Chinese invest 36b yen in Japanese real estate

Chinese private capital has become a major force in Japan's real estate sector, with investment reaching 36 billion yen (US$304 million) last year, Xinhua reported on Thursday.

Following an active influx of overseas capital, the Japanese real estate market has enjoyed rapid development. International investors, including those from China, have shown keen interest in the sector.

Statistics from an institute on the future of urban areas under Japan's Mizuho Trust & Banking Co., Ltd. show that in 2014, more than US$10 billion in foreign capital poured into the property market, about a fifth of the country's total real estate volume. The focus has been on high-grade properties, particularly in the downtown areas of Tokyo.

The U.S. group Blackstone spent 190 billion yen (US$1.6 billion) last year on more than 5,000 residential buildings in the Japanese capital. China's Fosun Group invested 70 billion yen (US$590 million) in a 25-storey office building located near Shinagawa Station in one of Tokyo's inner city business districts.

Investment funds from the United States, France and Germany also bought office buildings and comprehensive commercial facilities in Tokyo's Shinagawa, Shinjuku and Nakano wards.

An interesting trend is that an increasing numbers of individuals are also actively investing in Japanese property, including many Chinese wealthy people. Japan's Real Estate Institute predicted that in the past year, at least 36 billion yen (US$300 million) of Chinese private capital poured into the real estate market. As a result, many Japanese real estate companies have increased their Chinese-speaking staff.

One of the reasons for the trend is that investors think the real estate market in Japan's large cities has considerable potential for growth.

In recent years, average land prices have declined sharply across the nation, although some areas are beginning to rebound. Last year, prices of commercial and residential land in Tokyo, Nagoya and Osaka started to rise again, with the vacancy rate of office buildings in downtown Tokyo dropping to five percent, and residential housing prices rebounding.

However, the overall price of Japanese real estate is still low. Currently the corresponding prices for most ordinary residential houses in Tokyo are less than or equal to prices in Beijing and Shanghai.

Tokyo will host the 2020 Olympic Games. Investors believe it is likely that Tokyo's real estate will undergo a major revaluation before the event.

In addition, Japan's real estate rental ratio is reasonable, and the property investment return rate is holding steady at 6-8 percent. All these factors have helped stimulate overseas interest.

There are no restrictions on foreign investment in the Japanese real estate sector. In addition, the government has worked hard to increase the liquidity of the market by progressively lowering capital gains, registration and license taxes on real estate.

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