HONG KONG -- Japanese real estate brokers are busily courting the growing number of Hong Kong investors looking to tap Japan's property market.
The weaker yen is making Japanese real estate more affordable for overseas investors. At the same time, property prices in Hong Kong have been ballooning amid the inflow of money from investors in mainland China. Moreover, hopes are high that Japanese property prices will continue to rise ahead of the 2020 Tokyo Olympics.
In 2014, the median price of Hong Kong homes was 4.89 million Hong Kong dollars ($642,900), according to U.S. housing research company Demographia. That is roughly 160% higher than prices for properties in Tokyo and Yokohama, just south of the Japanese capital. New condominiums in Hong Kong regularly go for more than HK$6.3 million.
Condominium developer group Daikyo has set up a local unit to provide over-the-counter services in Hong Kong. Daikyo holds seminars and introduces potential investors to properties throughout Japan. The company uses its domestic network to find tenants and collects rents on behalf of owners. It also helps investors looking to sell their properties.
The Hong Kong unit's first offerings are in a condominium in Tokyo's Shinagawa Ward. The price is about 70 million yen ($581,400) to 160 million yen per unit, with an expected return of 3-4% a year. Shinagawa has good access to Haneda Airport, and the Linear Chuo Shinkansen line, which will link Tokyo to Nagoya in 40 minutes, will eventually stop there, making the location even more attractive to overseas investors.
Daikyo aims to receive about 100 orders for the first fiscal year of operations in Hong Kong and 200 to 300 orders a year for the next two to three years. Kazuhiko Kaise, president of Daikyo group real estate broker Daikyo Anabuki Real Estate, said Daikyo will strengthen its foothold in Hong Kong and Taiwan first, given that immediate expansion in mainland China is difficult. He made this comment at a media conference held in Hong Kong.
Tokyu Fudosan Holdings' real estate agency, Tokyu Livable, is planning to offer hotels and office buildings in the Tokyo metropolitan area and elsewhere to investors in Hong Kong through a tie-up with Midland IC&I, a major Hong Kong property agency specializing in industrial and commercial properties. The Japanese company started offering mainly investment condominiums at its Hong Kong representative office, which opened last October, and eventually plans to offer commercial facilities as well.
Hitching a ride
Some Japanese companies have begun offering financial services geared toward foreign investors considering property in Japan.
Shinsei Property Finance, the mortgage loan services arm of Shinsei Bank group, is cooperating with Tokyu Livable to provide real estate loans for Hong Kong-based investors. The loans can be used to finance up to 300 million yen of the purchase of new and used condominiums in Tokyo's 23 wards. Shinsei Property Finance targets slightly less than 10 billion yen in outstanding loans over three years.
In the past, overseas investors often found it difficult to take out mortgage loans for properties in Japan because their local financial services providers did not have the ability to assess the collateral value of such properties. Using its loan program for Hong Kong investors as a starting point, Shinsei Bank aims to expand such services to other Asian regions.