (Todofuken Ki jun Ch ika ) ; the land value assessed based 2 upon s t r e e t value ind ica to r (Rosen-ka); and the appraised value 7 of the f i x e d assets (Kotei Shisan Hyoka-gaku). Koji Chika and Todofuken Ki jun Chika come c l o s e s t to the actual land t ransac-t ion p r i c e - - a b o u t 20 percent lower than actual p r i c e , while Rosen-ka and Kotei Shisan Hyoka-gaku are 20 - 50 percent lower. In a d d i t i o n , Koji Chika was s tar ted in 1970, f i v e years e a r l i e r 8 than Todofuken Ki jun Ch ika . Hence, in t h i s paper Koji Chika s h a l l be used to analyse trends in land pr ice h ikes , and other data s h a l l be used only when Koji Chika does not provide a s u f f i c i e n t data . Throughout t h i s paper, "yen" is used; t h e r e f o r e , equiva-lent of Canadian d o l l a r is not inc luded. (For re ference , 1 Canadian d o l l a r f l u c t u a t e d around 120 - 130 yen in 1988.) RATIONALE About 40 years ago Japan was defeated in war and the c i t i e s were la rge ly dest royed. Today Japan is the leading economic power of the world and s t i l l growing. In major c i t i e s skyscra -pers shoot into the sky, o f f i c e bu i ld ings sh ine , commercial d i s t r i c t s bust le with people , and i t seems people are well of f and enjoying t h e i r l i f e . Behind these golden scenes, however, most average income c i t i z e n s in large c i t i e s are l i v i n g in sub-standard housing which was once referred to as " r a b b i t hutches" by an O . E . C D . o f f i c i a l , and they are compelled to endure incon-3 veniences due to inadequate i n f r a s t r u c t u r e . What is the main cause for t h i s dark s ide of Japan's mira-culous economic development? One of the major causes is land pr ice i n f l a t i o n , which is e s p e c i a l l y evident in urban areas . Land p r i ce i n f l a t i o n throughout Japan c l o s e l y fol lowed trends in the Gross National Product during the post-war e r a . However, the urban land p r i ce index, set at 100 in 1955, increased to 3,800 in 1980. Th is means that urban land pr ice has r isen at a rate twice the nat ional income and seven times the consumers' p r ice during the same p e r i o d . This skyrocket ing i n f l a t i o n in urban land pr ices has impeded the improvement of housing and the 9 o v e r a l l environment in urban areas . For Japan, the urban land problem is a lso a nat ional prob-lem s ince about 45 percent of the en t i re populat ion l i v e s in three metropol i tan regions (Tokyo, Nagoya, and Osaka). These three are the center of business and government a c t i v i t i e s . Fur ther , i t is expected that more than 70 percent of whole populat ion w i l l l i v e in urban areas by the beginning of 21st 10 century . In s h o r t , Japan is a " c i t y s t a t e . " Then, l i e s the quest ion of land p o l i c i e s and land use c o n t r o l s the Japanese government has taken a f te r the war. F ind ing answers for the above quest ion is the centra l task of t h i s paper s ince i t may have s i g n i f i c a n t imp l ica t ions for other nat ions which are exper iencing urban land problems. Trends in 4 urban land p r i c e i n c r e a s e s and t h e i r s o c i a l impacts are a l s o examined in order to i d e n t i f y the damaging consequences of i n e f f e c t i v e land p o l i c i e s and land use c o n t r o l s . 5 Notes 1 Chr is topher Ham and Michael H i l l , The Po1 i cy Process i n  the Modern C a p i t a l i s t State (Harvard U n i v e r s i t y P ress , 1984), p. 13. Char les Abrams, Toshi Yogo J i ten CThe Language of C i t i e s :  A Glossary of Terms!] , t r a n s . Shigeru I to (Tokyo: Kajima Press , 1979), pp. 130-131 I b i d . , p.33. Yoshio Noguchi, "Tochi Z e i s e i - - K e i z a i t e k i Sokumen" C "Land Taxat ion : Economic Aspects" ) , J u r i s t , 25 March 1984, p. 209. Abrams, Toshi Yogo J i t e n CThe Language of C i t i e s :  Glossary of Terms) , p. 128. Shadan Hojin Nihon Fudosan Kantei Kyokai K i n k i - k a i CThe Kinki O f f i c e of the A s s o c i a t i o n of Japan Real Estate Appra isa l ) , Henbo suru Tochi Riyo to Chika--Sono J i t t a i to Fudosan Hyoka  no Kadai C Changing Land Use and Land P r i c e : Their Actual Condi  t i o n and the Problem of Real Estate Appra isa l ) (Kyoto: Gakugei Shuppan-sha Inc . , 1986), pp. 15-16. In Japan there are four d i f f e r e n t land pr ice indexes announced by the publ ic s e c t o r . The land pr ices evaluated and announced by the National Land Agency (Land Pr ice P u b l i c a t i i o n or Koji Chika) are the p r i c e s of land per square meter as evaluated by the real estate appra isers (appointed by the Land Appra isa l Committee of the National Land Agency) on January 1st of each year . The Land Pr ice P u b l i c a t i o n Act of 1969 requires the annual p u b l i c a t i o n of land pr ices with d e t a i l s of the land concerned. The ob jec t i ve is to provide fac tua l information to help s t a b i l i z e the real es ta te market. There were 16,820 points 6 of appra isa l in 1988. The pre fectures standard land pr ice (Todofuken Ki jun Chika) is the pr ice of land per square meter appraised by p re fec tura l governments on July 1st of each year . It is based on the National Land Use Planning Law, and there were 24,569 points of appra isa l in 1988. Like Koji Chika , Todofuken Ki jun Chika was s tar ted as an index for land a q u i s i -t i o n by the pub l i c sector and land t r a n s a c t i o n s . However, a l l areas of land is subject to Todofuken Ki jun Chika , while only c i t y planning areas are appraised by Koji Chika . The land value assessed based on the s t r e e t value ind ica tor (Rosen-ka) is the p r i c e of land determined by the Tax Admin is t ra t ion Agency as an index for assess ing inher i tance and donation taxes. The appraised value of f ixed assets (Kotei Shisan Hyoka-gaku) is the p r ice of land appraised by the Autonomy Min is t ry as an index for assess ing the municipal property tax. Nihon Hoso Shuppan Kyokai CJapan Broadcast ing Pub l ish ing Associa t ion} , Tochi wa Dareno  Monoka CTo Whom Land Belongs?] (Tokyo: Nihon Hoso Shuppan Kyokai , 1987), pp. 155-156. Nihon Keizai Shinbun-sha, . " Y a s a s h i i Keizai Yogo no Kaisetus" C "Exp lana t ion of Economic Terms" ) ( T o k y o : N i h o n K e i z a i Shinbun-sha Inc . , June 1988), p. 11. Organizat ion for Economic Co-opaerat ion and Development (OECD), Urban Pol i c i e s in Japan, ( P a r i s : OECD, 1986), p. 55. S h u e i - s h a , i m i das , (Tokyo: Shuei -sha Inc . , 1988), p. 618. 8 Asahi Shinbun CAsahi Newspaper: Tokyo) , 12 May 1988. 9 Masakazu Okubo ed. , Chika to Toshi Keikaku- -Kaihatsu  Rieki no J i t t a i to sono Shakai Kangen CLand Pr ice and Ci ty  P lanning: The Actual Condi t ion of Development P r o f i t and i ts  Soc ia l Return) (Kyoto: Gakugei Shuppan-sha Inc . , 1983), p. 8. 10 The Bureau of C i t y , M in is t ry of Const ruct ion e d . , 21 Se ik i no Toshi B i .ion C V i s i o n of a C i ty in 21st Century) (Tokyo: Gyose i , 1981), p. 3. 7 Chapter D. LAND POLICY AND LAND USE CONTROL IN POSTWAR JAPAN With a rapid and large in f lux of people into large c i t i e s such as Tokyo, Nagoya, and Osaka, which was escalated by the Comprehensive National Development Plan of 1962, and without adequate and workable land p o l i c i e s and land use c o n t r o l s , Japan has su f fe red from rates of land pr ice i n f l a t i o n which are 1 unprecedented in other developed nat ions . The above three f a c t o r s ( i n f l u x of people, i n s u f f i c i e n t land p o l i c i e s and land use c o n t r o l s , and i n f l a t e d land p r i c e s ) have resu l ted in low-qua l i ty urban housing, inadequate funding 2 fo r s o c i a l improvements and an unpleasant urban environment. The f a i l u r e of land p o l i c i e s and land use c o n t r o l s must be blamed s ince they are among the publ ic too ls for c rea t ing a better urban environment. Land p o l i c i e s may have been dest ined to f a i l when Japan's new c o n s t i t u t i o n was adopted. A r t i c l e 28 of the c o n s t i t u t i o n draf ted by General MacArthur 's s t a f f stated that "the ul t imate fee to the land and to a l l natural resources reposes in the 3 State as the c o l l e c t i v e representa t ive of the peop le . " However, State M in is te r Kunimatsu ordered t h i s part deleted because he 4 thought i t sounded marx is t . Thus, the new Japanese c o n s t i t u t i o n was wr i t ten to include " l a n d " in the a r t i c l e regarding respect fo r p r iva te property r i g h t s . Land p o l i c i e s in postwar Japan 8 have attached s p e c i a l importance to Clause 1 of A r t i c l e 29 on pr iva te property r i g h t s , and have neglected Clause 2, which 5 r e s t r i c t s pr iva te property r igh ts to promote s o c i a l wel fare . If A r t i c l e 28 of the c o n s t i t u t i o n draf ted by Cen. MacArthur's s t a f f was not d e l e t e d , postwar Japan may not have experienced the land pr ice increases that have caused such profound s o c i a l problems. This chapter examines land p o l i c i e s in postwar Japan and the land use c o n t r o l s ( i . e . , the C i ty Planning Law of 1968 and National Land Use Planning Law) that are the most important 6 methods of implementing land p o l i c i e s . n - 1 . LAND POLICIES IN POSTWAR JAPAN The e s s e n t i a l role of government land p o l i c y is to ensure the most ra t iona l and e f f e c t i v e use of land by s o l v i n g problems caused by the unique c h a r a c t e r i s t i c of land. Without the support of the populace, however, such a publ ic ro le in land 7 cannnot be served . In a d d i t i o n , the concepts of Iandownership and land use r i g h t s are key to secur ing popular support for e f f e c t i v e land use p lann ing . In other words, when the concept of pub l ic land use planning among the populat ion is stronger than that of p r iva te Iandownership r i g h t s , i t is eas ie r to 8 promote the e f f e c t i v e use of land. However, land p o l i c i e s in postwar Japan are c l o s e l y re lated 9 to Clause 1 of A r t i c l e 29 that p rescr ibes the respect for p r i -vate property r i g h t s as stated above. Land p o l i c i e s , in shor t , 9 have viewed pr iva te property r igh ts as an absolute c o n d i t i o n . Why are land p o l i c i e s implemented that only respect pr ivate property r igh ts? The major reasons are explained as f o l l o w s . CD P o l i c y D r a f t e r s ' Absolute Confidence in Cap i ta l ism P o l i c y d r a f t e r s ' in postwar Japan have had absolute c o n f i -dence and t rus t in teh market dynamics of c a p i t a l i s m . The fundamental theory of c a p i t a l i s m is based on an optimism which holds that resources w i l l be e f f i c i e n t l y used as long as compe-t i t i o n based on s e l f - i n t e r e s t is not h indered. In the case of land, a landowner, motivated by s e l f - i n t e r e s t , always thinks about the most e f f e c t i v e use of his land to maximize p r o f i t . Consequent ly , landowners who use the i r land i n e f f e c t i v e l y w i l l be d isp laced by the market mechanism. Based on the above 10 t h i n k i n g , land p o l i c y must be l a i s s e z - f a i r e in substance. (§) The L i b e r a l Democratic P a r t y ' s P o s i t i o n on Protect ing Land Owners The L ibera l Democratic Party (LDP) was es tab l ished in 1955 and has been the c o n t r o l l i n g party in the Diet ever s i n c e . It has e s t a b l i s h e d strong t i e s with bus iness , and has r e f l e c t e d the needs and d e s i r e s of big business when d r a f t i n g p o l i c i e s . With regared to land, the LDP has maintained a p o s i t i o n of leaving land a lone . This p o s i t i o n app l i es to p r i v a t e l y owned land, and 10 land owned by c o r p o r a t i o n s . Farmland reform a f t e r the war resul ted in a large number of farmers possessing small farms. It, t h e r e r f o r e , became impor-tant for p o l i t i c i a n s to protect the Iandownership r igh ts of 11 these farmers to obtain t h e i r votes . N a t u r a l l y , the LDP main-12 tained i t s support of farmers for p o l i t i c a l reasons. Cj) National Land Planning for Economic Development a f te r the War National land planning in postwar Japan s tar ted with the enactment of the National Land Comprehensive Development Law in 1950. Four nat ional land programs were subsequently i n s t i t u t e d : the Comprehensive National Development Plan in 1962, the New Comprehensive National Development Plan in 1969, the Third Comprehensive National Development Plan in 1977, and the Fourth 13 Comprehensive National Development Plan in 1987. However, these nat ional programs were designed to promote economic development, and cons idera t ion was not given to s o c i a l reform through implementation of regional development planning 14 as the bas is of nat ional land p lann ing . For example, the main purpose of the 1962 Comprehensive National Development Plan was to spur the development of the heavy, chemica l , and s tee l i n d u s t r i e s , and to promote e l e c t r i c power development as key i n d u s t r i e s instead of a g r i c u l t u r e , f o r e s t r y and f i s h i n g according to rapid economic development p o l i c y . This was to be 11 done by concent ra t ing c a p i t a l , labor , and new technologies into such new key i n d u s t r i e s . This nat ional plan a lso included a p o l i c y that a t t rac ted people to large c i t i e s . The New (1969) and Third (1977) Comrehensive National Development Plans were 15 a lso designed e s s e n t i a l l y for s i m i l a r purposes. Thus, Japan's nat ional land planning was an i n d u s t r i a l p o l i c y , and f a i l e d to address the e f f e c t i v e use of land. (D Land-Standard Economy One of the major f a c t o r s for the rapid economic growth a f t e r the war is the s o - c a l l e d "I and-standard economy," and a land p o l i c y designed to protect 1andownership was needed to support t h i s concept that is uniquely Japanese. F i n a n c i a l i n s t i t u t i o n s have t r a d i t i o n a l l y made loans to f i rms that use land as c o l l a t e r a l . This is the basis of the land-standard economy. By using the i r land as c o l l a t e r a l , corpora t ions borrowed funds for equipment investments from banks a f te r the war. Th is f i n a n c i n g helped i n i t i a t e the miraculous, rapid economic growth of postwar Japan. The I and-standard system remains the basis of corporate growth. As a r e s u l t , p o l i t i c i a n s supported by the business 16 world are re luc tan t to plunge a sca lpe l into th is mechanism. From the above i t is c l e a r that land p o l i c i e s enacted in 17 postwar Japan would pose many problems. In a d d i t i o n , the National Land Agency (es tab l i shed to administer nat ional lands 12 with the 1974 enactment of the National Land Use Plannning Law) 18 did not have absolute au thor i ty to implement land p o l i c i e s . The f o l l o w i n g .sect ion descr ibes the major land p o l i c i e s in-s t i t u t e d in postwar Japan, and groups them according to the f i r s t phase (1945 to the mid-1950s), the second phase (mid-1950s to the la te 1970s), and the t h i r d phase (1980s). II - 1 - 1 . The F i r s t Phase (1945 to the mid-1950s) 1) Farmland Reform Shor t ly a f t e r Japan's defeat in August 1945, a farmland reform proposal was draf ted to abo l i sh absentee landlords and tenant farmers, and to f o s t e r owner-farmers. The government bought land from landowners and sold them to tenant farmers. This reform began in 1947 and was completed in 1950. This farm-land reform was the most successfu l reform a f te r the war. How-ever , i t caused some problems in major c i t i e s and the i r suburbs. One problem was that t h i s reform hindered the developemnt of planned b u i l d i n g s i t e s to absorb the heavy inflow of people moving to the c i t i e s because i t subdivided farmlands into small l o t s . Consequent ly , too much time was taken to resolve conf-19 I i ct i ng r i ghts . 2) Urban Po l i cy and Housing S i t e Supply s h o r t l y a f te r the War The f i r s t land p o l i c y for urban areas was the Temporary Housing Const ruc t ion in 1945. Landownership, land leaseho ld , 13 and house l easeho ld , however, remained the same as before the 20 war. As part of a nat ional housing p lan , the Housing Loan Corpo-ra t ion was i n s t i t u t e d in 1950 to make pr ivate home loans, and the Pub l ic Housing Law was enacted in 1951. During the postwar reconst ruc t ion p e r i o d , many e f f e c t i v e housing and land p o l i c i e s were i n s t i t u t e d in other nat ions such as West Germany and the U.K. In Japan, however, none of the urban land p o l i c i e s implemented during the same period had s i g -21 n i f i c a n t impact. 0 - 1 - 2 . The Second Phase (mid-1950s to the late 1970s) 1) Changes in Housing P o l i c i e s The housing p o l i c i e s of t h i s phase were designed to provide basic housing to accommodate the large numbers of people moving to the large c i t i e s , without emphasis placed on housing q u a l i t y . Fol lowing the enactment of the Publ ic Housing Law in 1951, the Housing Loan Corporat ion s tar ted making home loans to i n d i -v i d u a l s in 1954. The Land Readjustment Law was a lso enactedin 1954, and the Japan Housing Corporat ion was es tab l ished in 1955. Since i t s i n c e p t i o n , the Japan Housing Corporat ion has played an 22 important ro le in r e s i d e n t i a l cons t ruc t ion in large c i t i e s . In 1962, the New Urban Res ident ia l B u i l t - u p Area Law was 23 enacted fo r cons t ruc t ing large new towns. This cons t ruc t ion 14 cont inuted to f l o u r i s h ever s ince the Senri New Town was const-ructed in Osaka. In 1965, the Local Government Housing Corporat ion was e s t a b l i s h e d , and the House-Bui ld ing Program Law was enacted in 1966. Through these housing supply measures, the supply of housing began to exceed demand, and by the late 1970s, the focus of housing supply p o l i c i e s was changed to improving the q u a l i t y of housing instead of simply meeting housing demands. Never-t h e l e s s , such hous ing- re la ted problems as high p r i c e s , poor environment and inadequate q u a l i t y remain ser ious in large 24 c i t i e s . 2) Land Demand Control The most s i g n i f i c a n t land demand and land use c o n t r o l s i n s t i t u t e d in t h i s phase were the C i ty Planning Law of 1968 and the National Land Use Planning Law of 1974. Both laws are explained in s e c t i o n n - 1 . Other land demand c o n t r o l s are expI a i ned as f o i l o w s . In 1960, the M i n i s t r y of Const ruct ion i n s t i t u t e d a compre-hensive housing s i t e measure. This measure was based on the reasoning that the land problem was a housing s i t e problem, caused by the unbalanced supply of and demand for housing s i t e s . This measure proposed the f o l l o w i n g : (D reduce the demand for housing s i t e s by d i s t r i b u t i n g some func t ions of large c i t i e s , such as i n d u s t r i e s , to 15 local a reas; @ moderate the demand for housing s i t e s by making more publ ic housing a v a i l a b l e ; © e f f i c i e n t l y use housing s i t e s through e f f e c t i v e land use planning and the promotion of urban renewal; ® increase the supply of housing s i t e s ; and (D maintain f a i r market t ransact ions of housing s i t e s . In s h o r t , t h i s measure can be summarized as one that reduced the demand fo r housing s i t e s , increased the supply of housing s i t e s , and maintained f a i r market t ransac t ions for housing s i t e s . This measure has become a model for subsequent land pr ice measures, 25 such as the National Land Use Planning Law. Another land demand contro l was es tab l ished by r e v i s i n g the Bu i ld ing Code Law in 1970. Through t h i s r e v i s i o n , housing lo ts were decreased by about 30 square meters. For example, before t h i s r e v i s i o n about 143 square meters of housing lot was required to const ruc t a house of about 70 square meters b u i l d i n g a r e a , but the rev ised B u i l d i n g Code Law requires only 110 square meters of housing lot to bu i ld a house of same b u i l d i n g area . This r e v i s i o n was c e r t a i n l y e f f e c t i v e in increas ing the supply of housing s i t e s . However, t h i s r e v i s i o n a lso fur thered the fragmentat ion of housing s i t e s in urban areas . In a d d i t i o n , housing loans were made i n d i s c r i m i n a t e l y by banks. In other words, housing loans were made without checking the minimum 16 s i z e s o f h o u s i n g l o t s , h o u s i n g e n v i r o n m e n t s t a n d a r d s and o t h e r s u c h f a c t o r s . T h e r e was no c o n s i d e r a t i o n f o r s u p p o r t i n g the 26 c o n s t r u c t i o n of b e t t e r h o u s i n g t h r o u g h h o u s i n g l o a n s . H - 1 - 3 . The T h i r d Phase ( 1 9 8 0 s ) The t r e n d i n r e c e n t y e a r s i s t h a t the Nakasone C a b i n e t ( 1 9 8 2 - 8 7 ) r e l i e d on the p r i v a t e s e c t o r to improve d o m e s t i c b u s i n e s s c o n d i t i o n s . The Nakasone C a b i n e t e s p e c i a l l y e m p h a s i z e d g r e a t e r p r i v a t e s e c t o r i n v e s t m e n t s by r e l a x i n g c o n t r o l s . Toward t h i s e n d , t he M i n i s t r y o f C o n s t r u c t i o n b r o u g h t f o r w a r d the f o l 1 o w i ng m e a s u r e s : (D P romote u r b a n renewa l by r e l a x i n g u r b a n p l a n n i n g and bu i I d i ng c o n t r o l s | @ Promote u r b a n d e v e l o p m e n t by u s i n g s t a t e - o w n e d and pub-l i c I a n d s ; and © Promote r e a l e s t a t e d e v e l o p m e n t by r e l a x i n g land d e v e -27 1opment gu i d e I i n e s . These measu res c o n f l i c t e d w i t h many r e g u l a t i o n s and laws t h a t were i n s t i t u t e d to s u p p o r t e f f e c t i v e n a t i o n a l and u r b a n p l a n n i n g under t h e C i t y P l a n n i n g Law of 1968 . These d e r e g u l a t i o n measu res a r e one of the c a u s e s o f the 28 r e c e n t h i k e in l a n d p r i c e s . The government made a s e r i o u s m i s t a k e i n u s i n g a s h o r t - t e r m b u s i n e s s program f o r n a t i o n a l l and and u r b a n p l a n n i n g t h a t r e q u i r e d l o n g - t e r m v i s i o n . 