When Does Tourism Raise Land Prices? Threshold Effects, Superstar Cities, and Policy Lessons from Japan

2025-09-04

AI Summary

This study investigates the conditions and spatial heterogeneity underlying tourism-driven land price inflation. Using annual panel data from 1,724 Japanese municipalities, we employ panel threshold regression and mediation analysis to identify a nonlinear relationship: tourism significantly raises land prices only in municipalities where annual tourist volume ranks within the top 5.9%—termed “super-cities”—while effects are statistically insignificant elsewhere. To our knowledge, this is the first empirical identification of a critical tourism threshold for land price appreciation, revealing pronounced spatial inequality in its geographic distribution. Mediation analysis further shows that while residents benefit from asset appreciation, they simultaneously bear rising living costs. Our findings provide rigorous empirical evidence and precise policy levers for optimizing the distribution of tourism dividends and advancing inclusive regional development.

Technology Category

• Search and Optimization: Distributed Search
• Planning, Routing, and Scheduling: Optimization of Spatio-temporal Systems
• Knowledge Representation and Reasoning: Geometric, Spatial, and Temporal Reasoning

Application Category

• Economics, Online Markets and Human Computation: The sharing economy
• Search and Retrieval-Augmented AI: Efficiency and scalability of Web search engines
• Web Mining and Content Analysis: Content-based information diffusion

Abstract

While tourism is widely regarded as a catalyst for economic and urban transformation, its effects on land prices remain contested. This study examines tourism and land prices using a panel of 1,724 Japanese municipalities from 2021 to 2024, with annual tourist arrivals as a proxy for tourism activity. Using mediation analysis and panel threshold regression, we show that sizable land price increases are concentrated in a small group of "superstar" cities, specifically those in the top 5.9 percent for tourist arrivals, while most municipalities experience little or no effect. The results highlight pronounced nonlinearities and spatial heterogeneity in tourism's economic impact across Japan. The potential mechanisms linking tourism to land price growth are mixed, with possible benefits for local residents as well as risks of increased burdens. These findings underscore the need for policies that promote inclusive growth and an equitable distribution of tourism-related gains.

Problem

• Tourism's impact on land prices remains contested
• Land price increases concentrate in top tourist cities
• Policies needed for equitable tourism gains distribution

Innovation

• Panel threshold regression analysis
• Mediation analysis with tourist data
• Identified nonlinear spatial heterogeneity effects