Weak yen attracts Hong Kong buyers to Japan

The depreciation of the yen has seen more Hongkongers invest in Japan's property market.

Joe Law Hin-pong, managing director of investment firm JL Advisers, said the favourable exchange rate and high yields were the reasons many Hong Kong and European individual and institutional investors had decided to invest in Japanese property since mid-2013.

"Individual investors are buying small, one-room apartments in the city area in Tokyo while institutional investors are buying big blocks of residential and commercial buildings," Law said. "The trend is likely to continue as there are few markets like Japan which can offer a stable yield and capital gain. However, investors must also be aware of the currency, location and earthquake risks."

Law is a veteran investment banker who worked at Japanese financial firm Nomura from 1992. He set up his own investment firm in 2012 with a focus on bringing Chinese and European investors to Japan and encouraging Japanese to invest overseas.

Initially, investors were interested in manufacturing and infrastructure projects but they have wanted property since 2013, when Japanese Prime Minister Shinzo Abe launched economic reforms including monetary easing policies to provide liquidity in the domestic market. The yen has depreciated by more than 20 per cent against the US dollar.

Japan's property prices have fallen 70 per cent over the past 16 years, according to accounting firm Deloitte.

In contrast, Hong Kong property prices have kept setting record highs in the past two years despite the government's introduction of measures such as double stamp duty.