Encouraged by a weaker yen, Hong Kong investors are hunting for Japanese real estate, snapping up luxury second homes on Tokyo’s waterfront and seeking steady rental yields from studio apartments in smaller cities.
International property agents said sales have increased this year as the yen fell to multi-decade lows against the Hong Kong dollar, which has risen alongside the US dollar as the Federal Reserve raised interest rates while the Bank of Japan kept its ultra-easy policy. Expectations for an end to anti-Covid border controls have also led to a recent rise in inquiries, although some clients were buying properties without even seeing them in person, they said.
The trend may provide more tailwind to Japan’s housing market, bolstered in recent years by new developments ahead of the Olympic Games. Prices of new condominiums in Tokyo last year topped a record set in 1990 at the end of Japan’s asset-inflated bubble era. Even with those gains, Tokyo apartments remain cheaper per square meter than those in London, New York and especially Hong Kong -- the world’s least affordable home market.
At Jones Lang LaSalle Inc., inquiries by Hong Kong residents about Japanese properties have jumped as much as 70% from last year, and actual apartment sales are up about 30%.
Recent high-end listings by international brokers include a 1.7 billion yen ($12.5 million) three-bedroom townhouse in expat enclave Hiroo, and a Kengo Kuma-designed penthouse near Meiji Shrine with an infinity pool and tea house, estimated at over 5 billion yen. 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 yen.
Rental yields in Japan can exceed 6% while in Hong Kong they were usually no more than 3%. Yields on prime residences in Singapore and London are also under 3%, 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. 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.