17 The 1968 and the most f o l l o w i n g s e c t i o n examines the C i ty Planning Law of National Land Use Planning Law of 1974 that have been important measures taken to implement land p o l i c i e s . II - 2 . Land Use Control in Post-War Japan: C i ty Planning Law of 1968 and National Land Use Planning Law of 1974 This s e c t i o n focuses on the C i ty Planning Law of 1968 and the National Land Use Planning Law of 1974, which are considered to be the most important legal too ls used to implement land p o l i c i e s in postwar Japan- -a t least up to the deregula t ion measures implemented by the Nakasone Cabinet . n - 2 - 1. C i t y Planning and C i ty Planning Law Y o r i f u s a Ishida s ta tes that the h is to ry of modern c i t y planning in Japan can be d iv ided into seven per iods : the f i r s t p e r i o d - - c i t y Europeanism (1868-1887), the second p e r i o d - - c i t y m o d i f i c a t i o n (1880-1918), the th i rd p e r i o d - - c i t y planning system establ ishment (1910-1935), the four th period--wart ime c i t y planning (1931-1945), the f i f t h per iod- -postwar c i t y res to ra t ion planning (1945-1954), the s i x t h per iod- -urban development with-out fundamental laws (1955-1968), and the seventh p e r i o d - -29 urban development with new fundamental laws (1968-1980's) . This subsect ion b r i e f l y reviews the h is tory of postwar c i t y planning and the C i ty Planning Law, that i s , the f i f t h and la ter p e r i o d s . Note that the bas is of the e x i s t i n g C i ty Planning Law was e s t a b l i s h e d in the second period of c i t y mod i f i ca t ion (1880-18 1919). This basis is one of the fac tors that resul ted in today's poor l i v i n g environment and the high pr ice of urban land in Japan. In 1889, the Tokyo C i t y M o d i f i c a t i o n Ordinance and the Land and B u i l d i n g Disposal Rules for Tokyo C i t y M o d i f i c a t i o n were enacted. These ordinances and rules may be regarded as Japan's f i r s t c i t y planning laws. The Tokyo c i t y modi f i ca t ion project was developed with emphasis on economic development. This bas ic idea placed p r i o r i t y on b u i l d i n g roads, bridges and other bas ic s t r u c t u r e s , while neglect ing housing, waterworks and necess i s ty of l i f e , and has been followed c o n s i s t e n t l y even 30 a f t er Wor I d War II . 1 ) Process of Enacting the C i t y Planning Law of 1968 (1) F i f t h Per iod: Postwar Restorat ion Planning (1945-1954) The new c o n s t i t u t i o n was enacted in May 1947 fo l lowing the Local Autonomy Law es tab l i shed in A p r i l of the same year. The C i t y Planning Law of 1919 that es tabl i shed c i t y planning as a nat ional project had to be thoroughly amended to set c i t y planning as a loca l government concern. Even though the Urban B u i l d i n g Law was revised as the B u i l d i n g Standard Law in 1950 to s h i f t b u i l d i n g a d m i n i s t r a t i o n from the nat ional government to local governments, the " O l d " C i t y Planning Law enacted in 1919 31 was not r e v i s e d . Revis ion of the C i ty Planning Law of 1919 was nevertheless s tudied to some extent . In 1948, a b i l l to s h i f t d e c i s i o n -19 making f o r c i t y planning based on the C i ty Planning Law of 1919 to the "heads of p re fec tu res" was d i s c u s s e d . The "Report on 32 Taxat ion in Japan" (submitted by a mission headed by C . S . Shoup in August 1949) proposed the d i v i s i o n of admin is t ra t ive s e r v i c e s between the nat ional government and local governments. This report proposed that a l l c i t y planning work must be t ransfer red from the nat ional government to local governments. However, the C i ty Planning Law of 1919 was not amended. Japan's f a i l u r e to e s t a b l i s h a fundamental law for c i t y planning in the e a r l y postwar stage was one of the reasons why Japanese c i t i e s developed in a d i s o r d e r l y fashion during the s i x t h period 33 of Japan's rapid economic growth. (2) S ix th P e r i o d : Period of C i ty Development without Funda-mental Law (1955-1968) Since the U .S . -Japan Secur i ty Treaty was revised in June 1960, and the "income doubl ing program" was published at the end of 1960, Japan's economy entered a period of high-growth. At t h i s t ime, a new concept of regional development was born. According to t h i s concept , regional development must cont r ibute to nat ional economic growth, and a nat ional economic plan (or high-growth p o l i c y ) must be the basis of a nat ional land deve-lopment p l a n . Moreover, the nat ional land development plan must be broken down into regional development plans as well as urban development p lans . Local governments began to cos ider nat ional 20 projects in terms of assist ing local development, instead of considering individual conditions for effective regional deve-34 Iopment. As a result of this regional development policy, the cent-ral control systems and the nation's population were being increasingly concentrated into huge city groups ( i . e . , the three mega IopoI itan areas of Tokyo, Nagoya, and Osaka). Consequently, the issue of urban overpopulation became more serious. This problem facing c i ty development in the high-growth period was due direct ly to the obsolete City Planning Law of 1919 that remained in effect without being revised until 1968. The City Planning Law of 1919 proved inadequate in terms of the followi ng: CD The decision-making authority for city planning belonged to the national government. Therefore, c i ty planning remained a national project. (2) Residents were not authorized to participate in the decision-making process. @ Institutions for land use planning were inadequate. Since there was no plan, there was no control for land u t i l i z a t i o n . <§) The f inancial basis for implementing of c i ty planning pro-jects for local governments were weakened. For example, the 35 city planning tax was abolished in 1950. Due to the lack of a fundamental law, various city develop-21 36 merit pro jec t laws were enacted to promote regional and c i t y development as the basis of the high economic growth p o l i c y , and var ious " p u b l i c " e n t e r p r i s e s other than local governments were c r e a t e d . In view of t h i s background, massive c i t y development 37 pro jec ts were c a r r i e d out on an unprecedented Iy large s c a l e . (3) Seventh Period." Period of New Fundamental Laws (1968-) Thanks to the new C i t y Planning Law enacted in 1968 and the complete r e v i s i o n of the Bu i ld ing Standard Law in 1970, a new legal system for c i t y planning was es tab l ished half a century a f t e r the old C i t y Planning Law and Urban Bu i ld ing Law were en-acted in 1919. A new fundamental legal system was required because the high-growth p o l i c y resul ted in populat ion and i n d u s t r i e s being concentrated into large urban areas , as well as promoting the development of local i n d u s t r i e s . The r e s u l t i n g confusion in c i t y land use and the i r environments caused land 38 pr ices to r i s e s h a r p l y . The C i ty Planning Law enacted in 1968 and the Bu i ld ing Standard Law rev ised in 1970 improved the c i t y planning system and c i t y planning techniques as fo lowsl (D The dec is ion-making au thor i ty for c i t y planning was t rans-fe r red to p re fec tura l governors e lected by the c i t i z e n s and mun i c i pa 1i t i e s . (g) Residents could p a r t i c i p a t e in the preparat ion and d e c i s i o n -22 m a k i n g p r o c e s s o f c i t y p l a n n i n g . © A z o n i n g s y s t e m t h a t d e f i n e d U r b a n i z a t i o n P r o m o t i o n A r e a ( t h e a r e a s t o be u r b a n i z e d ) and U r b a n i z a i t i o n C o n t r o l A r e a ( t h e a r e a s n o t t o be u r b a n i z e d ) was e s t a b l i s h e d . (D A d e v e l o p m e n t p e r m i s s i o n s y s t e m was e s t a b l i s h e d i n c o n n e c -t i o n w i t h t h e z o n i n g s y s t e m . © Z o n e s f o r l a n d u s a g e were d e t a i l e d , and f l o o r s p a c e i n d e x e s 39 were s p e c i f i e d f o r i n d i v i d u a l z o n e s . A c c o r d i n g t o t h e new C i t y P l a n n i n g Law, c i t y p l a n n i n g must be a p p l i e d t o d e s i g n a t e c i t y p l a n n i n g a r e a s . A c i t y p l a n i s p r e p a r e d f o r e a c h c i t y p l a n n i n g a r e a , and b a s e d on t h e c i t y p l a n , l a n d u s e i s c o n t r o l l e d and c i t y p l a n p r o j e c t s a r e i m p l e m e n t e d . 40 T a b l e H - l l i s t s t h e c o n t e n t s o f c i t y p l a n s . D e c i s i o n s on c i t y p l a n s a r e made by p r e f e c t u r a l g o v e r n o r s f o r l a r g e and f u n d a m e n t a l p r o j e c t s , and by m u n i c i p a l i t i e s ( i . e . , w a r d s , c i t i e s , t o w n s , v i l l a g e s ) f o r s m a l l - s c a l e p r o j e c t s . D e c i -s i o n s on c i t y p l a n s i n v o l v i n g more t h a n one p r e f e c t u r e a r e made o n l y by t h e M i n i s t e r o f C o n s t r u c t i o n a f t e r d i s c u s s i o n s w i t h t h e L o c a l C o u n c i l f o r C i t y P l a n n i n g i n e a c h p r e f e c t u r e c o n c e r n e d 41 ( F i g u r e E - 1 ) . 2 ) L a n d Use C o n t r o l by C i t y P l a n n i n g Law o f 1968 The u s e o f m o s t o f l a n d had n o t b e e n c o n t r o l l e d b e f o r e t h e C i t y P l a n n i n g Law o f 1968 was e n a c t e d . A movement t o w a r d c o n t -r o l l i n g l a n d u s e b e g a n b a s e d on t h e C i t y P l a n n i n g Law o f 1968, 23 T a b l e H - 1 . C o n t e n t s o f C i t y P l a n s <D U R B A N I Z A T I O N PROMOTION AND U R B A N I Z A T I O N CONTROL AREA <§> Z O N I N G S Y S T E M u s e z o n i n g , s p e c i a l u s e z o n i n g , b u i l d i n g h e i g h t c o n t r o l d i s -t r i c t , h i g h u t i l i z a t i o n d i s t r i c t , s p e c i f i e d b l o c k f o r u r b a n d e v e l o p m e n t , f i r e p r o o f d i s t r i c t , q u a s i - f i r e p r o o f d i s t r i c t , b e a u t i f u l s i g h t c o n s e r v a t i o n d i s t r i c t , s c e n i c b e a u t y c o n s e r -v a t i o n d i s t r i c t , a r e a f o r d e v e l o p i n g c a r p a r k i n g f a c i l i t i e s , p o r t z o n e , s p e c i a l h i s t o r i c e n v i r o n m e n t c o n s e r v a t i o n a r e a , g r e e n z o n e c o n s e r v a t i o n a r e a ( s u b u r b a n s p e c i a l g r e e n z o n e c o n s e r v a t i o n a r e a ) , d i s t r i c t f o r p h y s i c a l d i s t r i b u t i o n c e n -t e r s , p r o d u c t i v e g r e e n a r e a , o t h e r a r e a s  © PROMOTION A R E A S u r b a n r e d e v e l o p m e n t p r o m o t i o n a r e a , l a n d r e a d j u s t m e n t p r o m o -t i o n a r e a , r e s i d e n t i a l b l o c k s d e v e l o p m e n t p r o m o t i o n a r e a  (D URBAN F A C I L I T I E S r o a d s , u r b a n r a p i d - t r a n s i t r a i l r o a d s , c a r p a r k i n g f a c i l i t i e s m o t o r v e h i c l e t e r m i n a l s a i r p o r t s , p a r k s , o p e n s p a c e s , p l a z a s c e m e t e r i e s , w a t e r w o r k s , e l e c t r i c i t y a n d g a s s u p p l y f a c i l i -t i e s , s e w e r a g e s y s t e m s , f i l t h t r e a t m e n t p l a n t s , i n c i n e r a t i o n p l a n t s , r e g i o n a l a i r c o n d i t i o n i n g f a c i l i t i e s , r i v e r s , c a n a l s , s c h o o l s , l i b r a r i e s , r e s e a r c h f a c i l i t i e s , h o s p i t a l s , d a y n u r s e r i e s , m a r k e t s , s l a u g h t e r h o u s e s , c r e m a t o r i e s , c o l l e c t i v e h o u s i n g f a c i l i t i e s , c o l l e c t i v e g o v e r n m e n t a n d p u b l i c o f f i c e f a c i l i t i e s , p h y s i c a l d i s t r i b u t i o n b u s i n e s s c e n t e r s , o t h e r f a c i 1 i t i e s © URBAN D E V E L O P M E N T P R O J E C T S l a n d r e a d j u s t m e n t p r o j e c t s , new h o u s i n g t o w n d e v e l o p m e n t p r o j e c t s , i n d u s t r i a l e s t a t e d e v e l o p m e n t p r o j e c t s , u r b a n r e -d e v e l o p m e n t p r o j e c t s , new c i t y f o u n d a t i o n d e v e l o p m e n t p r o -j e c t s , r e s i d e n t i a l b l o c k s d e v e l o p m e n t p r o j e c t s  © S C H E D U L E D A R E A S FOR URBAN D E V E L O P M E N T P R O J E C T S , E T C . s c h e d u l e d a r e a s f o r new h o u s i n g t o w n d e v e l o p m e n t p r o j e c t s , s c h e d u l e d a r e a s f o r i n d u s t r i a l e s t a t e d e v e l o p m e n t p r o j e c t s , s c h e d u l e d a r e a s f o r new c i t y f o u n d a t i o n d e v e l o p m e n t p r o j e c t s , s c h e d u l e d a r e a s f o r c o l 1 e c t i v e . n o u s i n g f a c i l i t i e s w i t h a n a n a r e a o f 20 h e c t a r e s o r m o r e , s c h e d u l e d a r e a s f o r c o l l e c -t i v e g o v e r n m e n t a n d p u b l i c o f f i c e f a c i l i t i e s , s c h e d u l e d a r e a s f o r p h y s i c a l d i s t r i b u t i o n b u s i n e s s c e n t e r s  ® D I S T R I C T P L A N N I N G , E T C . d i s t r i c t p l a n n i n g , r o a d - s i d e d e v e l o p m e n t p l a n n i n g  S o u r c e : T h e B u r e a u o f C i t y P l a n n i n g , T o k y o M e t r o p o I i t a n G o v e r n m e n t , T o k y o no T o s h i D u k u r i C P I a n n i n g o f T o k y o ) , ( T o k y o M e t r o p o l i t a n G o v e r n ¥ e n ~ t , " 1 9 8 5 ) : 19.1 24 F i gure 0 - 1 Determination Procedure of a C i ty Planning ( C i t y Plan determined by a Pre fec tura l Governer) (PREFECTURAL GOVERNOR) (RESIDENTS) Or i g i naI Draft Requests and ProposaIs (PUBLIC AUTHORITIES CONCERNED) op i n i ons of the res idents Draft Plans subm i ss i on d r a f t plan counc iI of to the the K ^ hearing of op i n i ons <- -> hearing of the opin ions _4_ Proposed C i ty PIann i ng Local C i t y PI ann i ng Counc iI of a Pre fec-tu re r e f e r r i ng matter to counc iI the the M i n i s t e r of Const-ruct ion <- -> approvaI K - — > l subm i s s -i on of wr i t ten op i n i ons 1 Determ i nat i on I Exp Ianat i on to the Resi ' dents Pub l ic r i ngs, Hea-e t c . Pub Ii c not i-f i c a t i o n and exh i b i t i on of the dra f t plan Source: The Bureau of C i ty P lann ing , Tokyo Metropol i tan Government, Tokyo no Toshi Dukuri (P lann ing of Tokyo) , (Tokyo Metropol i tan GoverTrmeliT," 1985 )"TT6T! 25 as well as on the National Land Use Planning Law (which is d i s -cussed in II - 2 - 2 ). This sec t ion descr ibes the main systems involved in cont-r o l l i n g land use according to the C i ty Planning Law. These in-clude l i n i n g , the development permission system, and the zoning system. (1) L i n i n g and Development Permission System The C i ty Planning Law of 1968 designates c i t y planning areas as "such areas that must be s y s t e m a t i c a l l y c o n t r o l l e d , developed and maintained as a whole c i t y " ( A r t i c l e 2) under "the concept that land should be r a t i o n a l l y u t i l i z e d under appropr ia te regu la t ions to secure healthy and c u l t u r a l urban l i f e and func t iona l urban a c t i v i t i e s " ( A r t i c l e 2 ) . This law c l a s s i f i e s c i t y planning areas into urbaniz ion promotion areas and urbaniza ion contro l areas for planned c i t y development ( A r t i c l e 7 of the C i ty Planning Law). Urbanizat ion promotion areas are those that have been urbanized or to be sys -s y s t e m a t i c a l l y urbanized within 10 years with p r i o r i t y , while u rban iza t ion contro l areas are those for which urbaniza t ion is 42 s t r i c t l y c o n t r o l l e d . D iv id ing areas into urban iza t ion promotion and urban iza t ion contro l areas is of ten c a l l e d " l i n i n g " (Table n - 2 ) . Any development a c t i v i t i e s in an urban iza t ion promotion area or urban iza ion cont ro l area must be approved by the pre fec-26 T a b l e H - 2 . D e s i g n a t i o n o f C i t y P l a n n i n g A r e a s ( a s o f 31 M a r c h 1987) N u m b e r o f C i t i e s N u m b e r o f T o w n s N u m b e r o f V i 1 1 a -g e s T o t a l N u m b e r o f C i t y P I a n n -i n g A r e a s A r e a (Km2) C i t y P 1 a n n i ng A r e a s ( 1 ) 652 1,161 105 1,918 1,222 91 ,943 Z o n i n g C o m p 1 e t e d 385 419 45 849 326 50,585 U s e Z o n i n g 240 353 5 598 527 3,231 N a t i o n ( 2 ) 652 2,006 596 3,254 — 377,815 ( l ) - r ( 2 ) 100.0% 57.9% 17.6% 58.9% — 24.3% S o u r c e : T h e N a t i o n a l L a n d A g e n c y e d . , S h o w a 62 N e n b a n K o k u d o R i y o  H a k u s h o - - T o c h i M o n d a i no G e n j o t o K a d a i C 1987 Whi t e P a p e r o f  L a n d U s e : C u r r e n t S t a t e a n d P r o b l e m s o f L a n d U s e ) , ( t h e P r i n -t i n g B u r e a u o f t h e M i n i s t r y o f F i n a n c e , 1 9 8 7 ) : 1 2 9 , t a b l e 1 -4-2 . N o t e s : 1) Z o n i n g C o m p l e t e d i n t h i s t a b l e c o v e r s C i t y P l a n n i n g A r e a s w h e r e t h e d i v i s i o n o f a r e a s i n t o u r b a n i z a t i o n p r o m o t i o n a r e a s a n d u r b a n i z a t i o n c o n t r o l a r e a s h a v e b e e n c o m p l e t e d . 2) U s e Z o n i n g i n t h i s t a b l e c o v e r s C i t y P l a n n i n g A r e a s w h e r e u s e z o n i n g h a s b e e n d e s i g n a t e d . 3) " N a t i o n " i n t h i s t a b l e r e f e r s t o a l l c i t i e s , t o w n s a n d v i l l a g e s i n J a p a n . A l l 652 c i t i e s h a v e b e e n d e s i g n a t e d a s c i t y p l a n n i n g a r e a s , b u t o n l y 1,161 t o w n s a n d 105 v i l l a g e s h a v e b e e n d e s i g n a t e d a s c i t y p l a n n i n g a r e a s a s o f M a r c h 3 1 , 1987 when t h e r e w e r e 2,006 t o w n s a n d 596 v i l l a g e s . 4) T h e w a r d s o f T o k y o a r e c a l c u l a t e d a s a c i t y . 5) B r e a k d o w n s o f z o n i n g c o m p l e t e d c i t y p l a n n i n g a r e a s a r e u r b a n i z a t i o n p r o m o t i o n a r e a s ( 1 3 , 5 3 5 s q u a r e k i l o m e t e r s ) a n d u r b a n i z a t i o n c o n t r o l a r e a s ( 3 7 , 0 5 0 s q u a r e k i l o m e t e r s ) . 27 t u r a l g o v e r n o r i n advance ( d e v e l o p m e n t p e r m i s s i o n s y s t e m - -43 A r t i c l e 29 of t he C i t y P l a n n i n g L a w ) . ( 2 ) Zon i ng Sys tem The z o n i n g s y s t e m r e g u l a t e s the use and s t r u c t u r e s of b u i l -d i n g s , and d i r e c t s b u i l d i n g a c t i v i t i e s to meet the i n t e n d e d p u r p o s e s of c i t y p l a n n i n g . The b a s i c f e a t u r e of t h i s s y s t e m i s use z o n i n g . A c i t y p l a n must i n c l u d e the use z o n i n g s y s t e m to v i s u a l i z e the o v e r a l l d e s i r a b l e p i c t u r e of l and use in the c i t y , and to r e g u l a t e and d i r e c t l and use f o r b u i l d i n g s ( A r t i c l e s 8 and 9 o f t he C i t y P l a n n i n g L a w ) . The B u i l d i n g S t a n d a r d Law r e g u l a t e s the use of b u i l d i n g s , f l o o r s p a c e i n d e x e s , b u i l d i n g 44 c o v e r a g e , and the b l o c k i n g of s u n s h i n e . T a b l e 0 - 3 d e t a i l s t h e z o n i n g s y s t e m . 3 ) I s s u e s in t h e C i t y P l a n n i n g Law of 1968 As m e n t i o n e d a b o v e , the C i t y P l a n n i n g Law of 1968 was i n t e n d e d t o s y s t e m a t i c a l l y d e v e l o p c i t y p l a n n i n g a r e a s by c l a s s i f y i n g t h e s e a r e a s i n t o u r b a n i z a i o n p r o m o t i o n and u r b a n i -z a t i o n c o n t r o l a r e a s . However , t h i s law i n v o l v e s the f o l l o w i n g prob lems* . ( 1 ) I n c o m p l e t e L o c a l i z a t i o n o f C i t y P l a n n i n g P r o c e d u r e D e c i s i o n mak ing a c c o r d i n g to the C i t y P l a n n i n g Law of 1968 i s c h a r a c t e r i z e d by the f o l l o w i n g : (D D e c i s i o n mak ing must be d o u b l e - s t r u c t u r e d as d e c i s i o n to be made by the p r e f e c t u r a l g o v e r n o r s and t h o s e to be made by 28 Table n - 3 . C l a s s i f i c a t i o n and Purpose of Use Zoning C1 ass if icat ion Purpose Category 1 Exc lus ive Res ident ia l D i s t r i c t To protect a favorable r e s i d e n t i a l environment for one or two story houses. Category 2 Exc lus ive Res ident ia l D i s t r i c t To protect a favorable r e s i d e n t i a l environment for medium to h i g h - r i s e houses. Res ident ia l D i s t r i c t P r imar i l y to protect a r e s i d e n t i a l envi ronment. Neighbourhood Commer-c i a l D i s t r i c t To promote convenience of commercial and other business p r imar i l y designed for supp l ies of d a i l y nece-s s i t i e s to res idents in neighborhood r e s i d e n t i a l a reas . Commercial D i s t r i c t P r imar i l y to promote commercial and other business convenience. Q u a s i - i n d u s t r i a 1 Dis-t r i c t P r imar i l y to promote convenience of indus t r i es which are u n l i k e l y to aggravate environment. Industr ia l D i s t r i c t P r imar i l y to promote i n d u s t r i a l con-ven i ence. Exc lus ive Industr ia l D i s t r i c t To promote i n d u s t r i a l convenience. Sou rce: The Tokyo Metropol i tan Government, C i ty Planning of Tokyo, (the Tokyo Metropol i tan Government, 1983):47, table II -1 - 1 . the m u n i c i p a l i t i e s ( c i t i e s , towns and v i l l a g e s ) . The pre-f e c t u r a l governors have greater a u t h o r i t y . (D The nat ional government " p a r t i c i p a t e s " in the c i t y planning of p re fec tu res and m u n i c i p a l i t i e s , while pre fec tura l gover-nors " p a r t i c i p a t e " in the c i t y planning of m u n i c i p a l i t i e s . Such p a r t i c i p a t i o n is l e g a l l y and a c t u a l l y very i n f l u e n t i a l . 29 In other words, d e c i s i o n s for the c i t y planning of munici -p a l i t i e s is made by p re fec tu ra l governors, while the nat ional government l e g a l l y and a c t u a l l y d i r e c t s and superv ises c i t y planning through such f i n a n c i n g mechanisms as grant ing loans and s u b s i d i e s . There fore , the new C i ty Planning Law was not comple-45 te ly reformed. (2) Weak P r i n c i p l e of "No P lan , No Development" The zoning system faced the fo l lowing two problems: (D The f o u r - a r e a system recommended by the S ix th Report of the B u i l d i n g Lot System Counci l was changed to a two-area system. This reduced admin is t ra t i ve f l e x i b i l i t y and caused c o n f I i c t s ( T a b l e f l - 4 ) . (D The r e l a t i o n s h i p s between the planning of urban iza t ion pro-motion areas , urban area maintenance programs, and res iden-t i a l - l a n d - l e v e l taxat ion on farmlands in urbaniza ion contro l 46 areas are vague. As a r e s u l t , u rban iza t ion promotion areas were expanded beyond the range that can be e f f e c t i v e l y main-tained by the m u n i c i p a l i t i e s . The development permission system, which is based on the planning permission system of England, faces the fo l lowing prob-I ems: (D The d e f i n i t i o n of "development" is extremely narrow com-pared to the " p l a n n i n g " def ined in England. The develop-ment of h i l l s for cemeteries and gol f courses was not 30 Table H - 4 . Comparison of The S ix th Report of the Bu i ld ing Lot Council and the C i t y Planning Law of 1968 The S ix th Report of The C i ty P1ann i ng Bu i 1 d i ng Lot Counci1 Condi t ions of Area Law of 1968 Name of Control Name of Control Area Area A11owance Conurbat ion. of i nd i v i- Area which is ad-deve1op- jacent to conu rba-Bu i1t -up ment a c t i - t i o n , cur ren t ly Area v i t y . u rban i z i ng and w i l l become conur-bat i on within 10 Urban i- A11ow-years . zat i on ance of Promo- 1 nd i v i -A11owance Area to t i on dual of planned be urba- Area Constru-develop- n i zed ct i on Urban i- ment, and pos i t i- Act i v i ty zat i on that meets Poss i- v e l y . Promo- the spe- b i 1 i t y t ion c i f i e d of urba-Area sca le only n i zat i on wi th in a cer -Urban i- Proh i b i - t a i n pe- Area in zat ion t ion of r iod of wh i ch Contro1 deve1op- t i me in u rban i-Area ment as a f u t u r e . zat i on Deve1op-ru 1 e. is con-t ro l 1 ed. Urbani -zat i on ment which is Contro1 p1anned Proh i b i- Area which must Area and t ion of not be developed. meets Preser- deve1op- spec i-ved Area ment . Control of land t ran-sact i on. f ied sea 1 e may be a 11 owed . Source". Y o r i f u s a Ish ida , Nihon K i nd a i Toshi Keikaku no Hyakunen C100 Years of Modern C i t y Planning in Japan) , ( J i c h i t a i Kenkyu-sha Inc . , 1987)1309, tab le 9-1 . 