Anyone visiting the Bank of Japan these days cannot miss the construction site across the street that takes up a whole city block, part of a renaissance in real estate development that is sweeping the country.

Offices, apartments and hotels are popping up in major cities across Japan as the BOJ's quantitative easing and negative interest rates push bank lending to real estate developers to an all-time high.

Many developers and analysts expect the construction boom, and its economic benefits, to continue ahead of 2020 Tokyo Olympics - a welcome and very visible sign of success for the BOJ.

"Rates are low, so it is easy to borrow money," said Mitsutoshi Tenda, a spokesman at Mitsui Fudosan Co, which is building the 26-floor office and retail complex next to the BOJ. "For the next five years, office development is likely to be higher than average."

Real estate lending began its revival after the BOJ started quantitative easing in early 2013. It gathered pace after the central bank's shock introduction of negative interest rates in January, which has crushed earnings and sent banks hunting for higher returns.

Domestic bank lending to the real estate sector rose 6.5 percent to 67.7 trillion yen ($665 billion) in the first quarter, the highest on record, according to BOJ data. The sector accounted for 14.5 percent of all domestic bank lending, the highest in five-and-a-half years.

Activity in the real estate sector is one bright spot in an otherwise disappointing assessment of Abe's economic policies, known as "Abenomics."

Abe swept to office in late 2012 with a bold pledge to end 15 years of deflation and malaise with quantitative easing, fiscal spending and structural reforms.

Almost four years on, his structural reforms have not proved radical enough to overcome a shrinking population or revive flagging productivity. Capital expenditure remains subdued, exports are weak and wage growth is too slow to generate inflation needed to meet the BOJ's 2 percent price target.

OLYMPICS BOOST

Tourism-related spending is driving much of the recent activity.

Nationwide, construction of hotels and restaurants, measured by square metres, surged 93.6 percent in June from a year ago, the biggest increase in more than two years, land ministry data show.

The number of tourists visiting Japan is already at a record high after an easing of visa requirements. With Tokyo preparing to welcome visitors for the Olympics and rural areas also attracting more visitors, Japan could face a national shortage of around 41,000 hotel rooms by 2020, according to Mizuho Research Institute.

Prime Minister Shinzo Abe has made it clear that public works investment, including hotels and infrastructure for tourists, is the centrepiece of his next stimulus package.

But other property types are also seeing growth.

Office space in central Tokyo rose 1.7 percent in June from a year ago, the fastest gain since April 2013, data from office broker and research firm Miki Shoji Co show.

In another welcome sign, growth has not been restricted to Tokyo alone. In central Nagoya, office space in June rose at the fastest annual pace in almost seven years, even if the market has been more subdued in Osaka, Miki Shoji data show.

And although residential housing starts fell in June for the first time in six months, the number of units is still at the highest level in a year, according to land ministry figures.

"Land prices have been rising and we feel recent activity in the real estate market is in line with recent economic growth," said Takafumi Miyamoto, a public relations manager at Bank of Tokyo-Mitsubishi UFJ, a unit of Japan's largest lender.

ECONOMIC BENEFITS

The economic benefits are considerable.

The real estate and construction industries combined accounted for almost 18 percent of gross domestic product in 2014, the most recent year Cabinet Office data are available.

The two sectors employ 10 percent of the workforce and have been advertising to hire more workers since late last year. More jobs means more consumption, not to mention the extra spending associated with moving into a new office or apartment.

The rise in activity has also begun feeding into wages.

Wages for workers in property and leasing rose 7.3 percent in May from the same period a year ago, the fastest gain in two years, according to labour ministry data.

While wages in the construction sector fell an annual 1.4 percent in the same month, economists say a chronic shortage of construction workers should boost wages soon.

Still, for those who harbour memories of Japan's 1980s property bubble, the question inevitably arises whether history is repeating itself. There are signs that office and residential supply has overshot demand in certain areas and some analysts believe the boom may not be sustainable.

"Total monthly lending is slowing down, so upcoming data on real estate lending will probably slow down," said Yoji Otani, senior analyst at Deutsche Securities.

One concern was that Japan's declining workforce means the replacement of older office buildings with shiny new ones has already exceeded demand, Otani said.

Yet, last year nationwide land prices rose a mere 0.2 percent, according to the National Tax Agency, while commercial land prices rose 0.9 percent, land ministry data show. Both were the first gains in eight years - hardly the stuff of bubbles.

"The negative interest rate policy is a benefit, but this is not like the bubble economy of the '80s and '90s when buildings were built regardless of demand," Mitsui Fudosan's Tenda said. "We are starting new projects in response to demand. We are not borrowing money and building things just because rates are low.