TOKYO -- Diamonds squirreled away in Japanese homes for decades are finding new life from overseas buyers.
Foreigners are flocking to the country's largest jewelry district in search of jewels snapped up around the world during Japan's bubble economy of the 1980s.
This "bubble heritage" is now finding its way back to the market as the owners age and reorganize their assets, allowing the diamonds that had long been stored away in dresser drawers to flow to emerging economies such as China and India.
"From 600,000 yen," says the auctioneer opening the bidding on a brilliant 2.5-carat diamond ring. Seats were filled with buyers chatting among themselves in Chinese and Hindi.
Competition was intense right at the hammer. "700,000 yen!" "750,000 yen!" The price jumped every few seconds. Finally, a foreign buyer shouted "860,000 yen!" An audible sigh leaked from would-be buyers who had lost out in the bidding.
Close to 1,000 dealers tussled in the building in Okachimachi, Tokyo -- the city's famed jewelry district. The October auction was co-sponsored by two local companies, Apre and Daiya, and was marked by intense competition.
Foreign traders now dominate the Japanese diamond market. According to Apre, of the 80 vendors who participate regularly in the auctions, about 40% are foreign -- nearly double the figure a year earlier.
Indian and Chinese traders are prominent. "An existing diamond that has been auctioned off is brought to India for polishing and reprocessing," said a buyer who represents an Indian-owned wholesaler.
This is the way diamonds that once came to Japan are now finding their way across the world. In addition to China and Dubai in the Middle East, "demand is also increasing in Southeast Asia and Israel, where the affluent population has increased with economic growth," says a diamond trading company official.
According to trade statistics, Japan's diamond exports reached a record high of about 8.5 billion yen ($78 million at today's rates) in 2015. Although the figure dropped to 7.2 billion yen in 2018, that was still three times higher than 10 years ago. There is scant production of new diamonds in Japan, so this is almost all existing stones.
The top export destination in terms of value is Hong Kong, which is a relay point for global sales. China is second, followed by Israel. Imports continued to decline after peaking at about 370 billion yen in 1990 during the bubble period. Although they have increased slightly since 2009 after the Lehman shock, imports came to about 94 billion yen in 2018, a level far from the heyday.
Why are Japanese existing diamonds attracting so much attention? "This is because many luxury products imported during the bubble period are asleep in the home," explains Apre President Atsuyuki Kikuchi. A Chinese buyer says that "diamonds bought in the bubble period have better quality and cost less than in any other country."
The classic diamond wedding ring was long a coveted item in Japan. During the bubble economy of the 1980s, demand for the rings took off. Jewelry worth hundreds of billions of dollars was sold to the country during this time, industry observers say, and diamonds made up much of this.
After the bubble economy collapsed so did the amount of diamond transactions. Many diamonds were forgotten and languished in drawers, but recently they have been finding their way to market as their owners age and pass away.
"The number of people who have come in to sell diamonds that they have inherited or were gifted has increased in the last four or five years," according to a consultant on deals involving such assets.
"There are more young people who would rather do things like travel than own precious jewelry," says an appraiser at a jewelry sales and purchase store. "This change in mindset means more diamonds are hitting the market."
This transfer of diamonds from Japan to emerging countries lines up with the forces driving the global economy. And more of these precious stones will likely find new luster overseas.