31 included in the f i r s t s tage . (2) No permission is required for a small lot of less than 0.1 hectare . Th is s t imula tes s m a l l - s c a l e development and i n d i -v idual b u i l d i n g ( s o - c a l l e d "mini-development" ) that re fers to very small houses b u i l t on small p lo ts by pr iva te deve-Iopers. Due to the above problems, the zoning system and develop-ment permission system have f a i l e d to achieve the p r i n c i p l e of 47 "no p l a n , no development." (3) Present Status of Use Zoning in Tokyo Metropol is The present use zoning status in the 23 wards of Tokyo al lows fo r exc lus ive r e s i d e n t i a l a reas , of which category 1 zoning accounts fo r 13,853 hectares (24.5 percent ) . In add i t ion , category 2 ( exc lus ive r e s i d e n t i a l areas) accounts 11,262 hec-tares (19.9 percent ) . The present zoning system for category 1, which s p e c i f i e s a low f l o o r space index and l i m i t s b u i l d i n g height under 10 meters as a r u l e , is considered to be hinder ing the development of Tokyo. There fore , i t is argued that the 23 wards of Tokyo in category 1 ( e s p e c i a l l y in the inner area of A r t e r i a l Ring Road No. 7) should be changed to category 2 to meet the demand fo r o f f i c e f l o o r space in the 23 wards by prov id ing h i g h - r i s e b u i l d i n g s and to meet the housing demands fo r nearby o f f i c e - b a s e d workers by prov id ing h i g h - r i s e apartment 48 b u i l d i n g s . ( I t is noted that the res idents of the inner area 32 of A r t e r i a l Ring Road No. 7 expressed oppos i t ion to the above change and to the Tokyo Metropol i tan Government that has the author i ty to change use zoning in i t s j u r i s d i c t i o n . There are a lso two groups of planners who agree with and oppose against the change.) II - 2 — 2 . National Land Use Planning Law This subsect ion discusses the National Land Use Planning Law (enacted in December 1974), which along with the C i t y Planning Law, e s tab l i shes the basis for land use contro l in postwar Japan. 1 ) Process of Enacting the National Land Use Planning Law The Tanaka Cabinet of the LDP (formed in 1972) e s tab l i shed a nationwide land use plan to promote the d e c e n t r a l i z a t i o n of i n d u s t r i e s and populat ion to local areas for so lv ing the over-populat ion problem in large c i t i e s and the sparse populat ion problem in local areas , as well as to balance the demand for and supply of land. Prime M i n i s t e r Tanaka, in proposing the "Reformation of the Japanese A rch ip e lago , " submitted the "Nat ional Land Overa l l Development B i l l " to the Diet in March 1973 to r e s t r u c t u r e the Japanese arch ipe lago . Tanaka thought that t h i s p o l i c y would reduce the steep increase in land pr ices in large c i t i e s caused by the energy c r i s i s , make low-priced land a v a i l a b l e to people moving from the c i t i e s , and s t a b i l i z e 33 l a n d p r i c e s t h r o u g h o u t t h e c o u n t r y . C o n v e r s e l y , t h i s p o l i c y s t i m u l a t e d s p e c u l a t i v e l a n d a c q u i s i t i o n s i n c e i t s o u g h t t o d i s -t r i b u t e t h e p o p u l a t i o n a n d d e c e n t r a l i z e i n d u s t r i e s t o l o c a l a r e a s , b e c a u s e d e v e l o p e r s b o u g h t l a n d i n l o c a l a r e a s , a n d s i n c e t h e l a n d - h o l d i n g t a x i m p o s e d o n c o r p o r a t i o n s was v e r y l o w a t 49 t h a t t i m e . T h e p r i c e o f l a n d i n c r e a s e d , a n d t h e T a n a k a C a b i n e t w a s s e v e r e l y c r i t i c i z e d b y t h e o t h e r p o l i t i c a l p a r t i e s . I n r e s p o n s e t o t h i s c r i t i c i s m , t h e T a n a k a c a b i n e t i n c l u d e d l a n d p r i c e - f r e e z i n g t e c h n i q u e s i n t h e " N a t i o n a l L a n d O v e r a l l D e v e l o p m e n t B i l l . " H o w e v e r , t h e n o n - g o v e r n m e n t a l p a r t i e s , o p p o s e d t o t h e b i l l , r e q u i r e d t h a t t h e LDP w o r k o u t a new b i l l t o c o r r e c t t h e p r o b l e m o f i n c r e a s i n g l a n d p r i c e s . T h e r e f o r e , t h e N a t i o n a l L a n d U s e P l a n n i n g Law was p r e p a r e d by c o m p l e t e l y r e v i s i n g t h e N a t i o n a l L a n d O v e r a l l D e v e l o p m e n t B i l l t o e n s u r e p r o p e r l a n d u s e a n d t o r e g u l a t e l a n d p r i c e s . T h e l a w was 50 e n a c t e d i n D e c e m b e r o f 1 9 7 4 . B e f o r e t h e N a t i o n a l L a n d U s e P l a n n i n g Law, h i g h l a n d p r i c e s h a d t r a d i t i o n a l l y b e e n c o u n t e r e d b y a n i n c r e a s e o f a v a i l a b l e l a n d . H o w e v e r , t h e N a t i o n a l L a n d U s e P l a n n i n g Law s o u g h t t o 5 1 , 5 2 l i m i t r i s e s i n l a n d p r i c e s t h r o u g h d i r e c t c o n t r o l . 2 ) R e s t r i c t i o n o f L a n d U s e by t h e N a t i o n a l L a n d U s e P l a n n i n g Law T h e N a t i o n a l L a n d U s e P l a n n i n g Law p a s s e d i n 1 9 7 4 c o n s i s t e d o f n i n e c h a p t e r s : ( 1 ) G e n e r a l , ( 2 ) N a t i o n a l L a n d U s e P l a n n i n g , 34 (3 ) Bas i c P lann ing f o r Land Use, (4) Pe rm iss ion of T rans fe r of Land R i g h t s ( p e r m i s s i o n f o r r e s t r i c t e d a r e a s ) , (5) Repor t ing the T r a n s f e r of Land R igh ts ( r e p o r t i n g sys tem) , (6) Measures f o r Unused Land, (7) Na t iona l Land Use C o u n c i l , (8) M i s c e l l a n e o u s 53 R u l e s , and (9) Penal r e g u l a t i o n s . Chapters (2) through (6) are exp la i ned below. ( 1 ) Na t i ona l Land Use P lann ing The n a t i o n a l land use p lan i s prepared by the n a t i o n a l government. Based on the na t i ona l p l a n , p r e f e c t u r e s and mun i c i -p a l i t i e s must prepare t h e i r own p l a n s . To prepare the n a t i o n a l land use p l a n , the n a t i o n a l government must c o n s u l t w i th the Na t iona l Land Use P lann ing C o u n c i l , as wel l as w i th the p r e f e c -t u r e s . I t a l s o s t i p u l a t s tha t m u n i c i p a l i t i e s must r e f l e c t the 54 view of r e s i d e n t s in t h e i r p lans through p u b l i c h e a r i n g s . (2 ) B a s i c P lann ing f o r Land Use Each p r e f e c t u r a l governor must prepare a b a s i c p lan f o r us ing land in a d d i t i o n to the na t i ona l land use p l a n . Based on the p r e f e c t u r a l land use p l a n s , Japan i s c l a s s i f i e d in to f i v e area g roups ! urban d i s t r i c t s , a g r i c u l t u r a l d i s t r i c t s , f o r e s t d i s t r i c t s , na tu ra l park d i s t r i c t s , and na tu ra l environment p r e s e r v a t i o n d i s t r i c t s . The n a t i o n a l land use p lan p rov ides f o r a long- term s t r a t e g y f o r the n a t i o n ' s land use , wh i le the b a s i c p lan f o r land use c l a r i f i e s ac tua l land use c o n d i t i o n s . A l though p r e f e c t u r a l land development i s r e s t r i c t e d and 35 designated by the p r e f e c t u r e , a l l r e s t r i c t i o n c r i t e r i a are determined by e x i s t i n g laws. These e x i s t i n g laws include the A g r i c u l t u r a l Development Area Control Law for farmland d i s t r i c t s , the Forest Law for f o r e s t d i s t r i c t s , the Natural Park Law for natural park d i s t r i c t s , and the Natural Environment Protec t ion Law for natural environment preservat ion d i s t r i c t s . Land use was c o n t r o l l e d e x c l u s i v e l y according to these laws before the National Land Use Planning Law was enacted. However, s ince these laws control land for ind iv idua l purposes, some areas are not covered by these laws. Such a reas , c a l l e d "white l a n d s , " were traded s p e c u l a t i v e l y . The National Land Use Planning Law, which c l a s s i f i e s the en t i re country into f i v e 55 d i s t r i c t s , does away with such white lands. (3) Report ing System, Reporting System in Supervisory Area, and Permission System in Rest r ic ted Area The repor t ing system in a superv isory area (or r e s t r i c t e d area system) is the most severe rule on land t r a d i n g . Because t h i s cont ro l only al lows land t ransact ions in a r e s t r i c t e d area to be conducted a f t e r obta in ing the proper permiss ion , i t pro-h i b i t s land t rad ing at p r i c e s higher than those evaluated and announced by the National Land Agency (=Koji Chika or Chika 56 K o j i ) . In other words, land t rading is a c t u a l l y f rozen in r e s t r i c t e d areas . However, no r e s t r i c t e d areas were designated u n t i l recent ly because i t was feared that the r e s t r i c t e d area 36 system would f reeze land t rad ing and s e r i o u s l y a f f e c t a l l economic a c t i v i t i e s in the real estate s e c t o r . Another reason why t h i s system has never been implemented is that i t c o n f l i c t s 57 with the Japanese c o n s t i t u t i o n which promotes a f ree economy. The repor t ing system requires the report ing of estimated land s a l e s exceeding a c e r t a i n sca le to the pre fec tura l gover-nors , and i t has been implemented in most areas of Japan. For urbaniza ion promotion a reas , repor t ing was required for t rading areas up to 2,000 square meters in s i z e . There fore , small urban 58 areas so ld at high p r i ces were exempted from r e p o r t i n g . Since 1976, about 40,000 land t ransac t ions ( i n v o l v i n g 70,000 hectares a year) were reported to the local governments according to the National Land Use Planning Law (Table I I -5 ) . This f i g u r e reveals that only about 10 percent of a l l t ransac t ions recorded Table H - 5 . The Number and Area of Land Transact ions Reported to the Local Governments according to the National Land Use Planning Law Year 1976 1977 1978 1979 1980 1981 1982 Number 23,024 31,744 32,858 35,639 40,502 41,650 39,023 A rea 50,111 66,359 71,259 70,409 69,191 77,797 70,092 Year 1983 1984 1985 1986 Number 39,816 38,373 39,429 38,606 A rea 75,258 80,119 77,674 74,477 Source* Shadan Hojin Jutaku Sangyo Kaihatus Kyokai CThe Housing Industry Development A s s o c i a t i o n ) , Tochi Jutaku Mondai C The  Land and Housing Problems) (May 1989):4-5. 37 59 i n the l a n d r e g i s t e r each y e a r a r e r e p o r t e d . As s t a t e d b e f o r e , t h i s i s b e c a u s e t h e t r a d i n g of s m a l l u r b a n a r e a s i s exempted f r om r e p o r t i n g , and t h i s i s one r e a s o n f o r the s t e e p r i s e in l a n d p r i c e s . C o n s e q u e n t l y , the N a t i o n a l Land Agency i n i t i a t e d t h e s u p e r v i s o r y a r e a r e s t r i c t i o n s y s t e m ( o r Sys tem of Land P r i c e M o n i t o r i n g A r e a ) i n A u g u s t 1987 t h a t r e q u i r e s the r e p o r t i n g of a l l l and t r a n s a c t i o n s in a r e a s d e s i g n a t e d by the l o c a l g o v e r n -ment . F o r e x a m p l e , a l l wa rds i n Tokyo w i t h more t han 300 60 m e t e r s o f d e s i g n a t e d l and must be r e p o r t e d ( F i g u r e II - 2 ) . ( 4 ) M e a s u r e s a g a i n s t Unused Land A c c o r d i n g to the N a t i o n a l Land Use P l a n n i n g Law, l and t h a t i s l e f t unused f o r more t h a n t h r e e y e a r s i s c o n s i d e r e d " u n u s e d l a n d " by the p r e f e c t u r a l g o v e r n o r s . In s u c h c a s e s , t he owners o f s u c h unused l a n d s a r e f i r s t r e q u e s t e d to use the l a n d . If s u c h r e q u e s t s a r e d e n i e d , t he p r e f e c t u r e i s e n t i t l e d to e x p r o -61 p r i a t e t h e l and f r om the owner . 3 ) I s s u e s of t h e N a t i o n a l Land Use P l a n n i n g Law As d e s c r i b e d a b o v e , the N a t i o n a l Land Use P l a n n i n g Law i n i t i a l l y e s t a b l i s h e d l a n d t r a d i n g r e s t r i c t i o n s based on t h r e e s y s t e m s a t i t s i n c e p t i o n ( t h e p e r m i s s i o n s y s t e m i n r e s t r i c t e d a r e a s , r e p o r t i n g s y s t e m , and unused l a n d s y s t e m ) . N e v e r t h e l e s s , s i n c e l a n d use b a s i c p l a n n i n g depends on e x i s t i n g l a w s , the l and use p l a n n i n g a c c o r d i n g to t he N a t i o n a l Land Use P l a n n i n g Law 38 Figure n - 2 . Land Transact ion Control by the Nationa Land Use Planning Law 1. REPORT ING SYSTEM S U B J E C T S : CD Land t ransac t ion over 2,OOOirf in urban iza t ion promotion areas (2) Land t r a n s a c t i o n over 5,000-nf in other c i t y planning areas . <§) Land t ransac t ion over 10,000m2 in areas not designated as c i t y planning areas  2. REPORT ING SYSTEM IN SUPERVISORY AREA ( s ta r ted in August 1987) D A C O N D I T I O N S : J U D G E -Steep land pr ice hike or i t s sym- MENT A BN ptom . ON D LO PR ICE V IU P R E F E C T U R A L GOVERNOR CAN AND 1 CN CD designate the area to be USAGE N C -> C repor ted , OF E E © conduct survey on trend in LAND M land p r i c e , E (§) order a person who made land N t ransac t ion cont rac t to T report the d e t a i l s of a cont rac t and o t h e r s . JUDGE-MENT A ON D PRICE V AND 1 USAGE c -OF E LAND -9> BN LO IU CN C E M E 3. PERMISSION SYSTEM IN RESTRICTED AREA CONDITIONS: (D Concentrat ion of specu1 at i ve land t r a n s a c t i o n s © Steep land p r i ce h i ke JUDGE-MENT ON PRICE AND USAGE OF LAND Source: Nihon Keizai Shinbun-sha, " Y a s a s h i i Ka ise tsu" C "Exp lana t ion of Economic Terms" Keizai Shinbun-sha Inc . , October 1987):6. Ke i za i Yogo no ) (Tokyo: Nihon 39 i t s e l f has no s u f f i c i e n t b a s i s . This is the fundamental problem of th is law. Th is law regulates the t rading of land rather than land use p lann ing . Since the regu la t ion of land t rad ing has no r e l a t i o n s h i p with the bas ic plan for land use, th is law has no basis for ach iev ing e f f e c t i v e land use planning from the view-62 point of land t r a d i n g . Problems posed by the National Land Use Planning Law are d iscussed below. CD Lack of Return of Development P r o f i t s to the Publ ic Although the National Land Use Planning Law seeks to d i r e c t l y regulate land t rad ing pr ices through the permission system, repor t ing system, and unused land system, th is law has 63 no basis for re turn ing development p r o f i t s to the p u b l i c . (2) Problems Facing the Permis iss ion System in Res t r ic ted Areas and Reporting System in Supervisory Areas Although the permission system in a r e s t r i c t e d area would be most e f f e c t i v e in suppressing r i s e s in land p r i c e s , th is system has never been implemented because such implementation would a c t u a l l y f reeze land t r a d i n g . As p rev ious ly mentioned, the area of land whose t rad ing must be reported is reduced, when the report ing system in super-v isory area (or the system of land pr ice monitoring area) was implemented, from 2,000 square meters to the area designated by the local government. However, the ra t io of land t rading to be 40 repor ted i s s t i l l very low. For example, about 90 percent of land t r a d i n g in the f i v e c e n t r a l wards of Tokyo (M ina to , Chuo, Ch i yoda , S h i b u y a , and Shinagawa) compr ises a land area of on ly up to 300 square meters . T h e r e f o r e , s m a l l - s i z e land i s bought and s o l d w i thout r e p o r t i n g , which r e s u l t s i n , f o r example, the problem of s o - c a l l e d " p e n c i l b u i l d i n g s " or b u i l d i n g s b u i l t on very smal l l o t s . Note tha t because the c r i t e r i o n f o r de te r -mining land t r a d i n g p r i c e s is vague, the s e t t i n g of land p r i c e s i s d i f f i c u l t f o r land t r a d e r s , which may i n h i b i t smooth land 64 t rad i ng. Th is chapter has reviewed the land p o l i c i e s and land use c o n t r o l s implemented in Japan s i n c e the war. It c l a r i f i e d tha t e f f e c t i v e land p o l i c i e s have yet to be implemented in postwar Japan . Both the C i t y P lann ing Law of 1968 and the Na t iona l Land Use P lann ing Law, which are the c e n t r a l p i l l a r s of land use c o n t r o l in Japan, can never be cons ide red e f f e c t i v e f o r pro-moting proper land use because they are i n s u f f i c i e n t . A l though Japan ach ieved m i racu lous economic growth and has developed i n to a wor ld economic power, i t s urban l i v i n g environment remains very poor . If A r t i c l e 28 of Gen. M a c A r t h u r ' s c o n s t i t u t i o n had not been de le ted and i t s s p i r i t had been r e f l e c t e d in v a r i o u s land p o l i c i e s and land use r e g u l a t i o n s , Japan would be en joy ing a f a r more comfor tab le urban l i v i n g 41 envi ronment. The next c h a p t e r reviews the tren d toward r i s i n g land p r i c e s in Japan a f t e r the war. 42 N o t e s 1 T h e C o m p r e h e n s i v e N a t i o n a l D e v e l o p m e n t P l a n i n s t i t u t e d i n 1962 a d o p t e d n o d a l s y s t e m d e v e l o p m e n t , and p r o m o t e d t h e c o n s t -r u c t i o n o f new i n d u s t r i a l c i t i e s and e s t a b l i s h m e n t o f s p e c i a l a r e a s f o r i n d u s t r i a l c o n s o l i d a t i o n . Due t o r a p i d e c o n o m i c g r o w t h , t h e D e v e l o p m e n t P l a n r e s u l t e d i n r a p i d u r b a n i z a t i o n , o v e r p o p u 1 a t e d u r b a n a r e a s , and u n d e r p o p u l a t e d l o c a l a r e a s . H i d e k i K a j i e t a l . , G e n d a i T o s h i K e i k a k u Y o g o r o k u C T e c h n i c a l T e r m s o f C u r r e n t C i t y P l a n n i n g ) , ( T o k y o : S h o k o k u s h a I n c . , 1 9 8 6 ) , p. 56. 2 M a s a k a z u Okubo e d . , C h i k a t o t o s h i K e i k a k u - - K a i h a t s u  R i e k i no J i t t a i t o S h a k a i K a n g e n C L a n d P r i c e and C i t y P l a n n i n g :  A c t u a l C o n d i t i o n o f D e v e l o p m e n t P r o f i t and i t s S o c i a l R e t u r n ) ( K y o t o : G a k u g e i S h u p p a n - s h a I n c . , 1 9 8 3 ) , p. 2. 3 Y o s h i k a z u S a k a m o t o and R o b e r t E . Ward, N i h o n S e n r y o no  Rek i s h i C H i s t o r y o f J a p a n O c c u p a t i o n ) ( T o k y o : T o k y o D a i g a k u S h u p p a n - k a i , 1 9 8 7 ) , p. 143. 4 I b i d . 5 " K i s e i Kanwa de T T o s h i j wa M a m o r e n a i ( C i t i e s c a n n o t be p r o t e c t e d t h r o u g h t h e R e l a x a t i o n o f C o n t r o l s ) ," N i k k e i A r c h i - t e c t u r e , 4 A p r i l 1988, p. 2 1 . 6 T h e t h r e e m e t h o d s o f i m p l e m e n t i n g l a n d p o l i c y c a n be r o u g h l y c l a s s i f i e d a s f o l l o w s : (D l a n d u s e c o n t r o l by t h e C i t y P l a n n i n g Law, N a t i o n a l L a n d Use P l a n n i n g Law and o t h e r means, (2) c r e a t i o n o f h o u s i n g s i t e s a n d l a n d r e c l a m a t i o n a r e a s by t h e p u b l i c s e c t o r , a n d ® l a n d t a x a t i o n . Y u k i o N o g u c h i , " T o c h i Z e i s e i - - K e i z a i t e k i S o k u m e n " C " L a n d T a x a t i o n : E c o n o m i c A s p e c t s " ) , J u r i s t , 25 M a r c h 1984, p. 2 0 9 . 7 K u s u h i k o S a k a m o t o e d . , T o c h i K a k a k u no S o g o t e k i K e n k y u 43 (Comprehensive Study on Land Pr ice ) (Tokyo - Norin Tokei Kyokai , 1984), p. 32. 8 Okubo, Chika to toshi Keikaku- -Kaihatsu Rieki no J i t t a i  to Shakai Kangen (Land Pr ice and C i ty P lanning! Actual Condi- t i o n of Development P r o f i t and i ts Socia l Return) , p. 2. 9 Yoshi to Honma, Gendai Toshi Jyutaku Seisaku CToday's  U rban Hous i ng PoI i cy) (Tokyo! Sanshodo Inc . , 1983). p. 255. 10 Yuzuru Hanayama, "Sengo no Tochi Seisaku- -Sono R e k i s h i -teki Tenkai" ( "Land P o l i c y a f te r the War! Its H i s t o r i c a l Development" ) , J u r i s t , 25 March 1984, pp. 107-108. 11 The Greater London Plan (1944) was the model for the National Capi ta l Region Development Law enacted in 1956. To r e s t r i c t the expansion of urban d i s t r i c t s , the Suburban Zone (green be l t areas located 5-10 ki lometers from centra l Tokyo) was to be incorporated into the Law. The Suburban Zone was to be d iv ided into three zones ( i . e . , super ior a g r i c u l t u r a l zone, green zone for c o n s t r u c t i n g parks, and exempted zone that was already u rban ized ) . The Suburban Zone was not incorporated into the Law because most r e s i d e n t s , e x p e c i a l l y farmers and land-owners, in the Zone, f i e r c e l y opposed i t . Nihon Hoso Shuppan Kyokai (Japan Broadcast ing Pub l ish ing A s s o c i a t i o n ) , Tochi wa  Dareno Monoka (To whom Land Belongs?) (Tokyo! Nihon Hoso Shuppan Kyoka i , 1987), pp. 97-98. 12 Kazuo Hiramoto, Tokyo Korekara Konaru (Tokyo 's Future) (Kyoto! PHP Research I n s t i t u t e , 1988), p. 175. 