Japan reassesses land for fixed asset tax only once every three years. The next base year is FY2027 (Reiwa 9), and its tax base will be land prices as of January 1, 2026. In the 2026 (Reiwa 8) Land Price Publication released by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) in March, standard commercial sites in hotel clusters rose +13.1% YoY in Shinjuku, +19.3% in Asakusa, +15.9% in Osaka Kita and +35.2% in Hakuba Village. Those increases, however, will not land on FY2027 tax bills one-for-one. Between assessed value and tax sits a buffer called the burden adjustment measure, and how hard it bites depends on where the “burden level” stands today. This article tracks 346 standard commercial sites across 17 major hotel locations from 2020 onward and estimates, per room, three things: where the burden level stands in FY2026, how fast tax starts climbing the staircase after the FY2027 revaluation, and the time lag before price gains after January 2026 reach the tax bill.

Our earlier pieces covered the current level of holding taxes on hotels (per-room fixed asset tax and its drag on NOI yield) and, in “Japan 2027 Property Tax Revaluation: +30% Value, Only +11% Hotel Tax”, how much the 2023–2026 three-year change moves the tax bill. This article covers neither; it is about the timing of when the change arrives. The lag between a land price rise and the tax catching up comes from two layers, the valuation cycle and the burden adjustment, and depending on location it ranges from one year to seven. Read it as input for deciding how much to budget in which year while FY2027 budgets are being drawn up.

The Revaluation Timeline — Land Prices on January 1, 2026 Set FY2027–FY2029

First, the framework, checked against MIC’s primary documents. Assessed values for land and buildings are reviewed in a base year every three years; the latest base year was FY2024 (Reiwa 6) and the next is FY2027 (Reiwa 9). The notice MIC issued ahead of the FY2024 revaluation (Sozeihyo No. 15, May 23, 2022) states the price survey date as “January 1, 2023 (Reiwa 5)” and provides that the market value of standard residential sites be set “at about 70% of published land prices, etc.”, using the 2023 Land Price Publication. Applying that precedent to FY2027, the price survey date would be January 1, 2026, with the 2026 Land Price Publication as the basis. The FY2027 notice itself could not be confirmed at the time of writing, so the final wording of the valuation date awaits MIC’s release.

The key point is that base-year prices are, in principle, held for the following two years (the second and third years). In those hold years values can be changed only when land prices fall: in a September 2021 notice (Sozeihyo No. 44), MIC called for applying a special provision that allows prices to be revised in hold years “where land prices have fallen and the mayor finds that this causes a marked imbalance for fixed asset tax purposes.” There is no revision for rises. In other words, a land price rise that occurs after January 1, 2026, however large, does not enter FY2027–FY2029 assessed values; it is carried over to the next base year, FY2030 (valuation date expected to be January 1, 2029).

Under this structure, the “valuation lag” before a land price rise reaches the tax bill is at least 15 months (a January 2026 price enters tax from April 2027) and can exceed four years (a rise in February 2026 passes through the January 2029 valuation date and enters FY2030). And once the assessed value moves, a second layer, the “taxable base lag” from the burden adjustment measure, is added on top. The next section looks at where that stands today.

Where the Burden Adjustment Stands — FY2026 Burden Levels Estimated at 60–69%

For commercial land (non-residential building sites), the taxable base is not simply the assessed value times the tax rate; it is set in three zones according to the burden level (prior-year taxable base ÷ current-year assessed value). The FY2027 local tax reform requests that MLIT and the Ministry of Economy, Trade and Industry (METI) submitted to MIC summarize the current rule as follows: “where the burden level is 70% or more, 70% of the current-year assessed value; where it is 60% or more but less than 70%, held at the same amount as the prior-year taxable base; where it is less than 60%, the prior-year taxable base plus 5% of the current-year assessed value (capped at 60% and floored at 20% of assessed value)”. They ask for the expiry to be extended by three years from the current March 31, 2027 (Reiwa 9) to March 31, 2030 (Reiwa 12). Whether it is extended will be decided in the FY2027 tax reform outline at the end of 2026, so this article assumes the current rule continues; if the rule changes, the figures change.

