Hong Kong investors drawn to Japanese property as shops in prime areas sell for discounts of up to 30 per cent

Shop owners in prime locations in Tokyo and Osaka are now selling because of the deteriorating economic outlook

Investors also find that the level of investment is much lower compared to Hong Kong

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People wearing protective face mask are seen at the Tsukiji fish market in Tokyo, Japan. Shops in the area are on sale at discounts of up to 30 per cent. Photo: Reuters

Published: 10:00am, 12 Apr 2020Updated: 9:45pm, 12 Apr 2020

Hong Kong investors are willing to take a risk on Japanese property even as the Covid-19 outbreak and postponement of the Tokyo Olympics dampens economic sentiment in the world’s third largest economy.

Shop prices in prime locations in Tokyo and Osaka that had held firm for more than a decade, have fallen by nearly 30 per cent, drawing the attention of investors like Polly Lo.

“I just started investing in Japan about two years ago,” said Lo, who owns a portfolio of shops, hotel rooms and flats in Japan, Thailand, Dubai, Malaysia, Australia and the UK. “Now, I’m looking for bargains in Osaka or Tokyo as buyers like me buyers can have bigger bargaining power and more choices in the market.”

She added the entry barrier for investments in retail units in areas with relatively high footfall was around HK$1 million (US$129,000) to HK$2 million compared to nearly HK$10 million in Hong Kong. “Besides, the investment yield on shops is high and the management fee is much more affordable compared to the UK or Australia.”

On Tuesday, Japanese Prime Minister Shinzo Abe announced a month-long state of emergency to contain the spread of Covid-19. He also unveiled a stimulus package worth nearly US$1 trillion – about 20 per cent of the country’s economic output – to cushion the impact of the epidemic. The country had nearly 4,500 coronavirus cases and a death toll close to 100 as of Thursday.

“Most shop owners in Japan were reluctant to offer discounts before the Covid-19 outbreak, but now they are preferring to cash out in the face of growing market uncertainties,” said Anvy Cheung, chief executive of Sakura Global, which specialises in Japanese property. Sakura is an associate firm of Hong Kong listed eprint Group.