Mainlanders ride to the rescue in Tokyo

HONG KONG: China-based buyers have become a new source of hope for Japan's weak property market.

"We are finding that more mainlanders are coming to Japan to buy residential property than there were last year," said Shirley Yan, Chinese market manager at Tokyo-based Housing Japan, a property agency targeting overseas buyers.

Responding to the trend, the agency recently established a Chinese website to target mainland buyers and also will be part of the Beijing Overseas Property and Luxury Show this week. It also will organise home-buying tours to Japan.

Sumitomo Realty and Development, one of the largest developers in Japan, also has set up Chinese websites for its residential projects, and property consultant Jones Lang LaSalle Japan echoed the view that the influx of China buyers into Japan had shown further growth.

"The surge in real estate demand from China was followed by tightening measures on investment by the Chinese government and that helped to prompt investors to look outside their country to invest their money," Takeshi Akagi, head of research and advisory at Jones Lang LaSalle Japan, said.

The Japanese property market, which has been at the bottom of a market cycle, had become an attractive option, Akagi said.

"With its stability, transparency and the depth of the market, Japan emerged as a safe and attractive investment destination for mainland investors," he said.

Yan added that helping this trend was the fact that property prices in Japan had fallen to attractive valuations.

"A property worth about 2 billion yen (RM72.5 million) in 1997 is now priced about 200 million yen only. Prices of more expensive properties dropped the most in the downward cycle," she said.

Since the downturn in Tokyo, a mid-priced, 1,076-square-foot flat can be bought for about 100 million yen (HK$8,661 per square foot) on the secondary market. A similar flat in new luxury residential buildings would cost about 200 million yen.

"Property prices are even cheaper than many high-end residential flats in first-tier mainland cities and Hong Kong. They are therefore very attractive to mainlanders," Yan said.

Buyers can also earn rental yields of between 5% and 10% from investment in a Tokyo property.

"The leasing market in Tokyo is very active. There is strong demand from multinational companies and buyers can break even in 15 to 20 years," Yan said.

While the agency has received more inquiries from mainlanders this year, offshore buying interest remains stronger from Taiwan, Hong Kong, Singapore, Australia, the United States and Europe.

However, Yan believes Chinese interest is on the rise and will increase substantially.

She said there were two types of Chinese buyers in the market; those looking for flats in Tokyo for investment and those targeting properties in regions such as Hokkaido, in the country's north. "Some of the scenes in a popular Chinese film If you are the one were shot on Hokkaido two years ago. The film attracted the attention of mainlanders to the region, and some bought properties for holiday homes," she said.

The outlook for the Japanese property market remains a concern to some investors after prices fell steeply in the fallout from the Asian financial crisis in 1997.

"The economy has not yet recovered after the global financial crisis and many sellers have cut asking prices to sell their flats in the past few years," Yan said. "But the market has stabilised and we are now seeing property prices rebounding."

The surge in the value of the yen is another concern. "It may make them adopt a wait-and-see attitude to the property market," she added.

Akagi said he believed the residential market in Tokyo had bottomed out and property was shifting into a recovery mode. He expects the improvement in the residential market to continue next year. -- South China Morning Post