China's property slump drives Hong Kong investors to Japan, aided by yen weakness
Global investors, including those based in Hong Kong, are channelling their funds into Japan's residential property market as returns from assets in mainland China sag in the midst of a four-year slump, according to market consultants.
They ploughed in US$11.2 billion of capital into Japanese real estate in the first quarter, or 6 per cent above the five-year average, according to data compiled by Colliers, making it the fifth largest recipient globally. Investors from the US, Singapore and Hong Kong were the top three contributors to the inflows, it said.
Even investors from mainland China are looking east: they poured US$1 billion into Japanese real estate in the same period, more than double the five-year average of US$428 million. In the residential sector, local and foreign funds spent US$1.2 billion in the first quarter, a 16 per cent increase from a year earlier, according to JLL.
'Hong Kong investors have traditionally focused on China, but the collapse of the Chinese real estate market has redirected capital flows towards more stable markets such as Japan and Australia,' said Masahiro Tanikawa, head of investment services at Colliers Japan. Both countries 'offer a deep and liquid multifamily investment market – one of the largest in the Asia-Pacific region', he added.
Investors are turning away from mainland China, where a debt crunch has persisted since 2020 and new home prices have slumped for 24 consecutive months. The pivot coincided with the slide in the Japanese currency, which bolsters the appeal of local assets to foreign funds.
02:28
Japan to release emergency rice stocks as prices soar
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The yen has weakened about 1 per cent against the US dollar over the past month, taking its cumulative depreciation to 9 per cent over the past 12 months. Inflation was 4 per cent in January, a two-year high, before easing to 3.5 per cent last month.
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