Land isn't really viewed as a financial asset that can be sold off to lock in profits or quickly discarded to cut losses, depending on market conditions. It's something you hold on to in good times and bad. I used to think that made sense. After all, most of the archipelago is mountainous. The lion's share of Japan's businesses and 125 million souls are located in the major metropolitan sprawls of Tokyo and Osaka.
Space is at a premium.
Japan's lofty real estate prices must be the simple product of supply and demand, I figured. Japanese economist Kozo Yamamura believes it's just that. The rest is locked up by Japanese corporations, urban farmers, or just sitting idle. One chief reason is that the ruling Liberal Democratic Party, the dominant power in Japanese politics for decades, likes it that way. Its patrons include Japanese banks, big corporations, and farmers, so it has a big vested interest in using Japanese tax policies and land-use rules to keep the nation's real estate market under tight control.