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Japan land prices edge up in 2016 on tourism boom

TOKYO (Reuters) - Demand for land to build hotels and shopping outlets stemming from a boom in tourism helped Japan's nationwide land prices edge up for two consecutive years, a government survey showed.

The overall land prices rose 0.4 percent in 2016 after rising 0.1 percent in 2015, according to the Ministry of Land, Infrastructure, Transport and Tourism.

Commercial land prices rose 1.4 percent last year, up from 0.9 percent the previous year, the ministry said. Residential land prices stayed at flat, after falling for the previous eight years.

"Demand for properties were strong, which helped land prices to improve steadily," said Noritoshi Yasuoka, director of the ministry's Land Price Research Division.

Foreign tourism boom helped demand for hotels and shops, while falling office vacancy rates increased profitability of office buildings, he added.

The number of foreign visitors to Japan rose 21.8 percent to a record 24 million last year, according to the Japan National Tourism Organization. Those travellers visited not just major cities like Tokyo and Osaka but also core regional cities, which helped land prices outside Tokyo and Osaka to rise.

Land prices for four core regional cities - Fukuoka, Hiroshima, Sendai and Sapporo - rose 3.9 percent. Prices in the regions surrounding Japan's three largest cities - Tokyo, Osaka and Nagoya - rose 1.1 percent.

Land prices for overall regional cities fell 0.3 percent in 2016, a slower fall than in 2015 but still marking 25 consecutive years of decline.

The top five biggest rises in commercial land prices were all in Osaka's shopping districts, which are popular among foreign tourists.

Of the top 10 biggest increases in residential land prices, seven spots were in Sendai city in Miyagi prefecture in northern Japan where a new subway system opened in 2015.

The ministry surveyed 26,000 locations nationwide.

(Reporting by Junko Fujita; Editing by Simon Cameron-Moore)