Our earlier estimate assumed burden levels had converged at the 70% cap by FY2026. This article drops that assumption: it sets the burden level at 70% in FY2021 (valuation date January 1, 2020) and then tracks it site by site through the FY2024 revaluation and the downward corrections in hold years. The result is below: all 17 areas are below 70% in FY2026, and the two Fukuoka areas, Sapporo, Hakuba and Kutchan have fallen to around 60%.

Fukuoka Hakata is the telling case. Commercial land there rose +41.0% from 2020 to 2023, so right after the FY2024 revaluation the burden level fell to an estimated 49.6% and entered the zone that climbs 5 points a year. Land holding tax per room moved from ¥67,600 in FY2024 to ¥74,200 in FY2026; it is already climbing the staircase without waiting for the FY2027 revaluation. Tenjin follows the same pattern. By contrast, the four Tokyo areas, Kyoto and Naha saw small changes in 2020–2023 and were still in the 66–69% hold zone in FY2026.

Then comes the FY2027 revaluation. In the three years from January 2023 to January 2026, commercial land rose by anywhere from +21.2% in Tokyo Ginza to +134.3% in Hakuba, so the assessed value in the denominator swells everywhere at once. The burden level falls to a median of 46% across the 17 areas, and to 26% in Hakuba Village, the lowest. Every area enters the below-60% zone, where the taxable base builds up by “5% of assessed value” each year. From here, how the tax moves depends not on the rate of increase in assessed value but on “how many steps remain to the 60% cap.”

Land Price Map of 17 Hotel Locations — Where YoY Growth Is Accelerating and Slowing

We look by area at land price levels on the January 1, 2026 valuation date and at how growth accelerated over the three years leading up to it. Circle size on the map is the 2026 published price (commercial land, median of the same sites); color intensity is the YoY change in the 2026 publication.

Twelve areas saw YoY growth widen three years running in the 2024–2026 publications: the four Tokyo areas, both Osaka areas, both Kyoto areas, Naha, Hakuba, Kutchan and Karuizawa (Hakone-Yumoto, measured with survey benchmark sites, also widened). Conversely, Sapporo and the two Fukuoka areas peaked in the 2024 publication and Takayama in 2025, and their gains narrowed heading into 2026. MLIT’s summary likewise notes that commercial land in the 2026 publication accelerated to +9.3% in the Tokyo area and +7.3% in the Osaka area, while the four regional cities (Sapporo, Sendai, Hiroshima, Fukuoka) slowed to +6.4% from +7.4% the year before, consistent with our area measurements.

The July 1 Land Price Survey shows what happened after the valuation date. Six areas saw the 2026 survey’s YoY change exceed the 2026 publication’s, meaning growth kept accelerating after the valuation date: Tokyo Shinjuku, Tokyo Ginza, Tokyo Asakusa, Osaka Kita, Osaka Minami and Karuizawa. The other eleven areas turned to slowing: Tokyo Shibuya, Kyoto Shijo-Kawaramachi, Kyoto Station, Sapporo Susukino, Fukuoka Hakata, Fukuoka Tenjin, Naha Kokusai-dori, Hakuba, Kutchan, Takayama and Hakone-Yumoto. In MLIT’s half-year changes measured at 503 commercial sites common to the publication and the survey, prices rose in the second half (January–July 2026) by +4.5% in the Tokyo area, +3.8% in the Osaka area, +2.3% in the four regional cities and +1.4% elsewhere. As the mechanism in the previous section shows, this half year is not included in FY2027–FY2029 valuations.

The Per-Room Land Holding Tax Staircase — From FY2026 to FY2029

Combining the rules with land prices, we line up the land holding tax per room for a 100-room hotel with 3,850 sqm of floor area (38.5 sqm per room, the same model as in our earlier articles). Site area is backed out by dividing floor area by each area’s median designated FAR; assessed value is 70% of the published price; and the taxable base is updated year by year from the previous section’s burden levels using the burden adjustment rules. The tax rate is 1.7% in total: 1.4% fixed asset tax plus 0.3% city planning tax.

