As Japan reels, investors may look to HK

Wary global property investors could turn their attention to Hong Kong and the mainland as they steer away from the real estate market in Japan in the wake of last week's devastating earthquake and tsunami.

Until last week's tragic events and the nuclear crisis that now looms over the country, Japan was a favourite target of global real estate funds and wealthy mainland investors who were betting on a rebound in its property market after it had slumped during the global financial crisis.

'Now people in general would be very nervous,' said Tim Murphy, managing director of property investment group IP Global. 'The reality is, if you look at history, economic downturns after natural disasters do not tend to last for very long. But in the short term people will look at other overseas markets such as Hong Kong, China, and Singapore.'

Low interest rates in Hong Kong and Singapore would provide an added attraction to wary investors looking for safer havens for their money, Murphy said. 'Lots of money will stay in Asia,' he said.

IP Global's luxury ski chalets in Niseko on Hokkaido island, an hour's flight from Tokyo, were not affected by the disasters, Murphy said. Half of the investors who bought 30 houses and 50 flats in the resort development last year were from Hong Kong.

The properties were sold at between US$500,000 and US$1.5 million each at the launch, but Murphy said discounts could now be offered on the 10 houses and 12 apartments that remain available for sale.