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News Release

A Fundamental Review of City Formation Policy
- The need to use national territory in a manner that prepares for population decline -

March 25, 2009

Overview

Owing to population decline, the falling numbers of households, the decline of local industry and the current economic crisis, which is affecting the manufacturing base, among other factors, the decline of regional economies is set to accelerate. In the core cities that have traditionally led the regional economies, urban sprawl is increasing, with the result that economic efficiency and the convenience of life in those cities is declining. Inefficient public investment spread across sprawling cities increases the fiscal burden, and the level of welfare of local residents is falling. This report clarifies the issues facing provincial cities in terms of land utilization, identifies problems with the City Planning Act, which relates to the design of cities, etc., and other legislation, and proposes directions for a fundamental review.

The demand for land is falling as Japan's population declines and, if land continues to be used in the way it is at present, it is likely that the supply of land will continue to grow unchecked and that the excessive stock of land will rise. By type of land use, the trends are as follows.

Residential land

In the provinces, the decline in population and the number of households is progressing faster than is generally imagined, and it is likely that a decline in demand for residential land will gradually become apparent. Meanwhile, owing to the conversion of agricultural land to other uses, among other factors, the supply pressure of residential land supply in the suburbs remains high and there is now a constant over-supply of residential land. As indicated by the fact that the difference in the price of residential land in city centers and in the suburbs has become smaller, the demand for residential land is higher in the suburbs. Meanwhile, population aging in city centers is advancing and this, together with the difficulty in improving local living conditions, is resulting in a growing number of empty houses and vacant plots of land, dotted around here and there, so that the attraction of city centers as residential areas is falling still further.

Commercial land

In the central shopping districts of core cities in the provinces, stores are experiencing a long-term decline in the size of their trading zones and the main commercial activity is gradually shifting to shopping centers and other developments in the suburbs. Efforts to create more compact cities include initiatives aimed at revitalizing shopping streets, but it is not easy to restore former trading zones and or to restore entire areas to their former liveliness.

Industrial land

With the structure of industry shifting from manufacturing to services, small and medium enterprises pulling out of markets or closing down and factories being transferred overseas or concentrated in certain regions, a surplus of land has arisen in industrial zones and light-industrial zones. Although relaxed development regulations encourage redevelopment of former office and factory sites, there is a danger that they will be subject to undisciplined development.

One of the reasons that provincial cities have been unable to meet the challenge of population decline and a changing industrial structure and are facing an over-supply of land is that the basic principles underlying Japan's existing city formation policy are badly out of tune with the needs of the age: town planning systems and agricultural land-related legislation are strongly development-orientated and are failing to control the use of agricultural land for other purposes. If the use of land is to reflect changing socio-economic conditions, these basic principles must be revised.

Setting out a grand design for provincial cities to meet the needs of the new age that curbed new development in the suburbs and concentrated investment in core cities would help to bring public and commercial facilities back into city centers and, although mixing the use of land, would revitalize them and increase their attraction. Strengthening the networks linking the core city with peripheral settlements would achieve both efficiency and sustainability of the entire region.

If cities are to be constructed according to a grand design of the kind described above, Japan will need to make major changes in its city formation policy, including (i) establishing a unified system of legislation relating to urban land use, (ii) developing a sustainable city concept that would progressively curb development the further one moved into the suburbs and (iii) shifting from a zoning-type approach to city formation to a mosaic-type model that would positively accept mixed use of land in cities. In conjunction with the establishment of this new legislation, public facilities must be brought back into city centers and housing policy must emphasize rented accommodation. These are the basic measures required for the reform of legislation relating to the use of national territory with a view to curbing new development in the suburbs (including the development on agricultural land) and bringing investment back into city centers.

In provincial areas, the decline in the number of households and the current economic crisis should be taken as an opportunity to create a new strategy for growth which, rather than relying on central government policy measures, would seek to enhance economic efficiency and the convenience of life in cities and leverage these to generate growth in the local community. To support these provincial initiatives, the government should set about a fundamental reform of land use-related legislation without delay.

For more information on the content of this report, please contact Takumi Fujinami, the Japan Research Institute, Limited.

Tel: 03-3288-4524
E-mail:fujinami.takumi@jri.co.jp

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