International Property

Hong Kong buyers’ interest in Japanese property cools in the short term after Osaka quake

Property agents, estimating transaction volumes in June to drop by a quarter, say it will take one to two weeks for interest to pick up again

PUBLISHED : Wednesday, 20 June, 2018, 1:08pm
UPDATED : Thursday, 21 June, 2018, 9:36am

A strong earthquake in Osaka this week has not only rattled Japan’s second-largest city, but also shaken Hong Kong buyers’ growing interest in Japanese property in the short term, according to real estate agents.

“One of our clients was paying a visit there, making the final decision among several properties, but came across the earthquake and decided to hold off,” said Michael Cheung, branch manager of Trusty Japan Realty, which specialises in selling Japanese property in Hong Kong.

The 6.1 magnitude quake on Monday has killed four people and injured hundreds more, as well as shattered windows, brought down walls and created chaos in the Japanese city.

Cheung said many existing clients had called to learn more about the situation, with as many as 100 enquiries received within two days. The flats owned by these clients were largely unaffected, he said.

A cloud would hang over the business in the next one to two weeks for the market to get over the news, and the 35 to 40 deals expected to be completed this month would represent a 25 per cent drop from May, Cheung said.

“It is just a short time of sudden panic,” he said, adding that the deal number should return to a normal level soon as most potential buyers of Japanese property are aware that Japan is an earthquake-prone country.

“I’ve checked that my house has survived [the quake],” said Candy Lam, a 28-year-old bank staff who bought a studio in Osaka last year for self-use. “Many of my friends and I travel to Japan several times a year as we like the culture and lifestyle there. I don’t expect to see a large drop of tourists because of the earthquake. The return for buying a flat in Japan is better than what I could get in Hong Kong.”

The holiday property investment in Japan fever is rapidly growing among Hongkongers, who have long considered the country as one of their favourite tourist destinations. Osaka, where prices are lower compared to Tokyo, has always top the list for Hong Kong buyers.

The return for buying a flat in Japan is better than what I could get in Hong Kong
Candy Lam, Japanese flat owner

TY-Property in Hong Kong sells between 40 to 50 flats a month in Osaka alone, which represents a 30 per cent increase from a year earlier, and more than double the number from three years ago. Gordon Tse, the agency’s managing director said any adverse impact on Hong Kong buyers’ interest would not be for the long term.

“They can buy a flat in core areas in Osaka, similar to Hong Kong’s Wan Chai, for about HK$1 million (US$127,400). What kind of property can we buy with that money in Hong Kong?” Tse said. “Veteran buyers will not change their investment strategy due to this, they look at the investment yield.”

Flats used for home-sharing such as those listed on sharing platforms like Airbnb, would fetch a yield of as much as 10 per cent, while those leased out on a long-term tenancy can generate a 4 to 5 per cent investment return rate. In Hong Kong, the rental yield of private residential flats in April was 2.6 per cent, according to Rating and Valuation Department.