Japanese land prices rose 8.6% last year, more than nine times faster than in 2005, when a 16-year property slump ended because of a rebound in the world’s second-largest economy.

The average land price jumped to 126,000 yen ($1,063) a square meter, the National Tax Agency said in a report yesterday. In 2005, land prices rose 0.9%. Prices in Tokyo, home to a 10th of Japan’s population, increased for a third year, surging 17% to 570,000 yen a square meter in 2006.

Land prices are recovering after dropping by more than half from their peak in 1991 as Japan’s longest economic expansion since World War II boosts domestic and overseas investment in property. The property recovery broadened, with prices rising or stable for the first time in 15 years in areas outside the three largest regions of Tokyo, Osaka, and Nagoya.

“Japan’s economic growth contributed to the recovery in land prices,” the chief executive officer of Mitsui Fudosan Co., Hiromichi Iwasa, said. “The globalization of real estate investment and securitization resulting in property prices based on profitability.”

Mr. Iwasa is also chairman of the Association of Real Estate Securitization.

The Tokyo, Osaka, and Nagoya regions contain about 47% of Japan’s 127.5 million people. Nineteen cities experienced declining land prices last year, down from 30 in 2005, the tax agency said.

The Ministry of Land, Infrastructure and Transport said in March that overall land prices in Japan rose 0.4% last year, the first increase in 16 years according to the ministry’s calculations.

Japan’s economy probably will outpace America for the first time in 16 years, aided by booming demand in China and India, according to the Organization for Economic Cooperation and Development. The Japanese economy grew at a 3.3% pace in the first quarter, more than five times as fast as America, thanks to exports and spending by consumers and companies.

The most expensive land nationwide was again in the fifth block of a central shopping district in Tokyo, Ginza, where prices soared by a third to 24.9 million yen a square meter. That’s still about a third less than peak prices in 1991.

Morgan Stanley, which has been investing in Japan’s property market for a decade, in April agreed to buy All Nippon Airways Co.’s 13 Japanese hotels for 281.3 billion yen in the country’s largest real estate acquisition. Competition for land and properties in Japan’s capital is prompting investors to find opportunities in other cities.

Land prices for prefectures other than the biggest three metropolitan areas had stopped falling and unchanged at 51,000 yen a square meter.

“Active purchases by developers, funds, and real estate investment trusts partly contributed to stopping the declines in land prices in regional areas,” the chief executive officer at Mitsubishi Estate Co., Keiji Kimura, said.

Midousuji in Osaka experienced the most rapid growth, with prices soaring 40% to 6.96 million yen a square meter. The second-fastest gains came near the western exit of Yokohama station, south of Tokyo, with a 36% advance.

Land prices in Osaka and the surrounding three prefectures gained 8.1% to 161,000 yen a square meter in 2006, compared with a 0.7% in 2005. Land prices in the Osaka prefecture rose 9.6% to 182,000 a square meter.

The Nagoya region had a 9.1% increase in land prices to 108,000 yen a square meter, accelerating from a 2.1% advance in 2005.

Land values calculated by the tax agency are used for inheritance tax and other taxation purposes. A transport ministry survey released in March, the government’s most detailed land price survey, showed nationwide average commercial land prices rose 8.9% in 2006, while average residential land prices gained 2.8%.