Homing in on Japan

When Julia Chang, a Taiwanese who divides her time between Taiwan and Tokyo, decided to diversify her family's investments, she settled on property in the Japanese capital where prices have slumped for two decades.

Chang, 48, a former flight attendant, is looking to buy her third flat in Tokyo, which is increasingly attracting foreign buyers after Prime Minister Shinzo Abe took office in December with a pledge to end the deflation that has depressed real estate. "Tokyo properties make a good investment because they are relatively cheap," said Chang, from her 170 million yen (HK$13.3 million) three-bedroom flat in central Tokyo. "It's a bargain."

Asian investors like Chang are being lured by returns as high as 8 per cent on rental income and signs the market is recovering. The government's resolve to keep the yen weak has also made property in Japan more affordable compared with Hong Kong, Singapore and Taiwan.

"Japan is cheap considering how much property prices have gained in Singapore and Hong Kong," said Akihiko Mizuno, international director and head of capital markets at Jones Lang LaSalle. "They expect to receive stable rental income and also have an expectation that prices will rise."

Home prices in Tokyo were about 120,000 yen to 150,000 yen per square foot, Jones Lang LaSalle said. That compared with the equivalent of 280,000 yen to 400,000 yen in Hong Kong and 200,000 yen to 250,000 yen in Singapore, it said.