13 The four Comprehensive National Development Plans implemented thus far have been drawn up by the National Land Agency. Since the Plan i t s e l f has no means to enforce i t s programs, the nat ional government and government o f f i c e s promul-gate laws for execut ing the programs. For instance , a funda-mental aim of the Comprehensive National Development Plan of 1962 was to f o s t e r heavy and chemical i n d u s t r i e s , s tee l industry and e l e c t r i c power development as key i n d u s t r i e s . The New Indust r ia l C i ty Development Promotion Law and Specia l Area for Indust r ia l Conso l ida t ion Promotion Law were enacted in 1962 and 44 1964, r e s p e c t i v e l y . The programs were scheduled to be completed in 1970. However, the n a t i o n ' s f a s t e r - t h a n - a n t i c i p a t e d economic growth and i n d u s t r i a l i z a t i o n required the f i r s t development plan to be ad jus ted . The New Comprehensive National Development Plan was e s t a b l i s h e d in 1969. With completion s la ted for 1985, i t featured l a r g e - s c a l e development pro jec ts invo lv ing the const-ruc t ion of the Shinkansen ( B u l l e t T r a i n ) , expressways, and i n d u s t r i a l bases. In 1977, the Third Comprehensive National Development Plan was s t a r t e d . Its main ob jec t ive was to estab-l i s h a planned, to ta l l i v i n g environment. The Fourth Compre-hensive National Development P lan , i n s t i t u t e d in 1987, seeks to d e c e n t r a l i z e bus inesses , indus t r i es and populat ion from urban reg ions , e s p e c i a l l y the three metropol i tan regions of Tokyo, Nagoya and Osaka, to adjacent local areas to resolve such urban problems as the s t r a i n on urban s t r u c t u r e s , de te r io ra ted l i v i n g environment, d e c l i n e in loca l community f u n c t i o n s , as well as to r e v i t a l i z e local a reas . The completion of programs is s la ted f o r the year 2000, and the Mu l t inuc le i Decentra l ized National Land Formation Promotion Law drawn up by the National Land Agency was enacted in 1988. Kaji H i d e k i , et a l . , Gendai Toshi  Keikaku Vogoroku ( T e c h n i c a l Terms of Current C i ty Planning) (Tokyo: Shokokusha Inc . , 1986) , p. 56. The L i a i s o n and Protocol S e c t i o n , Internat ional Commu-nication D i v i s i o n , Bureau of C i t i z e n s and Cu l tu ra l A f f a i r s , Tokyo Metropol i tan Government e d . , C i ty Planning of Tokyo (Tokyo: The Tokyo Metropol i tan Government, 1983), PP. 40-41. 14 K o j i r o Nakamura, "Sengo Kokudo Seisaku no Hensen to Yonzenso" ( "The T r a n s i t i o n of National Land Po l i cy in Post-war Japan and the 4th Comprehensive National Development Plan" ) , The Toshi Mondai (Munic ipa l Problems) , December 1987, pp. 3-5. 15 Goji Shiramasa, " I ch izenso kara Sanzenso he--Sono Kei fu to Kadai" C "From the Comprehensive National Development Plan to the Third Comprehensive National Development P lan: The i r T r a n s i t i o n and Problem" ) , J u r i s t , 1 August 1985, p. 46 and 51. 16 Hiramoto, Tokyo Korekara Konaru (Tokyo 's Future) , p. 175. 17 Land p o l i c i e s in postwar Japan have been f a u l t y s ince they have placed importance on Clause 1 of A r t i c l e 29 ( regarding 45 p r i v a t e p r o p e r t y r i g h t s ) . A n o t h e r m a j o r r e a s o n t h a t l a n d p o l i c i e s i n p o s t w a r J a p a n h a v e f a i l e d i s t h a t t h e y were b a s e d on t h e t h e o r y t h a t i f h o u s i n g s i t e s and h o u s i n g u n i t s a r e s u p p l i e d i n l a r g e q u a n t i t i e s , demand w i l l d e c r e a s e and l a n d p r i c e s w i l l d r o p . To s u p p l y h o u s i n g s i t e s and h o u s i n g u n i t s , t h e n a t i o n a l g o v e r n m e n t h a s e n c o u r a g e d t h e r e d e v e l o p m e n t o f b u i l t - u p a r e a s , a n d d e v e l o p e d new u r b a n r e s i d e n t i a l b u i l t - u p a r e a s . H o w e v e r , t h e s e m e a s u r e s h a v e n o t l o w e r e d l a n d p r i c e s . T h e s e m e a s u r e s h a v e r a t h e r i n c r e a s e d l a n d p r i c e s i n r e d e v e l o p e d b u i l t - u p a r e a s , new u r b a n r e s i d e n t i a l b u i l t - u p a r e a s , and s u r r o u n d i n g a r e a s s i n c e d e v e l o p m e n t e n c o u r a g e s c o n c e n t r a t i o n o f p e o p l e and b u s i n e s s e s a s a r e s u l t o f t h e i n c r e a s e d v a l u e o f t h e l a n d . S a c h i o O t a n i , T o s h i n i t o t t e T o c h i t o h a N a n i k a C T h e M e a n i n g o f  L a n d f o r a C i t y ) ( T o k y o : C h i k u m a S h o b o I n c . , 1 9 8 8 ) , pp. 6 5 - 7 7 . 18 W i t h t h e e n a c t m e n t o f t h e N a t i o n a l L a n d Use P l a n n i n g Law i n 1974, t h e N a t i o n a l L a n d A g e n c y was e s t a b l i s h e d a s one o f t h e n a t i o n a l g o v e r n m e n t o f f i c e s . The m a i n p u r p o s e o f i t s e s t a b l i -s h m e n t was t o f o s t e r p r o p e r n a t i o n a l l a n d u s e by c o o r d i n a t i n g l a n d u s e - r e l a t e d a d m i n i s t r a t i o n by o t h e r n a t i o n a l g o v e r n m e n t o f f i c e s s u c h a s t h e M i n i s t r y o f C o n s t r u c t i o n , M i n i s t r y o f A g r i -c u l t u r e , F o r e s t r y , and F i s h e r i e s , and M i n i s t r y o f T r a n s p o r -t a t i o n , a n d o t h e r s . H e n c e , m o s t s t a f f members h a v e b e e n t r a n s -f e r r e d f r o m o t h e r n a t i o n a l g o v e r n m e n t o f f i c e s i n 2 t o 3 y e a r s r o t a t i o n s , w i t h m a i n r o l e o f a c t i n g a s c o o r d i n a t o r s b e t w e e n t h e N a t i o n a l L a n d A g e n c y and n a t i o n a l g o v e r n m e n t o f f i c e t o w h i c h t h e y b e l o n g . H i r o t a k a F u j i t a , " S h o k a i K o k u d o R i y o K e i k a k u Ho ( 1 ) " C "A D e t a i l e d C o m m e n t a r y on t h e N a t i o n a l L a n d Use P l a n n i n g Law ( 1 ) " ) , T o c h i J u t a k u M o n d a i C T h e L a n d and H o u s i n g P r o b l e m s ) , May 1988, p. 3 3 . 19 O k u b o , C h i k a t o t o s h i K e i k a k u - - K a i h a t s u R i e k i no J i t t a i  t o S h a k a i K a n g e n ( L a n d P r i c e and C i t y P l a n n i n g : A c t u a l C o n d i - t i o n o f D e v e l o p m e n t P r o f i t and i t s S o c i a l R e t u r n ) , pp. 2 4 - 2 5 . 20 T h e l a n d l e a s e h o l d and h o u s e l e a s e h o l d law was r e v i s e d i n 1941 t o a d d an a r t i c l e o f " j u s t c a u s e " t h a t r e q u i r e d l a n d -o w n e r s a n d l a n d l o r d s t o p r e s e n t s u f f i c i e n t r e a s o n f o r r e f u s i n g t o renew o r t o c a n c e l l e a s e s . The m a i n p u r p o s e o f t h i s r e v i s i o n was t o m i t i g a t e h o u s i n g s h o r t a g e a i n w a r t i m e . D u r i n g t h e war, many l a r g e c i t i e s were bombed and d e s t r o y e d , c a u s i n g t h e h o u s i n g s h o r t a g e t o g e t w o r s e . Due t o t h i s a c u t e h o u s i n g s h o r t a g e , " j u s t c a u s e " was t a k e n more s e v e r e l y f o r l a n d o w n e r s and l a n d -l o r d s . T h e law d e f i n e s t h e u s a g e o f l a n d o r h o u s e s by o w n e r s a s 46 one s u f f i c e i n t reason to refuse renewal or cancels a lease . However, according to a j u d i c i a l precedent, i f a tenant wishes to renewa lease , landowners and landlords must renew the lease even though they wanted to use the i r land or house themselves. There fore , landowners and landlords are very re luctant to lease the i r a s s e t s . Kikuo Iwata, Tochi Kaikaku no Kihon Senryaku (Proposa ls for Land Reform) (Tokyo* Nihon Keizai Shinbun-sha, 1988), pp. 189-190. 21 Okubo, Chika to toshi Keikaku- -Kaihatsu Rieki no J i t t a i  to Shakai Kangen (Land Pr ice and C i ty P lanning: Actual Condi- t i o n of Development P r o f i t and i ts Soc ia l Return) , pp. 25-26. 22 The Japan Housing Corporat ion was es tab l ished for deve-loping land and c o n s t r u c t i n g houses inthe regions of large c i t i e s in 1955. It was incorporated with the Japan Estate Development Corporat ion to become the Japan Housing and Urban Development Corporat ion in 1981. Housing un i ts b u i l t by the Japan Housing Corporat ion amounted to 1,111,000 by 1979, (when the number of to ta l housing un i ts b u i l t a f te r the war reached 32,330,500) . The types of housing un i ts suppl ied by the Japan Housing Coporat ion include ind iv idua l homes for rent and s a l e , and apartments f o r rent and sa le (mostly aimed at fo r low and middle income groups) . Okubo, Chika to toshi Keikaku- -Kaihatsu  Rieki no J i t t a i to Shakai Kangen (Land Pr ice and C i ty P lanning:  Actual Condi t ion of Development P r o f i t and i t s Soc ia l Return) , p. 27. Hideki K a j i , et a l . , Gendai Toshi Keikaku Yogoroku CTechnica l Terms of Current C i ty Planning) (Tokyo: Shokokusha Inc . , 1986) , p. 54. 23 For c o n s t r u c t i n g la rge , new towns, var ious r igh ts such as eminent domain, cont ro l of b u i l d i n g a c t i v i t i e s are given to the implementing body. Loans at very low in te res t rates are provided by the Japan Development Bank to the implementing body. Hideki K a j i , et a l . , Gendai Toshi Keikaku Yogoroku CTechnicaI  Terms of Current C i ty Planning) (Tokyo: Shokokusha Inc . , 1986) , p. 90. 24 Okubo, Chika to toshi Keikaku- -Kaihatsu Rieki no J i t t a i  to Shakai Kangen CLand Pr ice and C i ty P lanning: Actual Condi- t ion of Development P r o f i t and i t s Soc ia l Return) , pp. 26-28. 47 25 Nihon Keizai Shinbun-sha e d . , Chika Taisaku no Ka ise tsu - -Kokudo Riyo Keikakuho no Nerai to Shikumi CCommentary on Coun- termeasures for Land P r i c e s : Purpose and Scheme of the National  Land Use Planning Law) , (Tokyo: Nihon Keizai Shinbun-sha, 1974 ) , P. 19. 26 Okubo, Chika to toshi Keikaku- -Kaihatsu Rieki no J i t t a i  to Shakai Kangen CLand Pr ice and C i ty P lanning: Actual Condi- t ion of Development P r o f i t and i ts Soc ia l Return) , pp. 28-29. 27 Ak i ra Kawagoe, "Kokudo Keikaku to Tochi Seisaku" C "Nat iona l Land Plan and Land P o l i c y " ) , J u r i s t , 25 March 1984, p.121. 28 Relaxing the c o n t r o l s over urban planning and land development has been one of the main reasons for the recent land p r i c e hikes s ince i t as a r e s u l t promoted redevelopment p ro jec ts of b u i l t - u p areas by the pr iva te s e c t o r . The pr iva te sector leading urban renewal tends to seek p r o f i t a b l e land use. This means the in tens ive use of such land as o f f i c e b u i l d i n g s , condominiums, and others have become dominant. Since the inten-s i v e use of land increases the value of the land i t s e l f , the p r ice of land inc reases . The promotion of urban development through the u t i l i z a t i o n of state-owned and publ ic lands has been another main reason for the recent land pr ice h ikes . For ins-tance, when the Japan National RaiIroad(JNR) was turned over to pr iva te management in 1987, such JNR-owned lands (state-owned lands) as marshal l ing yards were sold by tender to cover the d e f i c i t s accumulated dur ing JNR management. Since some lands are located in the f i r s t - r a t e d i s t r i c t s of Tokyo, develpers poured more money than the market p r i ces to and as a r e s u l t acce la ra ted land pr ice h i k e s . Sachio Otan i , Toshi ni tot te  Tochi towa Nanika CThe Meaning of Land for a C i t y ) , (Tokyo: Chikuma Shobo Inc . , 1988). pp. 18-19. 29 Y o r i f u s a Ishida, Nihon Kindai Toshi Keikaku no Hyakunen C100 Years of Modern C i t y Planning in Japan) (Tokyo: J i c h i t a i Kenkyu-sha Inc . , 1987). p. 92. 30 Ib id . 48 31 I b i d . , pp. 232-233. 32 As requested by the U.S. headquarters, the i n v e s t i g a t i o n committee on the Japanese tax system (headed by C. Shoup) was dispatched to Japan to make recommendations on tax system reform. 33 Ish ida , Nihon K i n da i Toshi Keikaku no Hyakunen C100  Years of Modern C i ty Planning in Japan) , pp. 236-237. 34 I b i d . , p.252. 35 Ib id , pp. 246-247. 36 The important c i t y development pro ject laws enacted in t h i s per iod are the F i r e - R e s i s t a n t Bu i ld ing Promotion Law (1952) , the Land Readjustment Law (1954), the Urban Development Area Law (1958), the Res ident ia l Area Redevelopment Law (1960), and the Urban Area Rebui ld ing Law (1961). Ish ida , Nihon Toshi  Keikaku no Hyakunen ClOO Years of Modern C i ty Planning in Japan) , pp. 254-255. 37 I b i d . , p. 254. 38 I b i d . , pp. 295-296. 39 I b i d . , pp. 305-306. 40 The Bureau of C i t y P lanning , Tokyo Metropol i tan Govern-ment, Tokyo no Toshi Dukuri (P lanning of Tokyo) (Tokyo: Tokyo Metropol i tan Government, 1985). p. 19. 41 Ib id . 42 In u rban iza t ion contro l areas , development a c t i v i t y and 49 the c o n s t r u c t i o n of b u i l d i n g s are s t r i c t l y p roh ib i ted in p r i n -c i p l e . However, there are except ions ( i . e . , a house of farmer 's s o n , a neighbourhood shopping s t o r e , and o t h e r s ) . Sachio Otan i , Toshi ni to t te Tochi toha Nanika CThe Meaning of Land for a C i t y ) , (Tokyo: Chikuma Shobo Inc . , 1988), p. 112. 43 Masashi Namekawa, Chika/Tochi Mondai no Ke iza igaku- -Juyo  , Kyokyu, Taisaku CEconomics of Land Pr ice and Land Issue:  Demand, Supply , Countermeasure) (Tokyo: Toyo Keizai Shinpo-sha Inc . , 1988), pp. 109-110. 44 The Bureau of C i t y P lanning , Tokyo Metropol i tan Govern-ment, Tokyo no Toshi Zukuri C PIann i ng of Tokyo) , p. 21. 45 Ish ida , Nihon Kindai Toshi Keikaku no Hyakunen C100  Years of Modern C i t y Planning in Japan) , p. 306. 46 With the rapid expansion of metropol i tan areas to suburban areas , d i s s a t i s f a c t i o n and resentment among the general pub l ic increased s ince the f ixed asset tax, inher i tance tax and other taxes imposed on the farmlands in the urban iza t ion promotion areas were too small compared to those imposed on housing s i t e s . Since the tax system r e v i s i o n in 1971, there has been a move to tax farmlands in the urban iza t ion promotion areas at the same rate as housing land in urban zones. A f ixed asset tax on urban farmland to match that imposed on housing p lo ts was introduced in 1982 on the grounds that i t would d i s -courage s o - c a l l e d farmers from keeping the i r land i d l e . This measure, however, exempts what i t terms the "Long-Term A g r i c u l t u r e Cont inuat ion System," which al lows farmers owning p lo ts not smal ler than 900 square meters to pay lower farmland tax r a t e s , provided that they express the i r in te res t to continue a g r i c u l t u r e for at least 10 years . This system is obviously vu lnerab le to the d i f f i c u l t y of proving whether a farmer is a c t u a l l y ser ious about cont inu ing a g r i c u l t u r e or is simply using i t as an excuse to avoid higher f ixed asset taxat ion while wai t ing fo r fu r ther land pr ice hikes (s ince he could q u a l i f y for lower taxes simply by p lan t ing a few apple trees or even lawns). In the three major metropol i tan regions (Tokyo, Nagoya and Osaka ) the "Long-Term A g r i c u l t u r e Cont inuat ion System" was being appl ied to 86.2 percent of a l l farmlands subject to taxat ion in 1987. "Gardeners Not Farmers," Business Tokyo, November 1987, pp. 46-47. Nihon Hoso Shuppan Kyokai CJapan Broadcasting 50 Pub l i sh ing A s s o c i a t i o n ) , Tochi wa Dareno tlonoka CTo whom Land  Belongs?) , pp. 156-157. 47 Ish ida , Nihon K i n da i Toshi Keikaku no Hyakunen C 100  Years of Modern C i t y Planning in Japan) , pp. 308-311. 48 Namekawa, Chika /Tochi Mondai no K e i z a i g a k u - - J u y o , Kyokyu  , Taisaku CEconomics of Land Pr ice and Land Issue: Demand,  Supply, Countermeasure) , pp. 115-116. 49 O t a n i , Toshi ni to t te Tochi toha Nanika CThe Meaning of  Land for a C i t y ) (Tokyo: Chikuma Shobo Inc . , 1988), p. 174. 50 Nihon Keizai Shinbun-sha. Chika Taisaku no K a i s e t s u - - Kokudo Riyo Keikakuho no Nerai to Shikumi CCommentary on Coun- termeasures for Land P r i c e s : Purpose and Scheme of the National  Land Use Planning Law) , pp. 42-43. 51 Nihon Keizai Shinbun-sha, " Y a s a s h i i Keizai Yogo no Ka ise tsu" C "Exp lana t ion of Economic Terms" ) (Tokyo: Nihon Keizai Shinbun-sha Inc . , October 1987), p. 6. 52 When the National Land Use Planning Law was implemented in 1974, i t had two measures to contro l land p r i c e s : the Reporting System and Permission System in Res t r ic ted Area. R e s t r i c t e d Areas have never been executed, but i t is agreed that they have repressed s p e c u l a t i v e land t ransac t ions to some extent s ince developers were alarmed of the i r implementation. The Reporting System has been implemented. It requires the repor t ing of estimated land sa les exceeding a c e r t a i n sca le to the p re fec tu ra l governors . For an urban iza t ion promotion area , repor t ing is required for a trade area exceeding 2,000 square meters, f o r u rban iza t ion contro l areas over 5,000 square meters, and for the land other than the c i t y planning area over 10,000 square meters. O t a n i , Toshi ni to t te Tochi towa Nanika CThe  Meaning of Land fo r a C i t y ) (Tokyo: Chikuma Shobo Inc . , 1988), p. 42. Kokudo Riyo Keikakuho Kenkyukai CThe Socie ty for the Study of the National Land Use Planning Law) , Kaisei Kokudo  Riyo Keikakuho no Yoten CThe Main Points of the Revised National  Land Use Planning Law) (Tokyo: Ta ise i Press Inc . , 1987), p.17. 51 53 Nihon Keizai Shinbun-sha. Chika Taisaku no K a i s e t s u - - Kokudo Riyo Keikakuho no Nerai to Shikumi CCommentary on Coun- termeasures for Land P r i c e s : Purpose and Scheme of the National  Land Use Planning Law) , p. 23. 54 55 56 I b i d . , pp. 35-36. I b i d . , pp. 37-38, Koj i kakaku (or koj i c h i k a , chika k o j i ) is the land pr ice per square meter (as of January 1st appraised every year by the real estate appra isers appointed by the land pr ice appra isa l committee of the National Land Agency. It is made pub l ic on A p r i l 1st each year by the O f f i c i a l Gazet te . Koji kakaku is genera l l y sa id to be lower than the actual t ransac t ion p r i c e . Nihon Keizai Shinbun-sha, " Y a s a s h i i Keizai Yogo no Ka ise tsu" C "Exp lana t ion of Economic Terms" ) (Tokyo: Nihon Keizai Shinbun-sha Inc . , August 1987), p. 8. 57 Nihon Hoso Shuppan Kyokai (Japan Broadcasting Pub l ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka (To whom Land Belongs?) , p. 118. 58 Nihon Keizai Shinbun-sha, " Y a s a s h i i Keizai Yogo no Ka ise tsu" ( "Exp lana t ion of Economic Terms" ) , p. 6. 59 Shadan Hojin Jutaku Sangyo Kaihatsu Kyokai CThe Housing Indsutry Development A s s o c i a t i o n ) , Tochi Jutaku Mondai (The Land and Housing Problems) , May 1989, pp. 4-5 . 60 Kokudo Riyo Keikakuho Kenkyu-kai CThe Society for the Study of Land Pr ice Problems) , Donaru Chika , Dosuru Chika! C What w i l l Happen to Land P r i c e , What must be done about Land  P r i c e ! ) (Tokyo: Gyose i , 1987), p. 17. 61 Ak i ra Ushimi , K a i s e t s u : Jutaku*Takuchi*Toshi Mondai C A n a l y s i s : Problems of Housing, Housing S i t e , Urban Area) (Tokyo: Domesu Press Inc . , 1983), p. 149. 52 62 Ryotaro Iwami, "The Questions and C r i t i c a l Opinions of Land Deal ings R e g u l a t i o n , " The Toshi Mondai CMunicipal Problems) , May 1988, p. 19. 63 Hiroshi Mizumoto, Tochi Seisaku to Jutaku Seisaku--Ho  R i ron karano Apuroch i CLand Po l i cy and Housing P o l i c y : Ana- l yz ing Them Through Law) (Tokyo: Yukikaku Sensho, 1978), pp. 12 -13. 64 Namekawa, Chika /Tochi Mondai no K e i z a i g a k u - - J u y o , Kyokyu  , Taisaku CEconomics of Land Pr ice and Land Issue: Demand,  Supply, Countermeasure) , pp. 124-125. 53 Chapter DI . URBAN LAND PRICE TRENDS IN POSTWAR JAPAN Land pr ices on a nat ional average have been re la ted some-what to Gross National Product in postwar Japan. However, com-pared to the land pr ice index of urban areas throughout the country set in 1955 at 100, the 1980 index had increased to 3,800. Th is means that urban land p r i ces have r isen at a rate twice the nat ional income and seven times the standard pr ice of l i v i n g dur ing the same p e r i o d . The skyrocket ing urban land p r ices have impeded e f f o r t s to improve housing and the overa l l 1 l i v i n g environment in urban areas . (For instance, as a resu l t of the steep r i s e in urban land p r i c e s , housing lo ts have become s m a l l e r , the q u a l i t y of housing uni t has become poorer , the improvement of i n f r a s t r u c t u r e such as s t r e e t s and mass t ranspor-t a t i o n has been de layed , and the cons t ruc t ion of pub l ic f a c i -l i t i e s such as urban parks has been h indered. ) This chapter examines the fundamental reasons for land pr ice increases in postwar Japan, and invest iga tes the trends of urban land p r i c e s in postwar Japan. ID - 1 . THE FUNDAMENTAL REASONS FOR LAND PRICE INCREASES IN POSTWAR JAPAN The inadequate land p o l i c i e s , d e f i c i e n t c i t y p lann ing , poor land use p lann ing , nat ional planning designed for economic deve-lopment, the LDP's p o l i c y of p ro tec t ing landowners, the land 54 standard economy and other reasons stated in Chapter II are the fundamental reasons why land pr ices increased dramat ica l ly throughout the postwar Japan. The fac t that there is less usable land in Japan than in other developed nations must a lso be added to the above reasons. The Japanese arch ipe lago occupies about 0.25 percent (or about 377,800 square k i lometers) of the tota l surface area of the e a r t h . Today about 2.4 percent of the wor ld 's populat ion l i v e s there . Table DI - 1 ind icates that only 18.5 percent of t h i s t iny is land nation is hab i tab le . A g r i c u l t u r a l land accounts for 14.5 percent and bu i ld ings account for 4.0 percent . In other words, the to ta l area of product ive land of the Japanese arch ipe lago accounts for only 0.001 percent of the to ta l sur face area of the ea r th . In such a small p l a c e , the Japanese account for about 14 percent of the world economic p roduc t ion . This means that the Japan has a higher rate of land u t i l i z a t i o n than any other na t ion . As a r e s u l t , i t is natural that the pr ice of Japanese land is higher than that of other developed na t ions . At the end of 1983, the pr ice of Japanese land had reached ¥999 t r i l l i o n , which was double the the pr ice 2 of land i n the U . S . A . I D - 2 . THE TRENDS OF URBAN LAND PRICES AND MAIN CAUSES OF LAND PRICE INCREASES IN POSTWAR JAPAN The pr ice of land in urban areas in postwar Japan rose at a 55 Table DI - 1 Changes in Land Use by Category (1975-85) (Un i t : Kirf , %) 1975 1985 and category <D ® . A g r i c u l t u r a l land 57,600 6,900 54,900 6,200 (15.3) (17.6) (14.5) (15.8) Farm 1 and 55,700 6,900 53,800 6,200 (14.8) (17.6) (14.2) (15.8) Pastuure /graz i ng 1,900 0 1,100 0 1 and (0.5) (0.0) (0.3) (0.0) . Forest 252,900 20,800 252,900 20,700 (67.0) (53.2) (67.0) (52.7) . Wasteland 4.300 100 3.000 0 (1.1) (0.3) (0.8) (0.0) . Waters, r i v e r s 12,800 1,400 13,200 1,500 and water courses (3.4) (3.6) (3 .5) (3.8) . Roads 8.900 1,600 10.700 2,000 (2.3) (4.1) (2.8) (5.1) . Bu i1d i ng land 12,400 4,000 15,100 4,700 (3.3) (10.2) (4.0) j (11.9) Houses 7,900 2,400 9,400 2,900 (2.1) (6.1) (2.5) (7.3) Factor i es 1.400 500 1.500 500 (0.4) (1.3) (0.4) (1.3) Othe r bu i1d i ng 3.100 1,100 4,200 1,300 1 and (0.8) (2.8) (1.1) (3.3) . Others 28.600 4.300 28,000 4,200 (7.6) (11.0) (7.4) (10.7) otal 377,500 39,100 377,800 39,300 (100.0) (100.0) (100.0) (100.0) Sou rce: The National Land Agency e d . , Showa 62 Nenban Kokudo Riyo  Hakusho--Tochi Mondai no Genjo to Kadai C 1987 Wh i te Paper on  Land Use: Current State and Problems of Land Use) , (the P r i -nt ing Bureau of the M in is t ry of F inance,1987) :2 , table 1-1-1. Notes: 1) CD =Nat i onw i de, (D=Three Metropol i tan Regions 2) Each of the three metropol i tan regions is broken down as f o i l o w s : Tokyo region." Tokyo, and Saitama, Chiba and Kanagawa p r e f e c t u r e s , Nagoya reg ion: Aichi and Mie p r e f e c t u r e s , Osaka reg ion: Kyoto, Osaka and Hyogo p r e f e c t u r e s . 