HONG KONG investors are starting to emerge as players in the Japanese residential property market, according to a Japan specialist at property consultants Vigers Hong Kong. Kinko McCafferty, head of Vigers' Japan section, said Hong Kong interest in the Japanese residential property market was developing because the gap in house prices between the two was narrowing. Japan has long been the world's most expensive place to buy luxury houses and flats, while Hong Kong is the second most expensive. But a 48 per cent fall in prices across all property sectors in Japan since 1993 meant the cost of buying an upmarket home there was nearing that of Hong Kong, she said, even though capital values in the territory had fallen 30 per cent over the past 18 months. However, potential Hong Kong investors may be wise to wait before spending any money on Japanese bricks and mortar because prices may fall further. It may be another two years before the Japanese housing market bottomed out, she said. She predicted a further 20 per cent fall in values over that period. Prices for homes built to international standards were traditionally expensive in Japan because so few existed, she said. However, for those home owners prepared to live in homes without central heating or air-conditioning, the cost of purchase was low. She expected the luxury market to pick up again when government restrictions on the involvement of foreign firms in the country's economy were lifted. These firms would want international-standard accommodation to house their expatriate staff as well as good-quality office space from which to operate. This would push up demand for both, she said. To provide further stimulus to the property market, the Japanese Government needed to inject cash into road building, low-cost housing and other infrastructure projects. By setting their sights on the Japanese market, Hong Kong investors were helping to consolidate the position of ethnic Chinese investors as the world's most active buyers of overseas property, she said.