Golf Membership Fees Signal Drop in Tokyo Land: Chart of the Day

A plunge in membership costs at Japan’s three most-expensive golf clubs may portend a further drop in Tokyo land prices this year.

“Commercial real estate and golf memberships are closely related because both require a lot of land and high corporate income,” said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo. “Everybody is hoping that the Tokyo real estate market will bottom out in 2012. When looking at the golf memberships, we don’t seem to have reasons to be too optimistic.”

The CHART OF THE DAY compares an index of commercial land prices in the Tokyo metropolitan area, compiled by the Japan Real Estate Institute, with the average membership price among Japan’s three most-expensive golf clubs. The average joining fees at Koganei Country Club, Tokyo Yomiuri Country Club and Yomiuri Golf Club this year have fallen about 40 percent compared to the full-year average in 2011, according to prices compiled by Nikkei Golf Corp., a Tokyo-based broker for membership trades.

Tokyo’s office vacancy rates increased to a record high of 9.23 percent in April from 9 percent a month earlier, pushing rents to a record low, according to Miki Shoji Co., a closely held office brokerage company. The vacancy rate was also 9.23 percent in January. The commercial property index peaked in early 1991, about a year after average prices for the country clubs reached a record high of 288 million yen ($3.62 million), the data show.

Golf-membership prices soared in Japan during the 1980s bubble economy, then slumped as the country suffered through series of recessions the past two decades. At least 800 golf clubs went bankrupt since 1991, according to Meiji Golf, a Tokyo-based broker. Some of the most expensive clubs in Japan don’t allow memberships for women or foreigners.

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