Hongkongers once again find Japanese real estate attractive as a weaker yen gives more bang for their buck

·3-min read

Hongkongers are returning to the Japanese property market after a two-year absence, taking advantage of a weakening yen, which is at a 20-year low against the US dollar.

“Inquiries for Japanese homes from Hongkongers have surged by up to 40 per cent this month,” said Anvy Cheung, chief executive of Sakura Global, which specialises in Japanese property. “In the past two years, most of them just stayed on the sidelines, adopting a wait-and-see approach [due to the pandemic].”

Most of the clients are looking for homes in Japan for investment or for holiday use, with budgets ranging from HK$1.5 million (US$192,000) to HK$2 million, she added.

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The Japanese yen, which has fallen 12 per cent since January, may continue to weaken against the US dollar amid expectations the Bank of Japan will lag its peers such as the US Federal Reserve in normalising monetary policy.

The Japanese yen has lost 12 per cent of its value against the US dollar this year. Photo: Bloomberg
The Japanese yen has lost 12 per cent of its value against the US dollar this year. Photo: Bloomberg

As the Hong Kong dollar is pegged to the US currency, the yen’s steep devaluation makes property investment more attractive to investors from the city. The easing of travel regulations, which were introduced at the start of the pandemic two years ago, has also boosted investors’ confidence.

Polly Lo, a veteran investor in Japan, is now looking for a residential unit for her 28-year-old daughter, who has saved about HK$600,000. Lo reckons it is enough to buy a studio flat of about 200 sq ft in Tokyo or a slightly bigger unit in Osaka.

She said that investing in Japanese property was a better option than parking money in Hong Kong banks, where the returns on time deposits do not amount to much.

“Besides, Japanese real estate is a better alternative now given the yen’s sharp fall and prospects of annual rental returns of as high as 4 per cent,” Lo said, who owns a shop in Osaka that brings her about HK$8,000 per month.

Hong Kong investors drawn to Japanese property as shops in prime areas sell for discounts of up to 30 per cent

In Hong Kong, the world’s most expensive property market, home prices have soared to levels that are beyond the reach of the general public. A 152 sq ft flat at Sayo in Mong Kok sold for about HK$3.4 million when the project launched in January.

“It is hard for my daughter to buy a flat in Hong Kong with her savings,” Lo said.

Others like her are also looking to use the yen’s depreciation to good effect.

Sophie Tsang, a 50-year-old IT professional, plans to make her second investment in Japan.

Tsang, who bought her first studio flat in Tokyo for HK$1 million about three years ago, has set her sights on a ryokan, a traditional Japanese inn. She has a budget of about HK$2 million to HK$3 million.

“Tourism in Japan will resume once the Covid-19 pandemic is over. I see it as a diversification of my investment, and it provides stable rental income,” said Tsang, who plans to retire next year.

JLL said the number of transactions for Japanese homes conducted by the firm jumped 70 per cent year on year in the first quarter.

“The hefty increase was largely due to last year’s low base for comparison,” said Mandy Wong, head of international residential at JLL in Asia-Pacific.

Due to the weakness of yen, she said some of her clients were now interested in buying more expensive homes in Tokyo, costing between HK$5 million and HK$20 million.

“They see a weaker yen as a bonus as these luxury homes are cheaper than before,” Wong said.

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