The shapes of the six lines show the differences in lag directly. Fukuoka Hakata has been rising since FY2024, and the FY2027 revaluation only steepens the slope slightly. Asakusa stays flat through FY2026, starts climbing 5 points a year from FY2027 and still has not reached the cap in FY2029. Naha steps up in FY2027, reaches the cap in FY2028 and flattens again. Even with the same “rate of increase in assessed value,” a different starting burden level means a different year when the tax starts rising and a different year when it stops.

The increase ranges from ¥1,400 in Hakuba to ¥63,800 in Shibuya (the smallest among cities is Naha at ¥3,900). In percentage terms Hakuba Village leads at +59%, but per room that is only ¥1,400. With a FAR of 200%, the site area per room is a large 19.2 sqm, but the published price is just ¥40,300/sqm. Shibuya, by contrast, rose +48.1% over three years, a third of Hakuba’s rate, but a published price of ¥4,800,000/sqm combined with a 500% FAR makes it the largest in yen. Regional resorts lead on rates; central Tokyo leads on amounts.

Another takeaway: seven areas have not finished climbing the staircase by FY2029. In Tokyo Asakusa, Osaka Kita, Sapporo Susukino, Fukuoka Hakata, Fukuoka Tenjin, Hakuba and Kutchan, the next revaluation in FY2030 arrives before they reach the cap of 60% of assessed value. At that point the rises from January 2026 to January 2029 land on assessed values all at once, so burden levels fall further and the staircase continues without a break. In the two Fukuoka areas, the staircase that began in FY2024 is still not over in FY2029; if assessed values rise again in the FY2030 revaluation, tax will have risen nine years in a row. Rather than treating the increase on the FY2027 tax bill as final, it is sensible to put it into business plans as a staircase that runs to FY2029 and on beyond FY2030.

When Do Rises After the Valuation Date Take Effect? — Estimating the Carry-Over

So how much tax do rises after the January 2026 valuation date add, and when? We add the half-year gains for January–July 2026 from MLIT’s common-site data (Tokyo area +4.5%, Osaka area +3.8%, four regional cities +2.3%, elsewhere +1.4%) to each area’s 2026 published price and recalculate assessed values. The resulting per-room difference once the taxable base reaches its cap (60% of assessed value) is as follows.

Read the table with care. Converted to tax, the half-year rise looks small at ¥78–¥17,300 per room a year, but that is the flip side of “not a single yen is reflected in FY2027–FY2029.” Rises during 2026 enter assessed values only at the FY2030 revaluation, and in areas that have not finished climbing the FY2027 staircase by then, the new denominator arrives while the 5-point climb is still under way. The total lag before a land price rise is fully reflected in a hotel’s holding tax is the valuation lag (up to just over four years) plus the burden adjustment lag (one to seven years): two to three years in central areas that were in the hold zone, and around seven years at sites like Hakuba Village where prices more than doubled in three years.

Impact on NOI and Yield — The Increase Is 0.08–2.02% of Room NOI

Next we translate the absolute tax amounts into investment-decision units. Room revenue is annualized as each area’s estimated settled ADR (12-month average, October 2025–September 2026) times a full-year occupancy of 82% (an assumption for the estimate); total revenue is set at 1.15 times room revenue, with a GOP margin of 40% and 4% of total revenue deducted for the FF&E reserve, insurance and other items to arrive at NOI. This is the same build as our earlier holding-tax article. We then divide the FY2026→FY2029 increase in land holding tax by NOI, and also by ¥24.25 million, the median acquisition price per room of domestic properties held by seven listed hotel REITs (N=298 properties, ownership master as of October 12, 2026), to get the yield impact.

The share of NOI ranges from 0.08% in Hakuba to 2.02% in Shibuya (the smallest among cities is Naha at 0.31%), and the yield impact stays within 0.006–0.263 pt. Compared with the 0.7 pt yield drag of holding taxes as a whole shown in our earlier article, the part moved by this revaluation is just under 40% of that (0.263 pt) even in Shibuya, the largest, and 0.12 pt or less in the other 16 areas. Converting to value, however, changes the picture. Capitalized at the expected yield for limited-service hotels in the Japan Real Estate Institute’s investor survey, a ¥63,800 annual increase in Shibuya equals ¥1,518,400 of value per room, or about ¥150 million for 100 rooms. Even in Naha Kokusai-dori it is ¥78,700 per room. For an operator who keeps holding, it is a matter of tens of thousands of yen a year; for parties buying or selling from 2027 on, it is an amount built into the taxes and public charges line of an appraisal, and so a point in price negotiations.

