Chinese Investors Not Dazzled by Japan’s Property Market

There has been much talk in Japan of a wave of rich Chinese investors buying up luxury condominiums in the Tokyo Bay area, and in response to this supposed demand there has been a mushrooming of Chinese-language real estate investment websites. The apparent aim has been to attract investment from China in the hope of reviving Japan’s real estate market, but so far the response from mainland investors has been lukewarm. The principal foreign investors at present are from Taiwan, reflecting the country’s relatively good relations with Japan, and ethnic Chinese Singaporean buyers who are accustomed to investing internationally. In other words, the fear that mainland Chinese are going to corner the Japanese real estate market has no basis in fact.

Websites Tailored to Chinese Investors

Numerous Chinese-language websites listing Japanese properties have been set up. One such website is SouFun Japan, run by the Tokyo-based Wenzhou Chamber of Commerce in Japan. Wenzhou is a “prefecture-level city” in Zhejiang Province on the southeast coast of China, and home to many private enterprises. There has been criticism in China that investment capital from this area has pushed up real estate prices in the country. Some believe that aim of SouFun Japan is to channel Wenzhou money to a new outlet after increasingly strict real estate regulations introduced by the Chinese government have made it tougher to invest domestically.

Chinese-language website that lists properties available in Japan.

SouFun Japan has a large number of photographs of Japanese properties, giving addresses, prices, the ages of the buildings, and other such standard information for a real estate site. Most of the properties are office buildings or condominiums in Tokyo and Kanagawa Prefecture, although vacation homes in the Nasu Highlands in Tochigi Prefecture and land in Tokyo’s centrally located Minato Ward are also for sale. The asking price for one Tokyo property on the site—a 20-year-old multipurpose building in the Yotsuya neighborhood of Shinjuku Ward—was a cool ¥1.3 billion, but a “sold” notice indicated that it had already found a buyer.

There are countless other Chinese-language real estate websites besides SouFun Japan, including Riben Fangchan Wang, which is based in Taipei, Taiwan, and has offices in Shanghai and Hong Kong; and JChere, which has its head office in Tokyo. There is even a web-design company based in Tokyo’s Asasaka district that specializes in creating Chinese-language real estate websites for its clients, as well as offering them a service to register on China’s leading search engine, Baidu.

Few Mainlanders Buying Japanese Properties

Despite its recent economic slowdown, China continues to enjoy annual growth of more than 7%, leading to high expectations that Chinese money might flow into Japan’s real estate market. This is what led to the unfounded rumors, mentioned earlier, of Chinese investors snatching up luxury buildings in the Tokyo Bay area.

“We have had customers from Taiwan buying units, but still none from mainland China,” says an employee at a real estate firm that sells luxury tower apartments with ocean views in Minato Ward. “The mainland Chinese buying Japanese apartments are generally limited to those who live in Japan or have some kind of connection with the country. I think very few are buying Japanese properties as an investment.” This same opinion was expressed by other real estate agents I spoke to; they told me that they would welcome Chinese investment, but so far it has not materialized.

New York and London More Appealing

Chinese investment in foreign properties has soared over the last few years. According to figures from the Chicago-based property management company Jones Lang LaSalle, Chinese global commercial real estate investment in 2013 rose 124% to $7.6 billion and is expected to reach $10 billion in 2014. However, that money is going to Europe, the United States, and Australia—not Japan.

According to Ōhira Shūichi, the head of SouFun Japan, the reasons for the lukewarm interest in Japanese real estate among Chinese investors include “anti-Japanese sentiment in China, ongoing bilateral tensions surrounding the territorial dispute over the Senkaku Islands (referred to by the Chinese as the “Diaoyu Islands”), and earthquake concerns—plus the fact that the Chinese economy is not as robust as it once was.”

This situation speaks to the fact that Japan needs to put its own economic house in order to become more attractive to investors in China, rather than raising a clamor about how the Chinese are buying up too many properties. 

(Original article in Japanese posted on May 26, 2014)