Hong Kong’s rich seeking steady returns shop for Japanese real estate

Hong Kong’s rich seeking steady returns shop for Japanese real estate

Roger Pettingell Sarasota Real Estate

At Jones Lang LaSalle, inquiries by Hong Kong residents about Japanese properties have jumped as much as 70 per cent from last year, and actual apartment sales are up about 30 per cent.

Recent high-end listings by international brokers include a ¥1.7 billion ($18.2 million) three-bedroom townhouse in the expatriate enclave Hiroo, and a Kengo Kuma-designed penthouse near Meiji Shrine with an infinity pool and tea house, estimated at more than ¥5 billion.

In the more moderate price range, Japan Hana is offering one- to three-bedroom apartments in Tokyo’s waterfront Shibaura district, some with views of Rainbow Bridge and priced from ¥64 million.

Mr Lam said many of his customers were searching for second homes in Tokyo and Osaka, as well as in Kyoto and Fukuoka, cities popular with tourists and known as top-class culinary destinations. Some were also interested in ski resorts in the northern prefecture of Hokkaido, he added.

Hong Kong investors are buying apartments with views over Tokyo’s Rainbow Bridge. 

While some sellers are wooing wealthy investors with package tours involving helicopter rides and champagne, brokers said most buyers are seeking lower-key deals, with many opting for small and older apartments that can be purchased in cash.

Advertisement

Mandy Wong, head of international residential for Asia-Pacific at Jones Lang LaSalle, described prospective buyers as wealthy individuals accustomed to investing overseas and buying properties mainly for long-term rental returns.

Grace Lau, a bank employee in her 30s and living in Hong Kong, is one such investor. Having purchased two apartments in Fukuoka last year, she bought an 18.6 square metre studio in June for $HK300,000 ($55,558) after seeing the yen tumble. She said her latest purchase was almost 20 per cent less than what she previously paid for a similar room, and that she might buy more if the yen kept falling.

“There’s no gain if you park your money at the bank,” she said. “But with this, I get a 5 per cent yield.”

Sam Wu, a Hong Kong restaurant owner in his 40s, said he saw Japan as a relatively safe market compared with Hong Kong. He and his wife bought a shop for HK$4 million near Shinsaibashi, Osaka’s landmark shopping district, about six months ago.

“Hong Kong’s property market seems shaky, with so many people leaving, so I wanted to look elsewhere,” he said, adding that they encountered fierce competition from other bidders. Mr Wu already owned three properties in Japan and visited the country frequently before the pandemic, so he felt comfortable making his latest purchase with just a virtual inspection using online street views.

A group of people on the rooftop of an apartment building for a barbecue during Japan’s Golden Week. AP

Advertisement

He said rental yields in Japan could exceed 6 per cent while in Hong Kong they were usually no more than 3 per cent. Yields on prime residences in Singapore and London are also less than 3 per cent, according to Jones Lang LaSalle.

However, some point out the risks for Japan’s market, including a shrinking local population and a tendency for the value of buildings to depreciate quickly.

Shun Ogishima, a researcher at Sumitomo Mitsui Trust Research Institute, also said the pandemic had changed people’s lifestyles and preferences, trends which may be difficult for foreign investors to assess.

“We have seen a shift from the city centre to the suburbs, and higher demand for bigger properties. It’s difficult to read what demand will be like after Covid,” he said. “It’s risky for foreign retail investors who are unfamiliar with the local area and unable to visit the properties before buying.”

Advertisement

Still, Hong Kongers see opportunities in a housing market that has no special restrictions on foreign buying, or additional taxes for non-residents, even if few of them qualify for Japan’s super-low mortgage rates.

And once border controls are loosened at both ends, brokerages expect investment in Japanese real estate to pick up even more.

“Japan is so close to Hong Kong that if people want to buy, more often than not they will visit,” said Mark Elliott, head of international residential at Savills.

Bloomberg


Leave a Reply

Your email address will not be published.