Severe economic conditions have hurt housing demand, and tighter credit has made it hard for real estate developers to raise money, putting many firms out of business.
Prices of commercial property fell more sharply than for residential property, underlining the impact of the financial crisis. Commercial land prices fell by an average 4.7 percent last year while residential land lost 3.2 percent in value.
Failures among real estate firms and operators of real estate investment trusts (REITs) have been on the rise since last year.
The number of bankruptcies in the real estate sector jumped 24 percent to 575 cases in 2008 from 463 in 2007. The total debt involved rose to 2.08 trillion yen from 1.33 trillion yen, according to Tokyo Shoko Research.