The Secondary Capital Act was enacted by the House of Councillors on 24 July, and expectations of rising land prices are spreading among local governments and in the capital markets. This article presents, based on the facts, the situation in which land prices are expected to move depending on whether areas receive secondary-capital designation, as well as the possibility that they could become the “next target” of unscrupulous sales schemes.
The Secondary Capital Act was enacted on 24 July by a margin of just 2 votes in the House of Councillors. Following the law's enactment, several local governments, including Aichi Prefecture, Fukuoka and Hokkaido, have put themselves forward as candidate areas, prompting growing expectations of benefits such as tax incentives, deregulation and the relocation of institutions. As a result, some investor media outlets have been hyping the view that land prices will rise in the real estate market.
At the same time, history shows that regional land markets have repeatedly formed bubbles whenever the national government advocated restructuring the country's land framework, and that speculation became active even where there was little legal basis for it. The 1972 Plan for the Remodeling of the Japanese Archipelago is cited as a case in which land prices soared and speculation expanded in regional areas.
Testimony from an adviser to a long-established real estate company cites typical examples of wilderness-land scams, including the sale of virtually worthless land on the claim that prices were certain to rise, as well as secondary damage that later occurred under the pretext of explaining development plans. 9 in 10 contract holders are said to be aged 60 or older, prompting calls to look back at history for lessons relevant to the present.
It has been suggested that secondary-capital designation could become the next bait used in unscrupulous sales schemes, underscoring the need for warnings informed by history.