Could Tokyo Be the Next Target for Chinese Home Buyers?

Chinese visits to Japan have more than doubled in the last year, and many of these mainland tourists seem so impressed with their neighbor to the east that they are deciding to buy homes in Tokyo and other major cities.

Sales of Japanese housing to Chinese buyers are said to have risen 70 percent year on year during the first quarter of 2015, as Tokyo and Osaka join Sydney, London and San Francisco as targets for China’s newly wealthy.

With Japan’s currency having lost as much as 24 percent of its value against the Chinese yuan in the last year, and with China’s domestic housing and equities markets looking less appealing, real estate investors and brokers in Japan are getting ready to welcome an invasion of mainland home buyers.

Come See the Temples, Then Buy a House

While visits to Japan have been on the rise in general, trips by tourists from China reached 405,800 in April, nearly 23 percent of total visitors. The visit by mainland tourist were a 113 percent increase from the same month in 2014, as more visitors from Shanghai, Beijing and Guangzhou came over to see the sights in Tokyo, Kyoto and Nara.

Although an advantageous exchange rate is part of the reason for the rising travel trade from the mainland, the boom is also being driven by Chinese consumers looking for new ways to spend their cash. And for many visitors from China, after touring Japan’s temples and stores their attention often turns to hunting for bargain apartments.

For every 100 new apartments sold in Japan, as much as 10 to 15 percent of these sales are to foreigners from mainland China, Taiwan and other parts of Asia, according to an account in Bloomberg.

The boom in sales of homes to Chinese buyers echoes a trend that has been experienced in housing markets in Australia, the US and the UK. A study released last month by the National Association of Realtors in the US found that in the year ending March 30th, sales of US homes to Chinese buyers climbed by $6.6 billion compared to a year earlier, to total $28.6 billion.

And real estate agencies are keen to help bring more of these Chinese buyers to Japan.

Housing brokers in Bejing are already organising fortnightly home buying tours of Tokyo and Osaka, and China’s largest real estate website Soufun, has already set up a platform for marketing Japanese homes in Mandarin to mainland buyers.

Housing Market Following the Commercial Market?

The rising attention that Chinese retail buyers are paying to the Japanese market appears to be mirrored by big acquisitions of commercial real estate assets by corporate and institutional investors.

Despite Japan’s aging population and decades of economic stagnation, the real estate markets in Tokyo and other major cities have enjoyed a renaissance in the last few years as commercial investors take advantage of high rents and low interest rates.

In February of this year, Chinese sovereign wealth fund CIC teamed up with LaSalle Investment Management from the US to invest RMB 140 billion ($1.2 billion) to acquire the Meguro Gajoen commercial complex in Tokyo.

China’s biggest private investor, Fosun, has also been active in Japan, acquiring two office buildings in Tokyo after buying out property investment company IDERA Capital Management.