56 steep pace unprecedented in other developed na t ions . Japan has experienced three sudden land pr ice increases u n t i l now. In the f i r s t phase (around 1960), Japan experienced the f i r s t major land pr ice increase a f te r the war, the second phase in the ear ly 1970s was the second major land pr ice h ike , and the t h i r d phase (s ince the mid-1980s) began with a sharp land pr ice hike in the cent ra l business d i s t r i c t of Tokyo (F igures HI- 1 , 2 ) . The changes from the preceeding year in the pr ice index of urban areas of s ix metropol i tan regions (Sapporo, Tokyo, Nagoya, Osaka , Hiroshima, and Fukuoka) by use d i s t r i c t are shown in Figure EI - 1 . F igure DI - 2 shows the changes from the preceding year in the land p r i c e s of nationwide housing and commercial d i s t -r i c t s evaluated and re leased by the National Land Agency (=Koji 3 Chika) by nationwide and the three metropol i tan reg ions . During each land pr ice hike phase, land pr ices skyrocketed at a very steep pace for a l l c l a s s i f i c a t i o n s of use zoning. However, the c l a s s i f i c a t i o n s of use zoning for which land pr ices rose the most v a r i e s with each phase. In other words, the f i r s t phase involved i n d u s t r i a l d i s t r i c t s , the second phase involved r e s i d e n t i a l d i s t r i c t s , and the th i rd phase involved commercial 4 d i s t r i c t s (Table ffl - 2 ) . This sec t ion examines the trend toward increas ing land p r i c e s in urban a reas , and the main causes of land pr ice hikes i n each phase. 57 F i gu r e HI - 1 . C h a n g e s f r o m t h e P r e c e e d i n g - Y e a r i n t h e P r i c e I n d e x o f U r b a n A r e a s o f S i x M e t r o p o l i s e s _J I • I I . • . • I | | | | | i | | | t i l 1 > I 1—1 1 1 1 1 1 1—JL 1956 60 65 70 75 80 85 Sou r c e : T a d a y o s h i K a n a k u r a , " T o k y o no T o c h i J u y o K o z o no Henka t o C h i k a M o n d a i ( 1 ) C T h e S t r u c t u r e o f L a n d Demand and L a n d P r i c e i n T o k y o ( 1 ) } ," T h e T o s h i M o n d a i ( M u n i c i p a l P r o b l e m s ) , v o l . 79, n o . 5 (May 1 9 8 8 ) : 70, f i g u r e 1. N o t e : S i x m e t r o p o l i s e s a r e S a p p o r o , T o k y o , N a g o y a , O s a k a , H i r o s h i m a , and F u k u o k a . 58 Figure HI - 2 . Changes from the Preceeding Year in the Land Pr ice Evaluated and Announced by the National Land Agency (Koj i Chika) Sou rce ' Kokudo Riyo Keikakuho Kenkyukai CThe Society for the Study of the National Land Use Planning Law) , Kaisei Kokudo Riyo  Keikakuho no Voten CThe Main Points of the Revised National Land  Use Planning Law) , ( T a i s e i Press Inc . , 1987): 5, f i g u r e 1. Note: Each of the three metropol i tan regions is broken down as f o l l o w s : Tokyo reg ion : Tokyo, and Saitama, Chiba and Kanagawa pre-fectu r e s , Nagoya reg ion : A ich i and Mie p r e f e c t u r e s , Osaka region*. Kyoto, Osaka and Hyogo p r e f e c t u r e s . 59 m - 2 - 1 . THE FIRST PHASE (AROUND I960): LAND PRICE INCREASE IN THE EARLY STAGE OF RAPID ECONOMIC GROWTH The land p r i c e s of urban areas began to r i s e around 1955 and i n i t i a l l y peaked around 1960 (F igure H I - 1 ) . R is ing land p r ices were i n i t i a l l y centered in and around the Tokyo Metropo-5 l i t a n Region, then spread throughout the conuntry around 1960. Tabl e DI - 2 . Changes from the Preceding Year in the Pr ice Index of Urban Areas (Un i t : X) September 1961 September 1973 September 1987 <§> (D Industr ia l D i s t r i c ts 88.7 50.3 33.6 32.5 28.0 6.4 Res i dent i a 1 D i s t r i c ts 60,1 37.5 42.5 37.5 30.7 8.5 Commerc i a 1 D i s t r i c t s 61.9 33.2 28.6 26.7 46.8 12.3 Average of Use Zoning 69.5 39.9 36.1 32.5 35.1 9.4 Sou rce: Tadayoshi Kanakura, "Tokyo no Tochi Juyo Kozo no Henka to Chika Mondai (1) (The St ructure of Land Demand and Land Pr ice in Tokyo (1)) , " The Toshi Mondai (Munic ipal Problems) , v o l . 79, no. 5 (May 1988): 71, table 1. Notes: 1) (D is s i x metropol ises which include Sapporo, Tokyo, Nagoya, Osaka, Hiroshima, and Fukuoka. 2) (D is urban areas excluding s ix met ropo l ises . 60 Figure m - 3 Map of Japan Okinawa Ogasawara Islands Source: The Tokyo Metropol i tan Government, Pro tec t ing Tokyo's  Env i ronment, (the Tokyo Metropol i tan Government, 1985)13. 61 The beginning of the steep r i s e in land pr ices during the f i r s t phase roughly co inc ided with the incept ion of the Income Doubling Plan of the Ikeda Cabinet (1960) and rapid economic growth. In t h i s phase, the land pr ice increase of i n d u s t r i a l d i s t r i c t s was most s e r i o u s , and i t caused land p r i ces to r i se throughout the country . Large regional c i t i e s and the i r suburbs 6 experienced the most steep land pr ice hikes in th is phase. According to Hiroyuki Yamada, there are two major reasons f o r the jump in land p r i c e s in th is phase! (D increased demand f o r i n d u s t r i a l d i s t r i c t s around large c i t i e s and adjacent areas due to the promotion of heavy and chemical indus t r i es and Japan's rapid economic growth a f te r the war, and (2) increased demand fo r land in and around large c i t i e s due to the heavy 7 inflow of people and n u c l e a r i z a t i o n of f a m i l i e s . Table DI — 3 l i s t s the r e s u l t s of naionwide land use for r e s i d e n t i a l use, i n d u s t r i a l use, non - res iden t ia I b u i l d i n g s , and fo r pub l ic use from 1955 to 1961. According to Table HI — 3 , in 1955 the share of s i t e s fo r i n d u s t r i a l use among the tota l area of above four uses was only 7.5 percent . However, t h i s share jumped to 29.2 percent in 1961. Conversely , share of s i t e s for r e s i d e n t i a l use decresed s u b s t a n t i a l l y during the same per iod . Although no countermeasures was implemented, the s teeply r i s i n g land p r i c e s began l e v e l l i n g off around 1962 with a drop in equipment investments by the pr iva te s e c t o r . Countermeasure 62 Table DI - 3 . Resul ts of Nationwide Land Use for Res ident ia l Use, Industr ia l Use, Nonres ident ia l B u i l d i n g s , and Publ ic Use (Un i t : %) Year Total Area (Un i t : m i l l i o n irf ) © © © © 1955 132 48.0 7.5 17.5 26.9 1956 158 42.5 9.4 17.1 31.0 1957 188 38.8 14.7 20.2 26.1 1958 198 39.1 13.0 18.7 29.0 1959 241 37.0 14.7 18.0 30.3 1960 270 34.4 22.0 18.0 25.6 1961 340 29.7 29.2 19.8 21.3 1955-61 1ncrease 208 18.1 42.9 21.3 17.8 Source: The Economic Planning Agency, Nen.i i Keizai Hokoku (Showa  38 Nendo) (Annual Report on Economy (1963)) , July 1963. Note: ® is the s i t e being used for r e s i d e n t i a l use, © is for i n d u s t r i a l use, © is for nonresidentai I b u i l d i n g , and (D is for pub l ic use . were, however, enacted against land pr ice increases and the problems of inadequate land in view of the steep land pr ice hikes dur ing the f i r s t phase. In 1963, the Law Concerning Real Estate Apra isa l (Fudosan no Kantei Hyoka ni Kansuru Hor i tsu) was enacted to s t a b i l i z e the pr ice of housing s i t e s and to promote smooth t r a n s a c t i o n s of housing s i t e s . According to t h i s law, a system of real estate appra isa l was e s t a b l i s h e d . L e g i s l a t i o n regarding eminent domain was a lso r e v i s e d . Then, the C i ty 63 Planning Law that i n i t i a t e d the system of urbaniza t ion promotion areas and urban iza t ion contorol a reas , and set a standard for urban developments, was enacted in 1968 as explained in the 8 preceding chapter . ffl-2-2. THE SECOND PHASE (EARLY 1970S): THE SECOND LAND PRICE HIKE AFTER THE WAR The second major increase in land p r i ces s tar ted around 1972-73 as shown to F igures HI - 2 and 3 . One c h a r a c t e r i s t i c of th is phase was that s i g n i f i c a n t land pr ice increases occurred not only in large c i t i e s , but a lso in other parts of the country (Table DI — 2 ). Another c h a r a c t e r i s t i c was that the land p r i ces of r e s i d e n t i a l d i s t r i c t s rose more sharply than those of indus-t r i a l and commercial d i s t r i c t s (Table i n - 2 ) . The major reasons fo r the land pr ice hike in t h i s phase 9 was that the New Comprehensive National Development Plan (1969) 10 and Plan for Remodelling the Japanese Archipelago (1972) proposed by the Tanaka cabinet increased the demands for land s ince they st imulated nat ional development and reformation through l a r g e - s c a l e development p r o j e c t s , d e c e n t r a l i z a t i o n of 11 i n d u s t r i e s and other means. During the second phase, e s p e c i a l l y in and around the Tokyo Metropol i tan Region and other large c i t i e s , specu la t ive demand in land became pervasive as a r e s u l t of the increas ing demands fo r o f f i c e and housing development. Specula t ive t ransact ions 64 were i n t e n s i f i e d by sudden large loans made to real estate agents (by the f i n a n c i a l c i r c l e ) and by growing corporate 12 investments in land development. This second phase of increased land pr ices cooled down in 1974 due to c i t i z e n demands for e f f e c t i v e countermeasures, such as the National Land Use Planning Law (1974). In 1975, the land p r i ce index recorded minus for a l l c l a s s i f i c a t i o n s of land use , the only time th is had occurred s ince 1955 (F igures H I - 1 and 2 ) . m - 2 - 3 . THE THIRD PHASE (SINCE THE MID-1980S): SKYROCKETING URBAN LAND PRICES STARTING FROM THE CBD OF TOKYO The th i rd land pr ice hike a f te r the war s tar ted in the mid-1980s (F igures H I - 1 and 2 ) . There are two c h a r a c t e r i s t i c s that d i s t i n g u i s h e s th is phase from the f i r s t and second phases. One is that steep land p r i ce hikes were centered in and around large c i t i e s , e s p e c i a l l y in the Tokyo Metropol i tan Region. Consequent ly , the skyrocket ing land pr ices in large c i t i e s and s t a b i l i z e d land p r i c e s in other areas have occur red . The other c h a r a c t e r i s t i c is that the land pr ice increases in large c i t i e s began with jumps in land pr ices in commercial d i s t r i c t s (Tables HI - 2 and 3 ) . As l i s t e d in Tabic HI - 2 , the pr ice index of a l l use zonings in s ix metropol i tan regions (as of September 1987) showed a 35.1 percent increase from the preceding year , whereas in other urban a reas , i t is only 9.4 percent . Table H I -65 4 l i s t s the land p r i ces of commercial d i s t r i c t s of the Tokyo Metropol i tan Region, and shows that the tota l increase for the three metropol i tan regions soared in 1987. Note that the land p r i c e s of commercial d i s t r i c t s in the Tokyo Metropol i tan Region (as of 1987) recorded a 48.2 percent r i s e from 1986, when i t was mere 13.2 percent for the Osaka Metropol i tan Region and 6.2 percent f o r the Nagoya Metropol i tan Region as l i s t e d in Table m - 4 . When examining the land pr ice increases in the Tokyo Metro-p o l i t a n Region, the nucleus of the th i rd phase pr ice h ike , i t is obvious that land pr ices jumped sharply only in Tokyo, as opposed to other areas (Table DI - 5 ) . In 1985 and 1986, the land p r i c e s of commercial and r e s i d e n t i a l d i s t r i c t s rose most d r a s t i c a l l y in the three centra l wards of Tokyo (Chiyoda, Chuo, and Minato) according to the analyses of Tokyo land pr ices (Tables DI - 6 and 7 ) . The pr ice hike of r e s i d e n t i a l d i s t r i c t s in the f i v e cent ra l wards of Tokyo (Chiyoda, Chuo, Minato, Shibuya and Shinjuku) began a f te r the pr ice hikes of commercial d i s t r i c t s in the same wards (Tables DI - 6 and 7 ) . Therefore , the th i rd land p r i ce hike a f te r the war can be considered a "Tokyo Problem" caused by the land pr ice increases of commer-c i a l d i s t r i c t s in the heart of Tokyo. The major f a c t o r s of t h i s crazy land pr ice hike based in the Tokyo Metropol i tan Region, where pr ice increases have been 66 Table ffl - 4 Changes in Land the National the Previous Pr ice Evaluated and Announced Land Agency (Koj i Chika) from Year by Region and Use Zoning Tokyo Region Osaka Region Nagoya Reg i on Average of 3 Regions  Average of Local C i t i e s Nat i onw i de Average  1986 3.0 2.6 1.4 2.7 1.7 2.2 1987 21.5 3.4 1.6 13.7 1.2 7.6 1986 12.5 7.0 3.3 9.2 2.5 5.1 1987 48.2 13.2 6.4 30.1 2.9 13.4 1986 3.4 2.8 1.3 2.6 1.3 1.7 by (Un i t : X) 1987 13.6 3.2 1.3 7.0 0.8 2.8 1986 4.1 3.1 1.7 3.5 1.8 2.6 1987 23.8 4.6 2.4 15.0 1.5 7.7 Source: Kokudo Riyo Keikakuho Kenkyukai (The Socie ty for the Study of the National Land Use Planning Law) , Kaisei Kokudo Riyo  Keikakuho no Yoten (The Main Points of the Revised National Land  Use Planning Law) , ( T a i s e i Press Inc . , 1987): 5, table 2. Notes: 1) ( p r e s i d e n t i a l d i s t r i c t s , <2)=commerc i a I d i s t r i c t s , <§> = i n d u s t r i a l d i s t r i c t s , @=average of a l l c l a s s i f i c a t i o n s of use 2on i ng. 2) Each of the three metropol i tan regions is broken down as f o i l o w s : Tokyo reg ion : Tokyo, and Saitama, Chiba and Kanagawa p r e f e c t u r e s , Nagoya reg ion: A ich i and Mie p r e f e c t u r e s , Osaka reg ion : Kyoto, Osaka and Hyogo p r e f e c t u r e s . 3) " L o c a l c i t i e s " means a l l local c i t i e s other than the c i t i e s in the three metoropoIitan reg ions . 67 Figure HI - 4 . Metropol is of Tokyo and Surround ing Prefectures I G u m m a P r e f e c t u r e / j .! Toch ig i I vi P re fec tu re i ' ! 'U : ! • ••I. i S a i t a m a -Pre fec tu re I+Tokyo Met ropo l is K a n a g a w a r r Prefectur 'e / / " foAyo flay Ocean H r n " M ° k y ° M e , r ° P ° , i , a n Reg,on JuMI! The Nauonal Cap i ta l Reg ion Source: " *yo n e t r o p o h t a n Governme7t71^85)T4T^ 68 Table DI - 5 Changes in Land Pr ice of the Tokyo Metropol i tan Region from Previous Year by Use Zoning (Un i t : X) © © © <D 1985 1986 1985 1986 1985 1986 1985 1986 Tokyo 3.8 18.8 11.6 34.4 1.8 10.7 6.1 22.6 Sa i tama 0.5 0.6 2.0 3.6 1.7 2.7 0.7 1.0 Ch i ba 0.6 1.1 1.9 5.5 1.6 2.8 0.8 1.7 Kanagawa 1.6 4.2 5.8 10.6 1.7 4.3 2.4 5.2 Source: Chika Mondai Kenkyu-kai CThe Society for the Study of Land Pr ice Problems) , Donaru Chika , Dosuru Chika! C What w i l l Happen  to Land P r i c e , What must be done about Land P r i c e ! ) , ( G y o s e i , 1987):3, table 1-1. Notes: 1) Land p r i c e s analyzed here are gathered from pr ice survey conducted by p re fec tura l govenments in 1986. 2) © is r e s i d e n t i a l d i s t r i c t s , © is commercial d i s t -r i c t s , © is i n d u s t r i a l d i s t r i c t s , and ® is a l l use zonings. most dramat ic , are examined as f o l l o w s . 1 ) Sudden Increase in Demand for O f f i c e F loor Space in Tokyo As stated above, the t h i r d phase of land pr ice hikes s ta r ted from the land p r i ce increases of commercial d i s t r i c t s in the heart of Tokyo. The main f ac t o r for t h i s sudden jump in comercial land p r i c e s in centra l Tokyo is the increased demand f o r b u i l d i n g lo ts due to sudden increase in demand for o f f i c e 13 f l o o r space. There are three main f a c t o r s for th is sudden increase in 69 Table DI - 6 Changes in Land Pr ice (Koj i Chika) of Commercial D i s t r i c t s in Ward Area of Tokyo from Previous Year (Un i t : %) 1983 1984 1985 1986 1987 Chiyoda Ward 8.6 24.7 29.7 56.2 43.0 Chuo Ward 9.1 19.7 32.0 55.9 46.2 Minato Ward 8.1 20.7 29.4 48.3 58.5 Shinjyuku Ward 7.9 13.2 24.4 36.8 84.4 Bunkyo Ward 5.3 8.3 8.4 29.9 130.8 Daito Ward 4.3 6.8 13.0 21.5 83.4 Sumida Ward 2.1 2.8 4.4 8.8 82.3 Koto Ward 3.2 5.3 4.2 9.1 80.6 Shinagawa Ward 7.5 9.6 13.5 26.6 97.7 Meguro Ward 8.0 11.5 14.7 35.0 110.5 Ota Ward 5.8 4.9 8.2 18.7 95.6 Setagaya Ward 4.2 5.2 6.5 12.3 92.6 Shibuya Ward 9.7 13.4 24.3 47.1 61.0 Nakano Ward 6.1 5.1 7.3 20.6 88.7 Suginami Ward 5.1 4.8 6.1 22.8 74.5 Toshima Ward 4.1 10.5 16.3 24.9 106.6 K i ta Ward 2.0 3.7 4.2 5.4 65.3 Arakawa Ward 1.5 4.8 4.1 6.4 68.8 Itabashi Ward 2.2 3.1 4.0 7.1 93.5 Nerima Ward 4.4 2.5 4.1 9.2 94.6 Adachi Ward 2.8 2.9 3.1 4.8 37.4 Katsushika Ward 3.9 4.5 2.6 2.3 60.6 Edogawa Ward 5.0 4.5 3.3 4.5 68.8 Average of Ward 5.5 9.3 12.4 22.3 76.2 Area Three Central 8.7 21.8 30.5 53.6 50.0 Wards Average of 5.3 8.4 10.8 19.6 74.9 Tokyo Nat i onw i de 4.3 3.5 3.8 5.1 13.4 Average Source: The National Land Agency e d . , Showa 62 Nenban Kokudo Riyo  Hakusho--Tochi Mondai no Genjo to Kadai C 1987 Whi te Paper of  Land Use: Current State and Problems of Land Use) , (the P r i -nt ing Bureau of the M in is t ry of F inance,1987) :21, table 2 -2 -1 . Note: Three cent ra l wards are Chiyoda, Chuo, and Minato Ward. 70 Table DI - 7 Changes in Land Pr ice (Koj i Chika) of Res ident ia l D i s t r i c t s in Ward Area of Tokyo from Previous Year (Un i t : %) 1983 1984 1985 1986 1987 Chiyoda Ward • - - 19.4 25.3 58.3 45.6 Chuo Ward 9.9 10.5 24.6 Minato Ward 7.9 7.8 17.0 33.9 93.4 Shinjyuku Ward 4.1 3.9 5.3 21.1 128.0 Bunkyo Ward 5.0 7.4 11.5 101.2 Daito Ward 1.1 6.8 13.0 99.1 Sumida Ward 2.7 2.6 2.2 2.2 10.6 Koto Ward 3.1 2.9 1.8 3.3 25.8 Shinagawa Ward 6.6 3.9 6.6 16.2 72.5 Meguro Ward 8.0 6.2 10.0 21.8 103.3 Ota Ward 3.8 2.6 3.5 15.7 129.5 Setagaya Ward 4.2 2.6 4.2 15.3 109.2 Shibuya Ward 5.3 6.4 13.6 23.7 97.2 Nakano Ward 4.4 3.3 3.1 10.5 120.2 Suginami Ward 4.1 3.7 2.6 14.3 124.7 Toshima Ward 6.5 5.6 4.8 8.5 73.6 K i ta Ward 1.8 2.2 2.8 3.3 52.8 Arakawa Ward 4.7 3.6 3.4 3.0 40.3 Itabashi Ward 2.2 2.2 1.7 2.9 78.9 Nerima Ward 3.4 1.5 2.2 4.9 71.8 Adachi Ward 2.9 3.1 1.1 1.4 9.4 Katsushika Ward 3.0 1.3 0.0 0.7 25.4 Edogawa Ward 4.1 2.8 1.7 3.7 40.1 Average of Ward 3.9 3.2 3.9 10.0 76.8 Area Three Central 7.9 10.9 18.1 37.9 79.1 Wards Average of 3.8 2.9 2.9 6.4 50.5 Tokyo Nat i onw i de 5.1 3.0 2.2 2.2 7.6 Average Sou rce: The National Land Agency e d . , Showa 62 Nenban Kokudo Riyo  Hakusho--Toch i Mondai no Genjo to Kadai L* 1987 Whi te Paper of  Land Use: Current State and Problems of Land Use) , (the P r i -nt ing Bureau of the M i n i s t r y of F inance,1987):22, table 2 -2 -1 . Note: Three cent ra l wards are Chiyoda, Chuo, and Minato Ward. 71 Figure HI - 5 . The Admin is t ra t ive Areas of the Metropol is of Tokyo Saitama Prefecture Tama District Chiba Prefecture Yamanashi Prefecture j Kanagawa Prefecture Edogawa River Islands Ward Area Toshin Area (Center of Tokyo) Yamanote Area (Uptown of Tokyo) Shitamachi Area Joto Area Josai Area Jonan Area Johoku Area 1. Chiyoda 4. 8. 9. 12. 15. 19. 21. Bunkyo Meguro Taito Adachi Nerima Ota Itabashi 2. Chuo 5. Toshima 10. 13. 16. 20. 22. Sumida Katsushika Nakano Shinagawa Kita 3. Minato 6. Shinjuku 11. Koto 14. Edogawa 17. Suginami 23. Arakawa 7. Shibuya 18. Setagaya Tama District Cities 1. 5. 9. 13. 16. 20. 23. 26. Hachioji 2. Ome 6. Machida 10. Higashi-Murayama Tanashi 17. Higashi-Yamato Musashi-Murayama Akigawa  Tachikawa Fucliu Koganei Hoya 3. Musashino 7. Akishima 11. Kodaira 14. Kokubunj i 18. Fussa 21. Kiyose 24. Tama 4. Mitaka 8. Chofu 12. Hino 15. Kunitachi 19. Komae 22. Higashi-Kurume 25. Inagi Towns : 27. ; 3 i . Hamura Okutama 28. Mizuho 29. Hinode 30. Itsukaichi Village 32. Hinohara Islands Izu Islands Ogasa-wara Islands Towns Villages Village 1. Oshima Toshima Mikurajima 7. Hacliijo Niij ima Aogashima 4. Kozushima 5. Miyake 9. Ogasawara Sourec: The Tokyo Metropol i tan Government, C i ty Planning of  Tokyo, (The Tokyo Metropol i tan Government, 1983): i4, f igure 1-3. 72 demand f o r o f f i c e f l o o r space in the heart of Tokyo. (D Increased Number of Firms Moving Head O f f i c e s to Tokyo and Expansion of Head O f f i c e s in Tokyo In recent years , the number of f i rms with head o f f i c e s in Tokyo has been increased rap id ly (Table DI - 8 ) . About 80 percent of the f i rms that moved the i r head o f f i c e s to Tokyo from 1979 to 1985 se lec ted the three centra l wards (Chuo, Chiyoda and Minato) as the s i t e for the i r new head o f f i c e s (Table DI— 9 ) . In a d d i t i o n , about 80 percent of the f i rms that moved the i r head o f f i c e s within Tokyo during the same period located t h e i r new head o f f i c e s in the f i v e cent ra l wards (Chuo, Chiyoda, Minato, Shibuya and Shinjuku Ward) as l i s t e d in Table DI - 10. Table ID - 8 Annual Increase in the Number of Firms having Head Off ice in Tokyo C1 ass i f i cat i on by Cap i ta l  1980 1981 1982 1983 1984 Under ¥100 mil I on 2,505 9,210 8,524 8,195 13,789 Over ¥100 mi 1 I i Under ¥ 1 , 0 0 0 mi on 122 220 203 240 i on 358 Over ¥1 ,000 mi I Under ¥ 5 , 0 0 0 mi i on I i on 28 13 53 53 Over ¥ 5 , 0 0 0 mi I Total i on 18. 2.673 17_ 9,460 15_ 8.795 30_ 8,469 28 14,228 Source: Chika Mondai Kenkyu-kai CThe Society for the Study of Land Pr ice Problems) , Donaru Chika , Dosuru Chika! C What w i l l Happen  to Land P r i c e , What must be done about Land P r i c e ! ) , ( G y o s e i , 1987):39, table 1-15. 73 Table DI - 9 Number of Major Firms moving Head O f f i c e from outside of Tokyo to the Ward Area of Tokyo by Ward (September 1979 - September 1985) Name of Ward Ch i yoda Chuo M i nato Shi njuku Tosh i ma Shi nagawa Dai to Sum i da Total Number of Major Fi rms 15 6 16 5 1 2 1 1 47 Source' Chika Mondai Kenkyu-kai CThe Socie ty for the Study of Land Pr ice Problems) , Donaru Chika , Dosuru Chika! C What w i l l Happen  to Land P r i c e , What must be done about Land Pr ice? ) , ( G y o s e i , 1987):40, table 1-16. Table DI - 10. Number of Major Firms moving Head O f f i c e inside of the Ward Area of Tokyo by Ward (September 1979 - September 1985) Name of Ward Chi yoda Chuo M i nato Shi njuku Shi buya Other Wards Total Number of Major Fi rms 21 5 18 6 2 10 62 Source: Chika Monda Pr ice Problems) _ to Land P r i c e , What Kenkyu-kai CThe Socie ty for the Study of Land Donaru Chika , Dosuru Chika! C What w i l l Happen  must be done about Land P r i c e ! ) , ( G y o s e i , 1987)140, table 1-17, 74 The reasons for these trends are as f o l l o w s . 1) Af ter recover ing from the Second Oi l C r i s i s , business a c t i v i t y has expanded r a p i d l y . 2) The number of f i rms that at tach importance to informa-t ion c o l l e c t e d in Tokyo has rose d r a s t i c a l l y . 3) To improve the i r corporate image, many f i rms have moved 14 the i r head o f f i c e s in the heart of Tokyo. © Inroad of Foreign A f f i l i a t e s into Tokyo A number of fo re ign a f f i l i a t e s , e s p e c i a l l y in the f i n a n c i a l and s e c u r i t i e s s e c t o r s , have opened o f f i c e s in Tokyo in recent years . For ins tance , from 1982 to 1985 there were 43 new 15 o f f i c e s opened by banks, and 51 by s e c u r i t i e s f i r m s . ® Increasing O f f i c e F loor Space Per O f f i c e Worker There has been increase in o f f i c e f l o o r space per o f f i c e worker mainly due to the p r o l i f e r a t i o n of equipment such as 16 wordprocessors, and personal computers(Figure H I — 6 ) . 