This impact can also be offset by revenue growth. For example, Asakusa’s ¥14,300 increase equals 0.33% of annual room revenue per room against an estimated settled ADR of ¥14,500, or about ¥48 of ADR. As our earlier articles showed, ADR’s three-year change has not kept pace with land prices’ three-year change in many locations, but it is worth noting as well that a rate improvement of tens to hundreds of yen per night is enough to absorb the holding-tax staircase.

Sensitivity — How Far Does the Share of NOI Move With Occupancy and GOP Margin?

The share of NOI in the previous table is a base case assuming 82% full-year occupancy and a 40% GOP margin. Because the holding tax increase does not depend on revenue assumptions, the share of NOI moves only with NOI in the denominator. With a downside case (72% full-year occupancy, 35% GOP margin) and an upside case (88%, 45%), six representative areas fall within the ranges below: Shibuya and Kita with the largest shares of NOI, Fukuoka Hakata, Asakusa starting to climb from the hold zone, Naha as the smallest among cities, and Hakuba as the smallest overall. The FF&E reserve, insurance and other items (4% of total revenue) are fixed in all three cases.

NOI = 12-month average estimated settled ADR (October 2025–September 2026) × full-year occupancy × 365 days × 1.15 × (GOP margin − 4%). The base case matches the previous table. Source: MetroEngines Research & Consulting estimates

Bold = this article’s base case. Source: MetroEngines Research & Consulting estimates

Even in the downside case no area reaches 3% of NOI; the largest are Shibuya at 2.67% and Kita at 2.53%. In Shibuya’s two-way table, only two cells exceed 3%, where a 30% GOP margin coincides with full-year occupancy of 76% or less. A 5-point drop in GOP margin (2.35%) has almost the same effect as a 12-point drop in occupancy (2.37%), so resilience to the holding-tax staircase depends more on managing GOP margin than occupancy.

What to Build Into Plans Now — Acquisitions, Rent Reviews and Business Plans

Here we turn the above into practical steps for FY2027 budgets and medium-term plans. This is not bad news to brace against; it is one of the few costs whose “when and how much” can be read in advance, so the smart move is to put it in the plan early.

Finally, one forward-looking point on FY2030. Of the 17 areas in this article, six saw the 2026 survey’s YoY change exceed the 2026 publication’s, meaning growth kept accelerating after the valuation date. In these areas gains will accumulate toward the January 1, 2029 valuation date. Where they overlap with the seven areas in which the next revaluation arrives before the FY2027 staircase is finished, the safe approach is to build medium-term plans assuming unbroken increases from FY2027 through FY2032. In Sapporo and Fukuoka, where growth has turned to slowing, the 5-point rises that have run since FY2024 may ease with the FY2030 revaluation; there, the “end of the staircase” may come into view.

Frequently Asked Questions

Q. If assessed values rise in the FY2027 revaluation, does tax rise at the same rate?
A. No. Commercial land is subject to the burden adjustment measure, and once the burden level falls below 60%, the taxable base is limited to the prior year’s amount plus “5% of assessed value.” In our estimate, even in Hakuba Village, where assessed value rose +134% in three years, FY2029 tax is +59% versus FY2026.

Q. Will the rise in benchmark land prices published in September 2026 be reflected in FY2027 fixed asset tax?
A. No. The FY2027 valuation is based on prices as of January 1, 2026, and in the hold years (FY2028 and FY2029) prices can be revised only when land prices fall. Rises after January 2026 are expected to enter assessed values in FY2030, the next base year.

Q. Will the burden adjustment measure continue beyond FY2027?
A. The current measure expires on March 31, 2027 (Reiwa 9), and MLIT and METI have requested a three-year extension (to March 31, 2030) in their FY2027 local tax reform requests. A decision is expected in the tax reform outline at the end of 2026; this article assumes the current rule continues.

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