Property investors in Hong Kong and Singapore are targeting new high-yielding real estate markets against a backdrop of uncertainty over the global economic environment and weakening economic conditions across the region. Driven offshore as a result of curbs placed on their home markets, Hong Kong and Singapore investors have turned to offshore markets, especially Japan, according to Mark Lampard, managing director of corporate solutions, Asia Pacific, at property consultancy Colliers International. Hong Kong investments in Tokyo property so far this year total US$1.1 billion, according to data from commercial property information service provider Real Capital Analytics. That ranked Japan the third most popular destination for local investors after traditional favourites Shanghai and London. The Asia Pacific region is entering an era of slower growth and faces challenges such as the potential risk of liquidity outflow from Asia, says Colliers International. "Hong Kong investors turned active in seeking external investment opportunities across the border since early last year," said Simon Lo, executive director of Colliers' research and advisory department for Asia. Their targets included both mainland and Japan properties offering higher rental yields. "Investors have turned defensive and are concerned to secure rental returns in the coming two to three years. They are not expecting significant capital gains in a short period of time," Lo said. In a separate study by Savills, Tokyo was named as the favourite world city, ahead of New York, for investors seeking returns above treasury yields from residential investments. Rental yields in Tokyo are currently attractive in relation to the extremely low returns available on government bonds in Japan, according to Savills. The city tops Savills' world cities investment ranking, followed by New York, Paris, and London. Savills has compared the gross rental income that investors receive in each city 'net of gilts'. This gives a measure of residential yields across its world cities, taking the return on 10-year government bond yields in each country away from gross rental returns. The result is a measure of the extent to which real estate income performs against the local risk environment and Tokyo scored a yield of 3.9 per cent, versus 3.6 per cent in New York, 2.7 per cent in Paris, and 2.2 per cent in London. Hong Kong was 2.8 per cent according to Savills.