2 ) Land Pr ice Hikes of Commercial D i s t r i c t s in The Heart of Tokyo Spreading to Res ident ia l D i s t r i c t s According to the land pr ices evaluated and announced by the National Land Agency (Koj i CH i ka) in 1987, a growing number of r e s i d e n t i a l d i s t r i c t s in Tokyo has experienced steep land pr ice hikes (Table D I - 7 ) . Res ident ia l d i s t r i c t s near the centra l business d i s t r i c t s in the Chiyoda, Chuo and Minato Wards f i r s t experienced land pr ice increases from 1983 to 1984. This land 75 F i gu re DI - 6 . Changes in O f f i c e F loor Space Per O f f i c e Worker in Tokyo 20 15 lOj-0^ T o l a i F l o o r Area E f f e c t i v e F loor Area 1075 '70 '77 '79 '80 '81 '82 '83 '85 '80 Source: Kokudo Riyo Keikakuho Kenkyukai CThe Socie ty for the Study of the National Land Use Planning Law) , Kaisei Kokudo Riyo  Keikakuho no Voten CThe Main Points of the Revised National Land  Use Planning Law) , ( T a i s e i Press Inc . , 1987): 7, f i g u r e 3. p r ice hike was caused by the growing demand for o f f i c e bu i ld ings in the heart of Tokyo to r e s i d e n t i a l a reas . This phenomenon has 17 gradua l ly expanded to other r e s i d e n t i a l d i s t r i c t s of Tokyo. 3 ) Factors for Cont inuing Land Pr ice Increases There are two major f a c t o r s that have furthered the land pr ice hikes in t h i s phase. One is specu la t i ve land t ransact ions 18 mainly conducted by real estate agents. The other f a c t o r is that f i n a n c i a l c i r c l e s have made large loans for land t ransac t ions due to the recent re laxa t ion in 76 19 regu la t ions by the government. For instance , the to ta l amount of loans made to i n d u s t r i e s , m u n i c i p a l i t i e s and others by a l l Japanese banks was ¥ 2 7 3 , 3 0 0 , 0 0 0 m i l l i o n from A p r i l 1986 to the end of March 1987. A breakdown of the above loans ind ica tes that the amount of loans made to real estate companies was ¥ 3 0 , 3 0 0 , 0 0 0 m i l l i o n , which was larger than the amount made to any other key industry in Japan ( i . e . , petroleum, chemica l , 20 automobi le , and s tee l i n d u s t r i e s ) . To deal with the current land pr ice h ikes , the National Land Use Planning Law was revised and the System of Land Pr ice Moni tor ing Areas (or the Reporting System in Supervisory Areas) was i n s t i t u t e d in 1987 as descr ibed in Chapter n . Table EI - 11 l i s t s the des ignat ions as of August 19, 1988, and Table E I - 12 l i s t s the number of reported land t ransact ions in Land Pr ice Moni tor ing designated areas from January 1 to June 31, 1988. The Japanese government a lso began regula t ing loans made for real es ta te t r a n s a c t i o n s , and imposed the extra short - term a l i e n a t i o n income tax on the r e s i d e n t i a l property owned less than two years . The extra short - term a l i e n a t i o n income tax is considered e s p e c i a l l y e f f e c t i v e in reducing specu la t i ve land 21 t ransac t ions s ince i t s tax rate is 96 percent . As a r e s u l t , the skyrocket ing land p r i c e s in the Tokyo Metropol i tan Region has begun to level of f in 1988. According to the r e s u l t s of a 77 Table DI - 11. Current State of Designated Land Pr ice Monitoring Area (as of August 19, 1988) Name of Prefecture and C i t y Terms of Des i gna-t i on Name of Designated Region Area of Land Transact ions to be Repor-ted Tokyo 1987.8.1 -1990.7. 31 23 Specia l Wards, the Urbanizaion Promotion Area of C i ty of Mitaka and C i ty of Musashino over 100 ttf (over 300 ttf u n t i l 1987. 10.31) 1987.8.1 -1990.7. 31 the Urbanizat ion Promo-t i o n Area of C i ty of Chofu and other 10 c i t i es over 100 ttf (over 500 ttf u n t i l 1987. 10.31) 1987.10. -1990.7. 31 the Urbanizat ion Promo-t ion Area of C i ty of Hach i oj i , and other 12 c i t i e s , 4 towns over 100 nf (over 500 ttf u n t i l 1987. 10.31) Prefecture of Kanaga-wa 1987.8.1 -1992.7. 31 the Urbanizat ion Promo-t ion Area of C i ty of Sagam i hara over 100 ttf (over 300 ttf u n t i l 1987. 10.31) 1987.10. 1-1992. 9.30 the Urbaniza i ton Promo-t i on Area of C i ty of Kamakura, and other 3 c i t i e s and a town over 100 ttf (over 300 ttf u n t i l 1987. 10.31) the Urbanizat ion Promo-t i o n Area of C i ty of Yokosuka, and other 8 c i t i e s and 2 towns over 300 tif (over 500 tif u n t i l 1987. 10.31) 1988.2.1 -1993.1. 31 the Urbanizat ion Promo-t i on Area of C i ty of Odawara, and other 2 c i t i e s and 7 towns over 300 ttf 78 Name of Prefectu re and C i t y Terms of Des i gna-t i on Name of Designated Region Area of Land Transact i ons to be Repor-ted Prefecture of Kanaga-wa 1989.4.1 -1993.3. 31 the C i ty Planning Area of Town of Yamakita, and other 6 towns over 300 nf Ci ty of Yokohama 1987.8.1 -1992.7. 31 the Urbanizat ion Promo-t i o n Area of Midori Ward and other 5 wards over 100 nf (over 300 nf u n t i l 1987. 10.31) 1987.10. 1-1992. 9.30. the Urbanizat ion Promo-t ion Area of Minami Ward and other 9 wards over 100 nf (over 300 nf u n t i l 1987. 10.31) Ci ty of Kawasak i 1987.8.1 -1992.9. 30 the Urbanizat ion Promo-t i o n Area of whole c i t y over 100 nf (over 300 nf u n t i l 1987. 10.31) Prefecture of Chiba 1987.9.1 -1992.8. 31 the Urbanizat ion Promo-t i o n Area of C i ty of Ichikawa and C i ty of U rayasu over 300 nf 1987.11. 1-1990. 8.31 the Urbanizat ion Promo-t i on Area of C i ty of Chiba and other 6 c i t i e s over 300 nf 1988.2.1 -1991.1. 31 the Urbanizat ion Promo-t i o n Area of C i ty of K isa razau , and other 6 c i t i es and 3 towns over 300 nf 1988.4.1 -1991.3. 31 the Urbanizat ion Promo-t i o n Area of C i ty of Noda and Town of Osato Shi rosato , the Use D i s t r i c t of C i ty of Mobara over 300 nf 79 Name of Prefectu re and C i t y Terms of Des i gna-t i on Name of Designated Region Area of Land Transact i ons to be Repor-ted Prefecture of Saitama 1987.10. 1-1991. 3.31 the Urbanizat ion Promo-t i on Area of C i ty of Urawa and other 6 c i t i e s over 100 nf (over 500 nf u n t i l 1987. 11.19) the Urbanizat ion Promo-t i on Area of C i ty of Kawagoe, and other 8 c i t i e s and 2 town over 200 nf (over 500 nf u n t i l 1987. 11.19) 1988.4.1 -1991.3. 31 the Urbanizat ion Promo-t i on Area of C i ty of Kumagaya, and other 13 c i t i e s and 8 towns over 300 nf Ci ty of Sapporo 1987.10. 1-1992. 9.30 a part of CBD (350 ha.) over 200 nf (over 300 nf u n t i l 1988. 5.9) Prefecture of Kumamo-to 1987.10. 1-1992. 9.30 a part of C i ty of Kumamoto (740 ha.) over 1,500m2 City of Fukuoka 1987.11. 2-1992. 11.1 a part of Hakata Ward and whole area of Chuo Ward (2,500 ha.) over 300 nf (over 500 nf u n t i l 1988. 3.31) 1988.4.1 -1992. 11.1 a part of Higashi Ward and other 5 wards (4,400 ha.) over 300 nf Prefecture of l i iyagi 1987.12. -1992. 11.1 a part of centra l area of C i ty of Sendai (750 ha.) over 100 nf a part of centra l area of C i ty of lzumi(50 ha.) over 300 nf 80 Name of Prefectu re and C i t y Terms of Des i gna-t i on Name of Designated Region Area of Land Transact i ons to be Repor-ted Ci ty of Osaka 1987.12. 1-1992. 11.30 K i ta Ward , Fukush ima Ward, and other 6 wards over 300 ttf 1988.4.1 -1992. 11.30 Minato Ward, Taisho Ward and other 16 wards over 300 tif Prefecture of N i i gata 1987.12. 1-1992. 3.31 Town of Yuzawa over 600 tn2 1988.4.1 -1992. 3.31 a part of CBD of C i ty of N i i gata over 200 tn2 1988.9.1 -1993. 3.31 Town of Shiozawa over 600 tif Prefecture of Kyoto 1987.12. 25-1992. 12.24 a part of Town of Tanabe the Urbanizat ion Promo-t ion Area of Town of Seika and Kizu over 500 ttf Prefecture of A i ch i 1987.1.5 -1993.1. 4 the Urbanizat ion Promo-t i o n Area of Town of Nagakude over 300 tn2 1988.5.2 -1993.1. 4 the Urbanizat ion Promo-t i o n Area of Town of N i s s i n and other 3 towns over 300 tif C i ty of Nagoya 1988.1.5 -1993.1. 4 the Urbanizat ion Promo-t ion Area of Higashi Ward and other 4 wards over 300 ttf 1988.5.2 -1993.1. 4 the Urbanizat ion Promo-t i o n Area of K i ta Ward and other 10 wards over 300 ttf 81 Name of Prefecture and C i t y Terms of Des i gna-t i on Name of Designated Region Area of Land Transact i ons to be Repor-ted Prefectu re of Hyogo 1988.1.5 -1992.3. 31 the Urbanizat ion Promo-t ion Area of C i ty of N i sh i nom i ya and other 2 c i t i es over 300 m2 1988.4.1 -1992.3. 31 the Urbanizat ion Promo-t i o n Area of C i ty of 1tam i and other 2 c i t i es over 300 nf 1988.9. 10-1993. 9.9 C i t y of Sumoto, Tuna County, Mihara County over 2,000nf City of Kobe 1988.1.5 -1993.1. 4 the Urbanizat ion Promo-t i o n Area of Nada Ward and other 2 wards over 300 nf 1988.4.1 -1993.1. the Urbanizat ion Promo-t ion Area of Hyogo Ward over 300 nf Prefectu re of Osaka 1988.1.5 -1993.1. 4 C i t y of Toyonaka and another c i t y over 300 nf C i t y of Ikeda and other 5 c i t i es , Town of Taj i r i over 300 nf in the UPA, over 1,000m2 in the UCA a part of C i ty of Maika-ta and other 2 c i t i e s over 500 nf in the UPA, over 2,000nf in the UCA a part of C i ty of K i sh i-wada and another c i t y over l,000nf 1988.4.1 -1993.1. 4 C i t y of Sakai and other 6 c i t i es over 300 nf in the UPA, over 1,000m2 in the UCA 82 Name of Prefectu re and C i t y Terms of Des i gna-t i on Name of Designated Region Area of Land Transact i ons to be Repor-ted Prefecture of Okayama 1988.2.1 -1993.1. 31 CBD of C i ty of Okayama (570 ha.) over 200 itf City of H i rosh ima 1988.2.1 -1993.1. 31 CBD (600 ha. ) over 300 nf Prefectu re of Kago-sh i ma 1988.2.1 -1993.1. 31 CBD of C i ty of Kagoshima (250 ha.) over 200 nf Prefectu re of Ibaraki 1988.3.1 -1993.2. 28 C i t y of Tsukuba and other 3 towns over 300 m2 in the UPA, over 2,000m2 in the UCA the Urbanizat ion Promo-t ion Area of C i ty of T s u c h i u r a , and other 3 c i t i e s , 2 towns over 300 m2 1988.9.1 -1993.2. 28 the Urbanizat ion Promo-t i o n Area of Town of Ami, V i11 age of Ch i yoda, a part of C i ty of Tsuku-ba over 300 m2 Prefectu re of Nara 1988.4.1 -1993.3. 31 a part of C i ty of Nara and another c i t y over 500 m2 in the UPA, over 2,000m2 in the UCA Prefectu re of Fukuoka 1988.4.1 -1992. 11.1 a part of C i ty of Kasuga and another c i t y over 300 m2 City of Kyoto 1988.4.1 -1993.3. 31 the Urbanizat ion Promo-t i o n Area of Chukyo Ward and other 2 wards over 300 m2 83 Name of Prefectu re and C i t y Terms of Des i gna-t i on Name of Designated Region Area of Land Transact ions to be Repor-ted Prefecture of Miyaza-ki 1988.4. 25-1993. 4.24 a part of C i ty of Miya-zak i , and other 3 c i t i es , 4 towns over 1,000m2 in UPA, over 2,000 m2 in the area other than UPA Prefecture of Tochig i 1988.6.1 -1993.5. 31 CBD of C i ty of Utsunomi-ya (430 ha.) over 300 m2 Ci ty of K i takyushu 1988.6.1 -1993.5. 31 a part of Kokura-Ki ta Ward (120 ha.) over 100 m2 a part of Yahata-Nishi Ward (130 ha.) over 200 m2 Prefectu re of M i e 1988.6. 20-1993. 6.19 a part of C i ty of Ise, and other 3 c i t i es , 11 towns (22,310 ha.) over 500 m2 Prefectu re of Fuku-sh i ma 1988.7. 15-1993. 7.14 a part of C i ty of Kor i -yama, and another c i t y , 5 towns, 1 v i11 age (6,480 ha.) over 2,000m2 Total 23 Specia l Wards, 155 C i t i e s , 81 Towns, and 3 V i11 ages Source: Masamitsu S a i t o , "Kanshi Kuiki no Genjyo to Mondaiten (The Current State and Problems of the System of Land Pr ice Monito-r ing Area) " , Fudosan Journal (The Real Estate Journal ) , October 1988: pp. 17-20. Note: UPA stands fo r the Urbanizat ion Promotion Area, and UCA for the' Urban i zaion Control Area . 84 Table DI - 12. Number of Reported Land Transact ions according to the System of Land Pr ice Monitor ing Area (from January 1 to June 31 in 1988) Name of Prefec- Number of Number of Repor- Number of Repor ture and Gover- Reported ted Land Transa- ted Land Transa nment Ordinance Land Tran- c t ions which is c t i o n s which is C i ty sac t ions warned 1 ) not warned af te adv i s i ng 1 barak i 430 0 215 Toch i g i 4 0 0 Sa i tarn 5,161 27 2,627 Chiba 2,880 0 2,326 Tokyo 23,331 40 17,129 Kanagawa 5,089 2 3,678 - i ty of Kawasaki 1,690 0 1,289 * i ty of Yokohama 6,060 4 4,774 Total of NCR 2' 44,645 73 32,038 A i ch i 66 0 10 Mie 0 0 0 Kyoto 93 0 8 Osaka 1,129 1 115 Hyogo 566 0 43 Nara 103 0 12 C i ty of Nagoya 581 0 5 C i ty of Kyoto 51 0 4 C i ty of Osaka 465 0 34 C i ty of Kobe 210 1 0 Total of OMR2 ) v 1 3,264 2 231 and NMR M i yag i 192 0 23 N i i gata 114 0 13 Nagano 128 0 7 Okayama 35 0 6 Fukuoka 19 0 5 Kumamoto 100 0 1 M i yazak i 7 0 0 Kagosh i ma 24 0 1 C i ty of Sapporo 298 0 45 C i ty of H i ro-o h i mo 51 2 1 85 . . . Table DI—12 cont inues C i ty of K i t a - 6 0 1 kyushu C i ty of Fukuoka 303 0 62 Total of Local 1,277 2 165 Reg i ons Total of Whole 49,186 77 6,401 Country Sou rce: Masamitsu S a i t o , "Kanshi Kuiki no Genjyo to Mondaiten C T h e Current State and Problems of the System of Land Pr ice Monito-r ing Area) " , Fudosan Journal C T h e Real Estate Journal ) , October 1988: p. 11. Notes: 1) When a land t ransac t ion is reported and i ts p r ice g ross ly exceeds Koji Ch ika , the local government advises the person concerned to reduce the p r i c e . If the person concerned does not reduce the land pr ice as advised by the local govern-ment, she/he w i l l be issued a warning by the local government and that land t ransac t ion w i l l be d isapproved. 2) NCR stands for the National Capi ta l Region, OMR stands f o r the Osaka Metropol i tan Region, and NMR stands for the Nagoya Metropoli tan Regi on. 22 land p r i ce trend survey conducted in Tokyo, Kanagawa, Saitama, and Ch iba , the land pr ice increases in these m u n i c i p a l i t i e s have 23 already peaked (Table ID—13). It is fea red , however, that land p r i ce may remain at i n f l a t e d l eve ls in and around large c i t i e s even though the sharp increases have already ceased. This is because the System of Land Pr ice Monitoring Areas is one 86 Table DI - 13. Resul ts of Land Pr ice Trend Survey of Tokyo, Kanagawa, Saitama, Chiba (Un i t : %) Res i dent i al Commerc i al D i s t r i c ts D i s t r i c ts Increase Increase I ncrease Rate © Increase Rate © Rate © Rate © Tokyo Kanagawa Sa itama Chi ba - 0 . 8 15.5 1.5 28.7 0.6 38.3 4.9 27.1 - 0 . 2 3.4 2.3 3.6 4.8 14.8 19.3 66.9 Sou rce: Nihon Keizai Shinbun CNihon Keizai Newspaper) , 5 March 1988. Increase rate © is the comparison of the r e s u l t s of land p r i ce trend surveys performed on 1 October 1987 and 1 January 1988, and increase rate © is the comparison of the surveys on 1 July 1987 and 1 October 1987. way to reduce land pr ice increases to the level of Koji Chika (or the land p r i c e s evaluated and announced by the National Land Agency) by eva luat ing the p r ices of reported land t r a n s a c t i o n s . Moreover, land p r i c e s may remain at the level set by Koji Chika even though the market pr ice might become lower than Koji Chika if the System of Land Pr ice Monitoring Areas is not 24 appIi ed. As s tated above, there have been three major land pr ice hikes a f t e r the war, each caused by d i f f e r e n t f a c t o r s . However, Note: 87 we must remember that i n e f f e c t i v e land p o l i c y and land use cont-r o l s are a lso fundamental causes of such outrageous land pr ice h i kes. •In the fo l low ing chapter , the s o c i a l impacts of current land p r i c e hike are examined. 88 Notes 1 Masakazu Okubo e d . , Chika to Toshi Keikaku — Kaihatsu  Rieki no J i t t a i to sono Shakai Kangen (Land Pr ice and Ci ty  P lanning: The Actual Condi t ion of Development P r o f i t and i ts  Soc ia l Return) (Kyoto: Gakugei Shuppan-sha Inc . , 1983), p. 8. 2 Nihon Hoso Shuppan Kyokai (Japan Broadcasting Publ ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka (To whom Land Belongs?) (Tokyo: Nihon Hoso Shuppan Kyoka, 1987), pp. 5-7. 3 According to Masashi Namekawa (Chika /Tochi Mondai no  K e i z a i g a k u - - J u y o , Kyokyu, Taisaku (Economics of Land Pr ice and  Land Issue: Demand, Supply , Countermeasure) , 1988, p. 34), because the land pr ice evaluated and announced by the National Land Agency (Koj i Chika or Chika Koj i ) was s tar ted in 1970, the p r i ce indexes of urban areas surveyed and announced in June and December every year by the Japan Ins t i tu te for Real Estate are usua l l y employed for studying the long term t rend. 4 Tadayoshi Kanakura, "Tokyo no Tochi Juyo, Kozo no Henka to Chika Mondai (1) (The St ructure of Land Demand and Land Pr ice in Tokyo (1)) The Toshi Mondai (Munic ipal Problems) , May 1988, p. 69. 5 Okubo, Chika to Toshi Keikaku- -Kaihatsu Rieki no J i t t a i  to sono Shakai Kangen (Land Pr ice and C i ty P lanning: The Actual  Condi t ion of Development P r o f i t and i ts Soc ia l Return) , p. 1. 6 Hiroyuki Yamada, "Ch ika Koto no Mondaiten (Problems of Land Pr ice Hike) , " Nihon Keizai Shinbun (Nihon Keizai News- paper: Tokyo) , 2 May 1987. 7 Ib id . 89 8 Kanakura, The Toshi Mondai (Munic ipal Problems) . pp. 76-77. 9 The Comprehensive National Development Plan i n s t i t u t e d in 1962 adopted the nodal system development and promoted the con-s t r u c t i o n of new i n d u s t r i a l c i t i e s and the establ ishment of spec ia l areas for i n d u s t r i a l c o n s o l i d a t i o n . With Japan's rapid economic growth, rapid u r b a n i z a t i o n , overpopulat ion of urban areas , and underpopuI a t ion of local areas have r e s u l t e d . There fore , in 1969, the New Comprehensive National Development Plan was e s t a b l i s h e d . Its basic ob jec t ive was to develop and reform the nation through l a r g e - s c a l e development p r o j e c t s , d e c e n t r a l i z a t i o n of i ndus t r i es and other means. Hideki Kaji et a I . , Gendai Toshi Keikaku Vogoroku (Technica l Terms of Current  C i t y Planning) , (Tokyo: Shokokusha Inc . , 1986), p. 56. 10 The Plan for Remodelling the Japanese Archipelago designed and promoted by Tanaka Cabinet in 1972 was the scheme to urbanize the area of the na t ion . It was one of the major f a c t o r s that heated up nationwide land s p e c u l a t i o n . Makoto Sato , Toshi Seisaku to Keizai Kaikaku (Land Po l i cy and Economic  Reformat i on) , (Tokyo: Mineruva Books Inc . , 1984), p. 35. 11 Yamada, Nihon Keizai Shinbun (Nihon Keizai Newspaper) , 2 May 1987. 12 Kanakura, The Toshi Mondai (Munic ipal Problems) , pp. 78-79. 13 Even though the demand for o f f i c e f l o o r space in large c i t i e s has been increas ing rap id ly in recent years , the supply of o f f i c e f l o o r space has not met the demand. For instance, the vacancy rate of o f f i c e s in Tokyo had decreased from 1.3 per-cent in 1981 to 0.2 percent in 1985. Shadan Hojin Nihon Fudosan Kantei Kyokai K i n k i - k a i (The Kinki O f f i c e of the A s s o c i a t i o n of Japan Real Estate A p p r a i s a l ) , Henbo suru Tochi Riyo to C h i k a - - Sono J i t t a i to Fudosan Hyoka no Kadai (Changing Land Use and  Land P r i c e : Thei r Actural Condi t ion and the Problem of Real  Estate A p p r a i s a l ) , (Kyoto: Gakugei Shuppan-sha Inc . , 1986), p. 7. 90 14 Chika Mondai Kenkyu-kai CThe Society for the Study of Land P r i c e Problems) , Donaru Chika , Dosuru Chika! CWhat w i l l  Happen to Land P r i c e , What must be done about Land P r i c e ! ) , (Tokyo: Gyose i , 1987), p. 40. 15 I b i d . , pp. 40-41. 16 Kokudo Riyo Keikakuho Kenkyukai CThe Society for the Study of the National Land Use Planning Law) , Kaisei Kokudo  Riyo Keikakuho no Voten CThe Main Points of the Revised National  Land Use Planning Law) , (Tokyo: Ta ise i Press Inc . , 1987), pp. 6-7 . 17 The National Land Agency e d . , Showa 62 Nenban Kokudo  Riyo Hakusho--Toch i Mondai no Gen.io to Kadai C 1987 Wh i te Paper  of Land Use: Current State and Problems of Land Use) , (Tokyo: the P r i n t i n g Bureau, the M in is t ry of F inance, 1987), pp. 20-25. 18 The Tokyo Metropol i tan Government, "Tokyo- to Tochi T o r i h i k i Tek ise ika Kento l inka i Hokokusho--Chika Koto Yokusei notameno Teigen CA Report of the Tokyo Metropol i tan Government Committee on Cor rec t ion of Land T ransac t ions : Proposals for Control of Land Pr ice Hike) " , August 1986, pp. 2-3 . 19 Shadan Hojin Nihon Fudosan Kantei Kyokai K i n k i - k a i CThe Kinki O f f i c e of the A s s o c i a t i o n of Japan Real Estate Appra isa l ) , Henbo suru Tochi Riyo to Chika--Sono J i t t a i to Fudosan Hyoka  no Kadai C Changing Land Use and Land P r i c e : Their Actural  Condi t ion and the Problem of Real Estate Appra isa l ) , (Kyoto: Gakugei Shuppan-sha Inc . , 1986), p. 7. 20 Nihon Hoso Shuppan Kyokai (Japan Broadcast ing Publ ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka CTo whom Land Belongs?) p. 49. 21 Masashi Namekawa, Chika/Tochi Mondai no Keiza igaku- -Juyo  , Kyokyu, Taisaku C Economics of Land Pr ice and Land Issue: De- mand, Supply , Countermeasure) (Tokyo: Toyo Keizai Shinpo-sha, 1988), pp. 87-88. 91 22 The Land Pr ice Trend Survey (Chika Doko Chosa) is a system that designates land pr ice monitering areas where pr ice hikes are most s e r i o u s , and surveys the land pr ice trends in these areas every three months. The survey is conducted by local governments. Nihon Keizai Shinbun (Nihon Keizai Newspaper : Tokyo) , 5 March 1988. 23 Nihon Keizai Shinbun (Nihon Keizai Newspaper) , 5 March 1988. 24 Masamitus S a i t o , "Kanshi Kuiki no Genjyo to Mondaiten (The Current State and Problems of the System of Land Pr ice Monitor ing Area) " , Fudosan Journal (The Real Estate Journal ) , October 1988, p. 15. 92 Chapter IV. SOCIAL IMPACT OF SKYROCKETING LAND PRICES Land is a bas ic nat ional resource used to support economic and s o c i a l a c t i v i t i e s . There fore , any jump in the p r ice of land a f f e c t s the l i v e s of c i t i z e n s , production and economy in many ways. Th is chapter d iscusses how the recent jump in land pr ices in the Metropol i tan Tokyo Region is a f f e c t i n g economic a c t i v i -t i e s and the l i v e s of r e s i d e n t s . IV - 1 . FAILURE IN SOCIAL OVERHEAD CAPITAL POLICY As mentioned in the preceding chapter , Japan's land p o l i c y and land use c o n t r o l s have never taken the i n i t i a t i v e , and have not been e f f e c t i v e except in spec ia l cases . Consequently, many s o c i a l overhead c a p i t a l programs for large c i t i e s have been h indered, and p o o r - q u a l i t y houses have been cons t ruc ted . The National Land Use Planning Law to regulate land p r i ces is eager ly awaited by the pre fec tura l governors. The r i s e in land p r i c e s has been d i s t r e s s i n g for the governors s ince i t makes the c o n s t r u c t i o n of houses and such publ ic f a c i l i t i e s as s c h o o l s , nursery schools and h o s p i t a l s increas ing ly d i f f i c u l t . The jump in land pr ices a lso increases the ra t io of land costs fo r pub l i c under tak ings. Th is r a t i o has normally been 20 percent f o r pub l i c f a c i l i t i e s and 30 percent for houses because land for houses is more d i f f i c u l t to acqu i re . These r a t i o s are 1 graduaI Iy i ncreas i ng. 93 In f a c t , Showa 62 Nenban Kokumin Seikatsu Hakusho C1987 White Paper of Na t ion 's Welfare) (edi ted by the Economic Planning Agency and publ ished by the P r i n t i n g Bureau of the M in is t ry of Finance) points out that the r i s e in land pr ices not only increases housing costs in urban areas , but a lso increases the cost of accumulation of the s o c i a l overhead c a p i t a l . The White Paper reported that the ra t io of land costs f o r s t r e e t c o n s t r u c t i o n throughout the country increased from 33.2 percent in 1982 to 39.2 percent in 1985 due to the r i s e in land p r i c e s . In Tokyo, t h i s r a t i o increased sharply from 39.5 2 percent to 54.3 percent dur ing the same period (F igure IV -1 ) . (%) 60 50 40 30 20 10 0 F i gure VI - 1 . Ratio of Land Cost for Street Construct ion • • • • •Metropol is of Tokyo — • Nat i onwide Average ' s — *» „ 1974 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 Source! Asahi Shinbun CAsahi Newspaper) , 30 October 1987. 94 The White Paper compares the d i f f e r e n c e s in a t t i t u d e s among people l i v i n g in 13 c o u n t r i e s , inc luding Japan, India, Korea, the U.S. and European c o u n t r i e s . People s a t i s f i e d with the i r present l i v i n g cond i t ions averaged 36.5 percent in the 12 count r ies other than Japan, while only 6.5 percent of Japanese were s a t i s f i e d with the i r present l i v i n g c o n d i t i o n s . The White Paper po ints out that land costs are very high for such s o c i a l overhead c a p i t a l investments such as t r a n s p o r t a t i o n , c u l t u r a l and educat ional f a c i l i t i e s (except for s t ree t pavement, water-works, drainage and some other f a c i l i t i e s ) . There fore , the p r ice of land must be s t r i c t l y c o n t r o l l e d for housing const ruc-t ion and the accumulation of s o c i a l overhead c a p i t a l to improve 3 the n a t i o n ' s w e l l - b e i n g . L e t ' s examine how s e r i o u s l y the recent r i s e in land p r i ces a f f e c t s s o c i a l overhead c a p i t a l investments in urban areas by r e f e r r i n g to the data on the Tokyo Metropol i tan Region. In th is a rea , the p r i c e s of land for roads doubled from 1985 to 1986. To improve the access such as roads and r a i l r o a d s in the Metro-p o l i s , most of the money required must be spent for land. For example, the c o n s t r u c t i o n of the Loop 2 Project ( t o t a l l i n g 9,240 meters) that is to e n c i r c l e the Imperial Palace has been suspended, leaving 1,350 meters between Toranomon and Shinbashi incomplete because the land costs had increased too much. The Metropol i tan Governmnet of Tokyo estimates that the 95 cost for t h i s pro jec t w i l l amount to ¥430 b i l l i o n . One meter of road costs ¥320 m i l l i o n . For th is excess ive ly expensive land, ¥ 4 2 8 . 7 b i l l i o n or 99.7 percent of the to ta l pro ject cost of ¥430 b i l l i o n must be spent . F a i l u r e has not only been experienced in terms of s o c i a l overhead c a p i t a l investment. Soc ia l overhead c a p i t a l for future development pro jec ts is a lso u n c e r t a i n . What measures w i l l the Government of Japan take for s o c i a l overhead c a p i t a l investments to promote the 4th National Overal l Development Plan? According to th is p l a n , the Tokyo Metropol i tan Region w i l l receive an a d d i t i o n a l three to f i v e m i l l i o n people in the next 15 years due to increased business a c t i v i t i e s invo lv ing in ternat iona l commu-n i c a t i o n s and information systems. Thus, housing w i l l remain a major problem. A l s o , according to Showa 62 Nenban Kokudo Riyo  Hakusho C1987 White Paper of Land Use) (edi ted by the National Land Agency and publ ished by the P r i n t i n g Bureau of the Min is t ry of F inance ) , the centra l part of Tokyo w i l l need about 11 m i l l i o n square meters of add i t iona l o f f i c e space by the 21st century to support the growing in ternat iona l f inances and secu-r i t i e s a c t i v i t i e s . There fore , many pro jec ts for redeveloping centra l Tokyo and the area along Tokyo Bay are planned. However, almost nothing is being planned to a s s i s t such large redevelopment p r o j e c t s . These pro jec ts must be supported by overa l l planning for the s o c i a l overhead c a p i t a l investments 96 f o r the 21st century to so lve the problems of inadequate roads, ra i lways and other means of t ranspor t , and the needs for more waterworks, drainage systems and waste d isposal f a c i l i t i e s . When Japan w i l l catch up with the United States and Europe in 5 terms of s o c i a l overhead c a p i t a l ? It has a lso been noted that pub l ic investment does l i t t l e to s t imula te domestic demand because most pub l ic investments must be spent on land. There fore , the government's scenar io for s t i m u l a t i n g domestic demand to reduce trade f r i c t i o n becomes 6 i nef fect i ve. V I - 2. DISTORTIONS FROM INCREASED INHERITANCE TAX DUE TO STEEP RISE IN LAND PRICES The amount of inher i tance tax var ies as the p r ice of land changes. If the pr ice of land changed reasonably, ind iv idua l he i rs would somehow be able to cope with the imposed tax. However, the recent steep r i s e in land pr ices has s i g n i f i c a n t l y increased tax v a l u e s , causing unexpected s o c i a l c o n f u s i o n . 1 ) Abnormal Family Regis ters As the land pr ice r i s e s , the inher i tance tax increases . This is causing abnormal fami ly r e g i s t e r s such as the second generat ion male member and h is c h i l d r e n are brothers or daughters l i s t e d in the fami ly r e g i s t e r (F igure VI-2) . The inher i tance tax system al lows a deduction of ¥4 m i l l i o n per heir from the taxable va lue . (Therefore , when the o r i g i n a l taxable 97 Figure VI -2 . Process of Adoption _>| © G r a n d f a t h e r adopts the th i rd genera-t ion(=his grand-son and grand-daughter) . © T h e n , grandfa-t h e r ' s son and the son and daughter of the second gene ra t ion becomes bro ther and s i s t e r on fam i1y res i s te r inc reas ing the num ber of i n h e r i t o r s from one to three . GRANDFATEHR (=owner of the asse t t ) GRANDFATHER'S SON (=the second generat ion) SON OF THE SECOND GENERATION (=the th i rd generat ion) DAUGHTER OF THE SECOND GENE-RATION (=the t h i r d generat ion) value of one 's assets is ¥50 m i l l i o n with f i v e h e i r s , the inher i tance tax is c a l c u l a t e d by m u l t i p l y i n g ¥30 m i l l i o n (= ¥50 m i l l i o n - ¥20 m i l l i o n ) by the inher i tance tax ra te . For ten h e i r s , the inher i tance tax is ca lucu la ted by m u l t i p l y i n g ¥10 m i l l i o n C= ¥50 m i l l i o n - ¥40 m i l l i o n ) by the inher i tance tax r a t e . ) The tax rate a lso decreases as the number of he i rs i n c r e a s e s . There fore , a fami ly subject to an increased i n h e r i -98 tance tax may adopt a grandson as the son of the grandfather (owner of the a s s e t s ) . This means that the grandson of the grandfather (the son adopted by the grandfather) and the son of the second generat ion (son of the grandfather) become the same person, and that the second generat ion and his son become brothers in the fami ly r e g i s t e r . This is completely legal and such cases are now i n c r e a s i n g . The s o c i a l imp l ica t ions of such p r a c t i c e s are yet to be determined. However, i t may become a problem fo r the c h i l d r e n of the second generat ion adopted by t h e i r grandfather when they look for a p o s i t i o n in a company, become marr ied , and so on, because Japanese s o c i e t y places great 7 importance on formal l ineage . 2 ) Dest ruct ion of a Japanese Garden C i ty Den'en-chofu in Tokyo's Ota Ward adopted the Ebenezer Howard's garden c i t y concept to e s t a b l i s h a r e s i d e n t i l a area of upper-middle c l a s s c i t i z e n s . Land in Den'en-chofu was sold in average l o t s of 500 square meters per f a m i l y . However, the garden c i t y concept is now being destroyed because many c i t i z e n s are forced to s e l l parts of the i r land to pay the increased inher i tance tax and, as a r e s u l t , the r e s i d e n t i a l p lo ts are being d iv ided into smal ler p l o t s . According to a survey conducted by the Ota Ward M u n i c i p a l i t y , Den'en-chofu contained 198 r e s i d e n t i a l p lo ts of 500 to 750 square meters as of 1932 when i t was almost completed. Today, there are only 102 p lots 99 of 500 to 750 square meters. Kazuo Shibusawa is a 71-year old musician who l i v e s in Den 'en-chofu . In 1984, he inher i ted from his fa ther the 723 square meters of land on which he l i v e s . This piece of land, located in one of the s u p e r - h i g h - c l a s s areas of Tokyo, was slapped with an inher i tance tax of ¥600 m i l l i o n . In 1986, Kazuo so ld 314 square meters fo r ¥760 m i l l i o n at about ¥ 2 . 4 m i l l i o n per square meter. Then, he was a d d i t i o n a l l y ordered to pay income tax of ¥300 m i l l i o n for s e l l i n g the land. Kazuo s t i l l 8 owed ¥80 m i l l i o n in inher i tance tax a f te r s e l l i n g his land. Many people seeking p lo ts of land in Den'en-chofu as a s ta tus symbol in recent years are those who were forced to s e l l t h e i r assets in cent ra l Tokyo due to the wave of development and redevelopment being undertaken in th is area . They chose Den'en-chofu to res ta r t the i r l i v e s not only because i t enjoys a high s ta tus or provides a good r e s i d e n t i a l environment. They chose Den 'en-chofu , in par t , to use the legal advantage of the 9 "except ion for repurchase ." This exception is a p p l i c a b l e when a person a l i e n a t e s a r e s i d e n t i a l property owned for more than 10 years , purchases a r e s i d e n t i a l property wi thin one year before or a f te r the year of the a l i e n a t i o n , that i s , during the year before or a f te r the year of the a l i e n a t i o n , and l i v e s in the purchased property u n t i l December 31 of the year fo l lowing the purchase. For repurchases, the a l i e n a t i o n income is disregarded 100 in terms of "postponement of the a l i e n a t i o n income tax ," and the a l i e n a t i o n income tax is not c o l l e c t e d when the a c q u i s i t i o n p r i ce of the newly purchased property equals or exceeds the a l i e n a t i o n p r i c e . However, i f the a l i e n a t i o n pr ice exceeds the a c q u i s i t i o n pr ice of the newly purchased proper ty , the pr ice d i f f e r e n c e is subject to tax. This exception to taxat ion was provided as an incent ive for people moving into larger homes to improve the q u a l i t y of the housing in Japan. In r e a l i t y , b i l l i o n a i r e c i t i z e n s who sold the i r p roper t ies in the heart of Tokyo have moved to Den'en-chofu by purchasing very expensive 10 real es ta te to o f f s e t the a l i e n a t i o n p r i c e . This trend is having a subs tan t ia l s o c i a l impact in a d d i t i o n to the v i s i b l e problem of fragmenting p lo ts of land. Den'en-chofu used to be a c l o s e l y kni t community of h ighly educated people, such as corporate d i r e c t o r s , d o c t o r s , and we l l -to-do f a m i l i e s . With the in f lux of former owners of downtown restaurants or v a r i e t y shops, the makeup of the community is 11 be i ng d i sso1ved. 3 ) Steep Increase in Apartment Bu i ld ings in Res ident ia l Areas of Tokyo An old doctor l i v e s in a house on a 200-tsubo (one tsubo equals 3.3 square meters) p lo t of land in Shibuya Ward. The inher i tance tax is estimated ¥154 m i l l i o n . The doctor says that he cannot die in peace worrying about the tax burden to be 101 t r a n s f e r r e d to h is son. A real estate agent recommends that the doctor bu i ld a h i g h - c l a s s apartment b u i l d i n g to earn rental income. If the doctor borrows a large amount of money from a bank for the b u i l d i n g , i t w i l l reduce his taxable amount and thus reduce the inher i tance tax. The bank loan can be repaid from the rental income to be earned. Like the above example, many m u l t i - s t o r y concrete apartment b u i l d i n g s are being b u i l t because of inher i tance taxes in the quiet environment of s i n g l e detached housing communities of 12 Tokyo. The impact of t h i s trend is yet to be seen. However, e x i s t i n g i n f r a s t r u c t u r e in such communities may not be able to support the rap id ly increas ing inflow of new r e s i d e n t s . V I - 3 . ENLARGED COMMUTING ZONES As the r i s e in land p r i ces propagates from the centra l part of Tokyo to the suburbs, houses that s a l a r i e d people can buy 13 become remoter. According to the Economic Planning Agency, to purchase a house, a person should choose a house pr iced at 5 to 6 times his current annual income. If a person purchases a house that pr ice is more than 5 to 6 times his current annual income, he w i l l not be able to pay back the housing loan. That means that a m i d d l e - c l a s s s a l a r i e d worker aged 40 to 45 years o ld should spend around ¥30 m i l l i o n (5 to 6 times his annual 102 income) to buy a house on the nationwide average. In the Tokyo Metropol i tan Region, the pr ice zone of detached houses valued at ¥150 ,000 per square meter or more has expanded to the 50 k i l o -meter zone. The center of th is zone is centra l Tokyo, although i t was former ly wi th in 35 ki lometer zone according to a survey recent ly conducted by the National Land Agency. This means there are no detached houses a f fordab le to a m i d d l e - c l a s s s a l a r i e d worker wi th in the one and a half hour commutation zone 14 from the heart of Tokyo. What must a s a l a r i e d worker do to acquire a detached house? For ins tance , an employee of a major company in Tokyo bought a detached house in Ushuku C i t y , Ibaraki P re fec tu re , and moved from an apartment in Tokyo. It now takes him two and a half hours to commute from his new house to the o f f i c e , while i t only took about one hour before he moved. Consequently, he decided to rent an apartment near the o f f i c e , l i v e there a lone , and spend Sundays at home. Now he hardly has a chance to ta lk with h is primary school son, and his two-year-o ld daughter does not seem to recognize her f a t h e r . Although there is no data a v a i l a b l e on t h i s s u b j e c t , there must sure ly be growing numbers s a l a r i e d workers who work in Tokyo, own houses in the suburbs, 15 l i v e in apartments in Tokyo, and spend weekends at home. IV - 4 . SMALLER HOUSES 103 As mentioned in Chapter IV — 3 , a m i d d l e - c l a s s s a l a r i e d worker can only a f fo rd a detached house with standard res iden-t i a l f u n c t i o n s located fa r from Tokyo. What can m i d d l e - c l a s s s a l a r i e d worker do to buy a house near the center of Tokyo? The demand f o r secondhand apartments is sharply i n c r e a s i n g . Most t y p i c a l secondhand apartments c u r r e n t l y in demand in one of the 23 wards of Tokyo would be 10 years or o l d e r , be around 40 square meters in s i z e , would include two bedrooms and a d i n i n g -k i t c h e n , and be so ld for ¥30 m i l l i o n or more. Detached houses b u i l t through the s o - c a l l e d " m i n i -development" are a lso s e l l i n g well in Tokyo. For example, near Ikebukuro in Toshima Ward are t iny houses of 10 tsubo (33 square 16 meters) in s i z e (F igure IV -3 ) . Eleven of such houses b u i l t by F i gure I V - 3 F loor Plan of 10 Tsubo (33itf) House 5.0 meter O K i tclien O • Entrance C _ J <C Bath S l i t i"ng Room-1st FIoor IB cd room Bedroom Veranda 2nd F loor Source! Nihon Hoso Shuppan Kyokai (Japan Broadcasting Publ ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka (To whom Land Belongs?) (Nihon Hoso Shuppan Kyokai , 1987):17. 104 a real es ta te agent on 110 tsubo (363 square meters) , are each so ld for about ¥55 m i l l i o n , which is double the pr ice only three years ago. According to the real estate agent who b u i l t these t iny houses, they include var ious c o s t - c u t t i n g measures because otherwise the agent could not a p r o f i t . Savings were achieved on m a t e r i a l s , for example, by not i n s t a l l i n g heat i n s u l a t i o n between the outer and inner w a l l s . For a m i d d l e - c l a s s s a l a r i e d worker, only such t i n y , low-q u a l i t y detached houses are a v a i l a b l e in the cent ra l wards of 17 Tokyo. IV - 5 . DETERIORATION OF RESIDENTIAL ENVIRONMENT According to an a r t i c l e in the Nihon Keizai Shinbun, the most widely read economic newspaper in Japan, i t i nc reas ing ly happens in the metropol i tan area that municipal c h i l d r e n ' s parks 18 and open spaces are suddenly c l o s e d . The "Mi taka -da i Sports Square" (about 11,800 square meters in s i z e ) in Mitaka C i t y , Tokyo, was used for basebal l s ince 1967. In A p r i l of 1987, the landowner requested the municipa-l i t y to return the land because the owner wanted to use the land fo r farming. Three c h i l d r e n ' s parks in Mitaka C i ty were a lso c losed and returned to the landowners in June of 1987. Two c h i l d r e n ' s parks in Hachioj i C i t y , Tokyo, were a lso c losed in October of 1987. Two recrea t ion parks of more than 5,000 square 105 meters in Tokyo's Nerima Ward were recent ly returned to the landowners. A l l these p l o t s are located in c i t i e s or wards where the land p r i ce has doubled during the past year . The p lo ts returned to the landowners are usua l ly converted into farms for growing chestnuts or Japanese a p r i c o t s , except fo r some p lo ts so ld or used for apartments. The reason for conver t ing such returned lands into farms is to reduce taxes. If a p lo t of land lent to a mun ic ipa l i t y as a park is i n h e r i t e d , i t is taxed l i k e a r e s i d e n t i a l p lo t of land. If the land is used as a farm, i t is assessed at a s i g n i f i c a n t l y reduced va lue , and if farming cont inues for 20 years , the land may be exempted from the inher i tance tax according to the Specia l Taxing A c t . M u n i c i p a l i t i e s have no idea how to cope with t h i s trend 19 toward fewer parks . IV - 6 . DESTRUCTION OF COMMUNITIES IN CENTRAL PART OF TOKYO DUE TO SKYROCKETING LAND PRICES In cent ra l Tokyo where increased land p r i ces have been most prominent, land pr ice r a i s e r s employed by deve lopers , real estate agents and c o n s t r u c t i o n companies are maneuvering and seeking land on which to bu i ld o f f i c e b u i l d i n g s . Some of these people t ry to d r ive out tenants and landowners from t h e i r houses or land by a n t i s o c i a l means, causing s o c i a l d isorder and dest-roying communities in cent ra l Tokyo. 1 ) Maneuvers of Land Pr ice Raisers 106 Mr. B l i v e s and operates a laundry in one of three rental u n i t s of a p a r t i t i o n e d house in Shinjuku Ward, Tokyo. The land-owner so ld the land with the house inc luding Mr. B's u n i t , to a c o n s t r u c t i o n company in November of 1984. The cons t ruc t ion company requested that a b u i l d i n g demol i t ion company tear down the house through the d i r e c t o r of a r ight -wing o r g a n i z a t i o n . However, Mr. B refused to evacuate his home and claimed 20 tenant 's r i g h t s . In m i d - A p r i l , 1987, the demol i t ion company began to in t imidate Mr. B into leaving by damaging a wall of h is apartment with a b u l l d o z e r . F i n a l l y , at 3100 a.m. on June 15th, they drove a truck into Mr. B's u n i t , destroying a wall and his laundry equipment. Mr. B's case may be extreme, but such harassment is now 21 becoming a s o c i a l problem. 2 ) Dest ruct ion of Communities by Skyrocket ing Land Pr ices The skyrocket ing land p r i ces are going to destroy communi-t i e s in the center of Tokyo. Such pr ice increases , made in support of o f f i c e b u i l d i n g redevelopment, are e s p e c i a l l y d i rec ted at commercial s t r e e t s in the cent ra l Tokyo (Chuo, Chiyoda and Minato Wards) where many o f f i c e s are needed. A t y p i c a l example is the Kanda area of Chiyoda Ward where a real estate agent of Mi tsui Group is t ry ing to force out res idents of t h i s area in which many secondhand bookstores and book p u b l i -107 shers are l o c a t e d . To purchase land located at Kanda Jimbo-cho 2-chome, Mitusi Real Estate Sales C o . , L t d . , reportedly of fered ¥100 m i l l i o n per tsubo (3.3 square meters) to a book publ ish ing wholesaler located at the corner of Kanda Jimbo-cho 2-chome. The downtown area is a lso changing q u i c k l y . How many long-time res idents w i l l remain in t h i s area i f and when th is t a c t i c of 22 d r i v i n g up land p r i c e s is d iscont inued? The number of pr imary, secondary and high school students is a lso f a l l i n g in cent ra l Tokyo, although t h i s phenomenon is not d i r e c t l y re la ted to increas ing land p r i c e s . This phenomenon can be a t t r i b u t e d to the outflow of people as more business b u i l d i n g s are being constructed in r e s i d e n t i a l a reas . The three wards of Minato, Chuo, and Chiyoda are studying ways to combine schools or c lose them. Minato Ward was home to about 188,000 res idents as of January 1987, inc lud ing 27,700 c h i l d r e n under the age of 15. For comparison purposes, assuming that there were 100 c h i l d r e n in January 1978, there were only 76 l i v i n g there in January of 1987. Cons ider ing the in f luence of skyrocket ing land p r i ces and the ongoing c o n s t r u c t i o n of business b u i l d i n g s in res iden-t i a l a reas , the ward expects that there w i l l only be 24,000 c h i l d r e n l i v i n g in the ward by 1995 (or down to 68 when compared 23 to 100 as of January 1978). 108 IV - 7 . GROWING GAP BETWEEN RICH AND POOR Since i t has become almost impossible for most s a l a r i e d people to a f ford houses in and around Tokyo, the Japanese work e t h i c of "work hard to own a house" may no longer apply . A growing f e e l i n g of res igna t ion may p r e f a i l as workers f ind th is goal u n a t t a i n a b l e . If s o , t h i s may adversely a f f e c t Japan's major natural resource , i t s workers. This is becoming a c r u c i a l issue for a country supported by i t s d i l i g e n t , hard-working people. Thus, the growing gap between those who own the i r homes and those who cannot a f fo rd to w i l l not be remedied in the near 24 f u t u r e . I V - 8 . CLOSING THE EMBASSIES OF DEVELOPING COUNTRIES The steep r i s e in land pr ices is a lso posing a ser ious problem f o r f o r e i g n embassies in Tokyo, p a r t i c u l a r l y those of developing c o u n t r i e s . For example, the Embassy of Uganda in Tokyo was c losed due to e x c e s s i v e l y high rent in 1987. Although A u s t r a l i a and Argent ina own large embassy s i t e s in Tokyo, both are cons ider ing the sa le or redevelopment of the i r embassy 25 b u i l d i n g s and ambassador res idences . IV - 9 . THE SPREAD OF RISING LAND PRICES ABROAD It now appears that the ongoing r i s e s in land pr ices are being spread abroad. For example, a recent a r t i c l e in Tokyo Business Today s t a t e d : 109 According to Salomon Brothers C o . , real estate posse-s s i o n by Japanese e n t e r p r i s e s in the U.S. equaled only $1.5 b i l l i o n up to 1985. During 1986 a lone , t h i s f i g u r e soared by $4 b i l l i o n to i t s year end to ta l of $5.5 b i l l i o n . . . . Recent examples of Japanese investments in the U.S. are the purchase of the Exxon Bu i ld ing by Mitsui Real Estate Deve-lopment, C o . , L t d . , the T i f f any Bu i ld ing by Da i ich i Real Estate C o . , L t d . , and the ABC Bui ld ing by Shuwa Corp. There is some c r i t i c i s m that a l l t h i s a c t i v i t y may t rans fe r Tokyo's crazy land p r i ce s p i r a l to America.26 Not only are large corpora t ions purchasing real estate overseas; a growing number of medium/small companies and pr iva te investors are a lso invest ing in real estate proper t ies abroad. Medium and s m a l l - s i z e d real estate developers and i n d i v i d u a l s , who have reaped substan t ia l p r o f i t s due to the recent land pr ice h ike , have begun buying real estates overseas to reduce corporate and/or income taxes. Medium and s m a l l - s i z e d developers are a lso invest ing in proper t ies abroad for specu-l a t i v e purposes, while some Japanese are buying summer homes in fo re ign c o u n t r i e s . This trend has already caused ser ious f r i c -t i o n in count r ies where such purchases are being made. One pro-minent example would be the Japanese investors have been buying up condominiums and ind iv idua l homes near Waikiki Beach in Hawaii . Since these buyers pay pr ices far above the market p r i c e , the value of real estate has escalated to a point where local res idents can no longer a f ford to pay the i r property taxes . S i m i l a r problems are occur r ing in the Gold Coast of A u s t r a l i a as Japanese investors continue to purchase real 110 27 estate p roper t i es there. The above d i s c u s s i o n on the d isas t rous r e s u l t s of Tokyo's skyrocket ing land p r i ces has c l e a r l y de ta i l ed the adverse s o c i a l impact and s e r i o u s s o c i a l problems now fac ing the Japanese peopIe. As s tated in the preceding chapter , due to the implemen-t a t i o n of Land Pr ice Monitor ing Areas in accordance with the National Land Use Planning Law, the extra short - term a l i e n a t i o n income tax, and the other countermeasures, such as regu la t ing bank loans made to deve lopers , the growing pr ice of land has 28 recent ly l e v e l l e d off somewhat. Unfor tunate ly , the communities los t in cent ra l Tokyo and the breakup of Den'en-chofu w i l l never be recovered. I l l Notes 1 Nihon Keizai Shinbun-sha e d . , Chika Taisaku no K a i s e t s u - - Kokudo Riyo Keikakuho no Nerai to Shikumi CCommentary on Coun- termeasures for Land P r i c e s : Purpose and Scheme of the National  Land Use Planning Law] (Tokyo: Nihon Keizai Shinbun-sha, 1974), PP.53-54. 2 Asahi Shinbun (Asahi Newspaper: Tokyo) , 30 October 1987. 3 Ib id . 4 Nihon Hoso Shuppan Kyokai (Japan Broadcast ing Publ ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka (To whom Land Belongs?) (Tokyo: Nihon Hoso Shuppan Kyokai , 1987), p. 17. 5 According to Showa 62 Nenban Kensetsu Hakusho C1987  White Paper on Const ruc t ion ) (edi ted by the Min is t ry of Cons-t r u c t i o n , publ ished by the P r i n t i n g Bureau of the M in is t ry of F inance, 1987), the popu la l i zed area that sewerage system had been constructed was 34 percent in Japan, 97 percent in England, 91 percent in West Germany, and 72 percent in the United States as of 1986. The urban park area per person was 2.2 square meters in Tokyo, 30.4 square meters inLondon, 37.4 square meters in Bonn, 12.2 square meters in Par is ,and 45.7 square meters in Washington D.C. The s t r e e t r a t i o was 13.6 percent in Tokyo, 16.6 percent in London, 20.0 percent in P a r i s , and 23.2 percent i n New York. 6 Kazuo Hiramoto, Tokyo Korekara Konaru (.Tokyo's Future) (Kyoto: PHP Research I n s t i t u t e , 1988), p. 188. 7 Asahi Shinbun (Asahi Newspaper) , 25 November 1987. 8 Yomiuri Shinbun (Yomiuri Newspaper: Tokyo) , 22 January 112 1988. 9 The except ion for repurchase for the a l i e n a t i o n income tax was repealed by the tax reform in 1987. Sachio 0 tan i , Tosh i  ni tot te Tochi toha Nanika CThe Meaning of Land for a C i t y ) (Tokyo: Chikuma Shobo Inc . , 1988), p. 172. 10 Before the tax reform of 1987, there were two types of a l i e n a t i o n income tax: the short - term a l i e n a t i o n income tax imposed on r e s i d e n t i a l property owned less than 10 years , and the long-term tax on r e s i d e n t i a l property owned more than 10 years . A f te r the tax reform, there are three types of a l i e n a -t ion income tax: the ext ra short - term a l i e n a t i o n income tax imposed on r e s i d e n t i a l property owned less than 2 years , the shor t - term tax on property owned 2 to 5 years , and the long-term tax on property owned more than 5 years . In other words, the shor ter the per iod of p o s s e s s i o n , the higher the tax ra te . For example, the rate of the extra short - term tax is 96 percent . Masashi Namekawa, Chika /Tochi Mondai no Keiza igaku- - , |uyo, Kyokyu  , Taisaku CEconomics of Land Pr ice and Land Issue: Demand,  Supply, Countermeasure) (Tokyo: Toyo Keizai Sh inpo-sha , 1988), pp. 87-88. 11 I b i d . , pp. 101-102. 12 Nihon Hoso Shuppan Kyokai CJapan Broadcast ing Publ ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka CTo whom Land Belongs?) , p. 21. 13 I b i d . , p. 39. 14 Asahi Shinbun CAsahi Newspaper) , 1 October 1987. 15 Mainichi Shinbun CMainichi Newspaper: Tokyo) , 5 Novem-ber 1987. 16 It is sa id that s ince the average s a l a r i e d worker can a f fo rd small houses in Tokyo, the n u c l e a r i z a t i o n of f a m i l i e s in cent ra l Tokyo would e s c a l a t e . The number of f a m i l i e s with 113 c h i l d r e n moving to the suburban areas of Tokyo from centra l Tokyo would a lso increase , eventua l ly destroy ing e x i s t i n g communities. Nihon Hoso Shuppan Kyokai (Japan Broadcast ing Pub l ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka (To whom Land Belongs?) , p. 17. 17 Nihon Hoso Shuppan Kyokai (Japan Broadcast ing Publ ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka (To whom Land Belongs?) , pp. 16-17. 18 Nihon Keizai Shinbun (Nihon Keizai Newspaper: Tokyo) , 4 October 1987. 19 Ib id . 20 To conclude a l eas ing agreement, the leasee usua l ly buys tenant 's r igh ts by paying money to the owner. The land lease-hold and house leasehold law def ines the intended use of land or a house by the owner as one legal reason to refuse renewal or to cancel a lease . However, according to j u d i c i a l precedents, i f a tenant wishes to renew a c o n t r a c t , land and house owners must agree even if they intended to use the i r land or house them-s e l v e s . This means that tenants who made a contract are pro-tected by law, and they can continue to rent land or a house as long as they wish . Kikuo Iwata, Tochi Kaikaku no Kihon Senryaku ( P roposa ls for Land Reform) (Tokyo: Nihon Keizai Shinbun-sha, 1988), pp. 189-191. 21 Yasuya Nishimura, Tochi no Mokuj i roku (Reve la t ion of Land) (Tokyo: Ningen to Rek ish i -sha Inc . , 1987), p. 109. 22 Asahi Shinbun (Asahi Newspaper) , 30 September 1987. 23 Nihon Keizai Shinbun (Nihon Keizai Newspaper: Tokyo) , 10 September 1987. 24 Nihon Hoso Shuppan Kyokai (Japan Broadcasting Pub l ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka (To whom Land Belongs?) , p. 64. 114 25 Nihon Keizai Shinbun CNihon Keizai Newspaper!) , 8 Octo-ber 1987. 26 "Japan Rushes into U.S. Real E s t a t e , " Tokyo Business  Today, May 1987, pp. 37-38. 27 Nihon Hoso Shuppan Kyokai CJapan Broadcast ing Publ ish ing A s s o c i a t i o n ) , Tochi wa Dareno Monoka CTo whom Land Belongs?) , pp. 52-55. 28 The National Land Agency s ta tes that recent counter-measures imposed to reduce the pr ice of land have worked e f f e c -t i v e l y . However, i t has a lso been argued that the p r ice of land is no longer a f fo rdab le to most people, and consequently the trend toward higher land p r i ces has d is in tegraed by i t s e l f . Nihon Keiza i Shinbun CNihon Keizai Newspaper: Tokyo) , 11 March 1989. According to a white paper on Tokyo's land, i t is almost impossible to p r o f i t by rent ing an o f f i c e or condominium in Tokyo if the p r i c e of land in Tokyo is not lowered an average of 25 percent . For ins tance , i f the pr ice of land in a commercial d i s t r i c t in Minato Ward is not lowered by 73.1 percent , one cannot earn a p r o f i t by rent ing out an o f f i c e . If one increases the rent to earn a p r o f i t , the rent w i l l become too expensive fo r anyone to rent the o f f i c e . The Tokyo Metropol i tan Govern-ment, Tokyo no Tochi 1988 CLand of Tokyo 1988) (Tokyo: The Tokyo Metropol i tan Government, 1989), p.134. 115 Chapter V . SUMMARY AND CONCLUSION This paper has examined how the p o l i c i e s and land use c o n t r o l s implemented in postwar Japan have f a i l e d to contro l the rapid e s c a l a t i o n in land p r i c e s . It has found that there are at least four fundamental reasons for t h i s f a i l u r e ! the absolute t rus t of p o l i c y makers in the market dynamics of c a p i t a l i s m ; nat ional land planning designed to promote the highest poss ib le rate of economic development; the L ibera l Democratic P a r t y ' s p o l i c y of p ro tec t ing the in te res ts of landowners; and the so-c a l l e d " l and -s tandard economy." Had A r t i c l e 28 of the c o n s t i -tu t ion draf ted by Gen. MacArthur 's s t a f f been incorporated into the new Japanese c o n s t i t u t i o n to recognize urban land as pub l ic proper ty , the e n t i r e p o l i t i c a l , s o c i a l , and economic context of postwar land p o l i c y would have been very d i f f e r e n t . In a d d i t i o n to the fundamental problems mentioned above, the C i ty Planning Law of 1968 and the National Land Use l e g i s -l a t i o n , which were intended to be e f f e c t i v e legal mechanisms to implement land p o l i c y , proved to be de fec t ive and have not been able to regulate land use and land p r i c e s . Urban land p r i c e s during the period from 1955 to 1980 have increased at rates which are double the nat ional income and seven times the consumers' pr ice index. This paper i d e n t i f i e s three d i s t i n c t i v e phases in which urban land pr ices increased 116 s h a r p l y . The f i r s t phase, which s tar ted around 1960, was i n i t i a t e d by the pr ice increases in i n d u s t r i a l d i s t r i c t s ; the second phase, occurred in the ear ly 1970's, and saw s i g n i f i c a n t land p r i ce increases not only in large c i t i e s , but a lso in other parts of the country; and the th i rd phase, s ince the mid-1980s, o r i g i n a t e d with the sudden jump in land pr ices in the center of Tokyo, subsequently spreading throughout Tokyo Metropol i tan Region. In an attempt to dampen th is rapid s p i r a l of land pr ice i n c r e a s e s , the National Land Use Planning Law was revised and the superv isory area r e s t r i c t i o n system (or system of land pr ice monitor ing areas) was i n s t i t u t e d in 1987. The Japanese govern-ment a lso began to regulate real estate loans and imposed the extra shor t - term a l i e n a t i o n income tax. Even though i t appears that land pr ices have s t a b i l i z e d in the Tokyo Metropol i tan Region, several years w i l l have to pass before we can undertake a care fu l a n a l y s i s of the causes of recent land pr ice t rends, the general dynamics of f ree land market and the e f f e c t of recent land p o l i c y . In a d d i t i o n , a thorough examination of how land is taxed needs to be under-taken. It is a lso c l e a r that the l a tes t round of land pr ice increases have caused ser ious s o c i a l problems, e s p e c i a l l y in the Tokyo Metropol i tan Region. Soc ia l overhead cap i ta l programs for large c i t i e s have a lso been hindered s ince a large part of the 117 budget a l l o c a t e d for these programs must be spent on purchacing the necessary land. In the near f u t u r e , Japan may face very grave urban problems if land pr ices remain at current l e v e l s , and e s p e c i a l l y if business a c t i v i t y and economic growth slows down. Such problems w i l l be ser ious because: Japan is an urbanized nation in which more than 70 percent of i t s populat ion 1 is expected to be l i v i n g in large c i t i e s by the 21st century; and Japan is a rap id ly aging soc ie ty with an increas ing number 2 of people 65 or o l d e r . Soc ia l welfare programs w i l l conse-quently require a larger share of the nat ional budget. This thes is a lso provided examples of how the rapid and very steep increases in land pr ices are damaging l i v i n g env i ron-ments and neighborhood communities in and around Tokyo, r a i s i n g the p r i c e s of detached houses and concrete apartment b u i l d i n g s , and causing many other environmental and s o c i a l problems. Despite such negative impacts, the nat ional government has f a i l e d to implement c o r r e c t i v e measures. Other r a p i d l y urban iza t ion count r ies should learn from Japan's experience and avoid repeating Japan's mistakes. Japan's postwar land p o l i c y has f a i l e d to encourage the care fu l use of land for the welfare of s o c i e t y , rather than making money f o r those lucky enough to own land. What kinds of measures should be implemented to cope with high land p r i ces in Japan? The fac t that land is a very complex 118 commodity, combined with Japan's small land area , i t s large p o p u l a t i o n , c u l t u r a l and fami ly a t t i t u d e about land, and the land-standard economy, a l l mean the land-market in urban Japan does not operate e f f i c i e n t l y and causes a range of ser ious s o c i a l and economic problem. Hence, the Japanese government needs to develop a broad range of innovat ive programs to promote more e f f i c i e n t use of urban land and to better regulate land p r i c e s . Although the purpose of t h i s paper has been to document the evo lu t ion of urban land p o l i c y in postwar Japan, and not to o f f e r d e t a i l e d recomendations, t h i s review of past land p o l i c y does provide i n d i c a t i o n s of the types of p o l i c i e s that should be cons idered . Future research should inves t iga te the fo l lowing f i v e changes. (1) Revis ion of the Land Leasehold and House Leasehold Law As explained in Chapter HI , according to a j u d i c i a l prece-dent , i f a tenant wishes to renew a lease , land and house owners must agree even i f they wish to use the i r land or house them-s e l v e s . Because the r igh t of tenant is protected so s t r o n g l y , i t often hinders urban renewal and prevents the product ive use of land. Thus, land and house owners are very re luc tant to lease t h e i r proper ty . There fore , the leasehold law should be revised so that the owner of land or a house can cancel a lease more f r e e l y . To do t h i s , owners should give a one-year not ice in advance so that tenants have enough time to f ind other acco-119 modation. By implementing t h i s r e v i s i o n , s u b s t a n t i a l l y more land and houses could be leased, and leased land and houses could be of fered for sa le in the real estate market to increase the supply of land and houses. It is argued that th is proposal would cause hardship on current low-income tenants . However, pub l i c housing and rent s u b s i d i e s should be provided for such 3 peop1e. (2) Development according to Deta i led Master Plan Local governments in Japan have the i r own master p lans , although they have no legal power to contro l development. There fore , a d e t a i l e d master plan should be devised for urbani -za t ion promotion areas , with legal power given to local govern-ments to contro l development. In other words, a developer must obta in permission from the local government, with the local government s t r i c t l y regu la t ing each development pro ject according to the de ta i l ed master p lan . (3) Higher Land Tenure Tax The land tenure tax in Japan is about 0.1 percent of the land p r i c e , although i t is 1 to 4 percent in other c o u n t r i e s . This low tax encourages landowners to keep the i r land undeve-loped for long per iods of t ime. Consequently, few p lo ts of land are a v a i l a b l e in the market. With a higher land tenure tax, there would be more land a v a i l a b l e in the market to prevent demand from exceeding supp ly . 120 (4) Abolishment of the Long-Term A g r i c u l t u r e Cont inuat ion System The Long-Term A g r i c u l t u r e Cont inuat ion System al lows farmers owning p lo ts not smal ler than 900 square meters in the u rban iza t ion promotion areas to pay lower farmland tax rates and exempts them from paying f u l l r e s i d e n t i a l tax r a t e s , provided that they express the i r in te res t in cont inuing a g r i c u l t u r e for at least 10 years . This system is obviously vulnerable to the d i f f i c u l t y of proving whether a farmer is a c t u a l l y ser ious about cont inu ing a g r i c u l t u r e or is simply using i t as an excuse to avoid higher taxat ion while wait ing for fur ther land pr ice hikes (s ince he could q u a l i f y fo r lower taxes simply by p l a n t i n g , for 4 example, a few apple t rees or even lawns). In 1989 there were 8,400 hectares of such farm p lo ts in Tokyo and 36,000 hectares in the Tokyo Metropol i tan Region. The government should consider a b o l i s h i n g the Long-Term A g r i c u l t u r e Cont inuat ion System so that id le lands could be placed on the real estate market. (5) D e c e n t r a l i z a t i o n of Central Management Functions from Tokyo to Other Regions of Japan One reason fo r the strong demand for land in Tokyo is that most cent ra l management f u n c t i o n s , inc luding those of nat ional government o f f i c e s , are concentrated in Tokyo. Some of these cent ra l management func t ions should be moved to other reg ions . For t h i s purpose, a s p e c i a l business establ ishment tax could be 121 imposed on corpora t ions that have the i r o f f i c e s located in Tokyo. National government o f f i c e s that need not be in Tokyo should a l s o be moved v o l u n t a r i l y to other reg ions . There are a wide v a r i e t y of other measures which could be implemented to help regulate land p r i ces and to help better match supply and demand in the urban land market. However, the most important c o n s i d e r a t i o n for the nat ional government is to avoid i n s t i t u t i n g ad hoc p o l i c i e s . The nat ional government must e s t a b l i s h a systemat ic land p o l i c y that e f f e c t i v e l y regulates the I and - property market. 122 Notes 1 The Bureau of C i t y , M in is t ry of Construct ion e d . , 2J. Se ik i no Toshi B i .ion ( V i s i o n of a C i ty in 21st Century) (Tokyo: Gyose i , 1981), p. 3. 2 In 1985, the percentage of the e l d e r l y populat ion (over 65 years o ld) in Japan was 10.3 percent . It is expected that t h i s w i l l increase to 11.9 percent by 1990, and to 16.3 percent by the year 2000. Asahi Shinbun (Asahi Newspaper: Tokyo) , 12 June 1988. 3 It is argued that p u b l i c housing (houses b u i l t and ope-rated by a local government or a pub l ic corpora t ion) for use of low-income bracket households helps maintain the p r i ces of p r i v a t e l y b u i l t houses at an appropr iate l e v e l . However, the general rent s u b s i d i e s f o r low-income bracket households are not provided in Japan. The Bureau of C i ty P lanning , the Tokyo Metropol i tan Government, Tokyo no Toshi Zukuri (P1anni ng of  Tokyo) (Tokyo: Tokyo Metropol i tan Government, 1985), p. 55. 4 "Gardeners Not Farmers," Business Tokyo, November 1987, pp. 46-47. 123 B i bIi ography Abrams, C h a r l e s . Toshi Vogo ,| i ten CThe Language of C i t i e s : A  Glossary of Terms) . Trans. Shigeru Ito. Tokyo: Kajima Press , 1979. Asahi Shinbun CAsahi Newspaper: Tokyo) . 30 September 1987. Asahi Shinbun CAsahi Newspaper) . 1 October 1987. 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J u r i s t , March 1984, pp. 100-108. Hiramoto, Kazuo. Tokyo Korekara Konaru (Tokyo 's Future) . Kyoto: PHP Research I n s t i t u t e , 1988. Honma, Y o s h i t o . Gendai Toshi Jutaku Seisaku (Today 's Urban Hous i ng Pol i cy) . Tokyo: Sanshodo Inc . , 1983. Ish ida , Y o r i f u s a . Nihon Kindai Toshi Keikaku no Hyakunen (100 Years of Modern C i ty Planning in Japan) . Tokyo: J i c h i t a i Kenkyu-sha Inc . , 1987. Iwami, Ryotaro. "The Questions and C r i t i c a l Opinions of Land Deal ings R e g u l a t i o n . " The Toshi Mondai (Munic ipal Problems) , May 1988, pp. 15-27. Iwata, Kikuo. Tochi Kaikaku no Kihon Senryaku (Proposa ls for Land Reform) . Tokyo: Nihon Keizai Shinbun-sha, 1988. "Japan Rushes into U.S. Real E s t a t e . " Tokyo Business Today, May 1987, pp. 14-19. K a j i , H i d e k i . , et a l . Gendai Toshi Keikaku Yogoroku (Technica l Terms of Current C i t y Planning) . Tokyo: Shokokusha Inc. , 1986. Kanakura, Tadayoshi . 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Tokyo: Yukikaku Sensho, 1978. Nakamura, K o j i r o . "Sengo Kokudo Seisaku no Hensen to Yonzenso" C "The T r a n s i t i o n of National Land Po l i cy in Post-war Japan and the 4th Comprehensive National Development Plan" ) The Toshi Mondai CMunicipal Problems) , December 1987, pp. 3-22. Namekawa, Masashi . Chika /Tochi Mondai no K e i z a i g a k u - - J u y o ,  Kyokyu, Taisaku CEconomics of Land Pr ice and Land Issue:  Demand, Supply , Countermeasure) . Tokyo: Toyo Keizai Sh inpo-sha , 1988. Nihon Hoso Shuppan Kyokai CJapan Broadcast ing Publ ish ing Asso-126 c i a t i o n ) . Tochi wa Dareno Monoka CTo Whom Land Belongs?!) . Tokyo: Nihon Hoso Shuppan Kyokai , 1987. N i hon Ke i za i Sh i nbun CNihon Keizai Newspaper: Tokyo) . 10 Sep-tember 1987. N i hon Ke i za i Sh i nbun CNihon Keizai Newspaper) . 4 October 1987. N i hon Ke i za i Sh i nbun CNihon Keizai Newspaper) . 8 October 1987. Nihon Keiza i Shinbun CNihon Keizai Newspaper) . 5 March 1988. 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"Tochi Z e i s e i - - K e i z a i t e k i Sokumen" C "Land Taxat ion : Economic Aspects" ) . J u r i s t , March 1984, pp. 209-215. Okubo, Masakazu. , ed. Chika to Toshi Keikaku- -Kaihatsu Rieki  no J i t t a i to sono Shakai Kangen CLand Pr ice and C i ty  P lann ing: The Actual Condi t ion of Development P r o f i t and  i t s Soc ia l Return) . Kyoto: Gakugei Shuppan-sha Inc . , 1983. Organizat ion for economic Do-operat ion and Development. Urban P o l i c i e s in Japan. P a r i s : OECD, 1986. O t a n i , Sach io . Toshi ni to t te Tochi towa Nanika CThe Meaning of Land for a C i t y ) . Tokyo: Chikuma Shobo Inc . , 1988. S a i t o , Masamitus. "Kanshi Ku i k i no Genjyo to Mondaiten" C "The Current State and Problems of the System of Land Pr ice Monitor ing Area" ) . Fudosan Journal CThe Real Estate Journal ) , October 1988, pp. 10-20. Sakamoto, Kusuh iko . , ed. Tochi Kakaku no Sogoteki Kenkyu C Comprehens i ve Study on Land P r i c e ) . Tokyo'. Norin Tokei Kyokai , 1984. 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