March 16 (Bloomberg) -- Here is the scorecard for the recent contemporary art auctions around the world: New York, $240 million; London, $229 million; Hong Kong, $67 million; Tokyo, $1.1 million. How can this be?

Japan, the world's second-biggest economy, enjoying its longest expansion in six decades, has been left out of the current art market boom. For collectors, the message is: Buy now.

Tokyo's overlooked galleries are attracting a new generation of young, wealthy Japanese in their 30s and 40s, unfazed by the asset slump of the 1990s and encouraged by skyrocketing overseas prices for established artists like Takashi Murakami, Yoshitomo Nara and Yayoi Kusama.

``Japan is one of the last places where you have a long history of art, some of it quite good, with depressed prices,'' said Edwin Merner, president of Tokyo-based Atlantis Investment Research Co., which manages more than $1 billion in Japanese equities. Atlantis has a long-term buy recommendation for Tokyo- based Shinwa Art Auction Co., which held the country's first public auction of contemporary Japanese art last year.

``There is a huge possibility of growth in Japan,'' said Shinwa Art President Yoichiro Kurata, 42, a former fund manager who took over the flailing auction house in 2001.

Japan's art market accounts for only 2-3 percent of the world total. That's partly because of the restrictive way in which prices were traditionally set by a small group of dealers.

Kurata, local galleries, museums, collectors, art advisers and recently the government, are helping to change that, giving space to young artists and making prices more transparent.

`Years Behind'

Shinwa, the only Japanese company to hold contemporary-only art auctions, with inaugural sales in May and December last year, is now the largest auctioneer in Japan with 35 percent of the market. Still, Kurata has a long way to go to open Japan to the level of auctions in Europe and the U.S.

``In Japan, this business started only 18 years ago,'' said Kurata. ``European auction houses have been active for 200 years. We're years behind, but working hard to catch up.''

Some new Japanese artists have broken into the international arena. Hisashi Tenmyouya, Makoto Aida and Akira Yamaguchi are attracting overseas collectors with their neo-nihonga figurative works, said Sueo Mizuma, owner of Mizuma Gallery, which represents the artists. Nihonga is a traditional style of Japanese painting using mineral pigments mixed with water.

``Recently, a collector bought a Tenmyouya piece from me for 1.5 million yen ($12,680) and sold it three months later at an auction in New York for 6 million yen -- amazing,'' Mizuma said.

Such mark-ups highlight the advantage of seeking out purchases in Japan.

Sugimoto Seascapes

``Galleries in Japan are a good place to buy because there's not much competition with the super-rich foreign collectors,'' said Atsuko Koyanagi, owner of Gallery Koyanagi in Tokyo's Ginza district. She represents photographer Hiroshi Sugimoto, installation artist Olafur Eliasson and younger artists like Tabaimo, whose videos and drawings are a fresh step away from the established cartoon genres of manga and anime.

Works from Sugimoto's newest series can be bought for $80,000 at the gallery, compared with prices for his seascapes of up to $1 million at auctions abroad, Koyanagi said.

It isn't just the lack of a developed auction industry that has subdued Japan's art market. Art fairs in Japan also tend to be fewer and smaller. Art Fair Tokyo 2007, to be held April 10- 12, is hoping to change this, said Executive Director Misa Shin.

Takashi Murakami's decade-old annual ``Geisai'' art festival drew 10,000 visitors in September, compared with almost 40,000 at Art Basel Miami Beach in December. Murakami has urged Japan's artists to overcome their traditional reticence about self-promotion and be more commercially minded.

$500 Works

Koyanagi helped establish the annual Art@Agnes fair, held at Tokyo's Agnes Hotel in January. The three-day event drew 31 exhibitors, who rented hotel rooms to show their works.

``Prices for the young artists' work at the event were affordable even for young collectors.'' said Koyanagai. For example, Yukari Art Contemporary was selling illustrations and paintings by 30-year-old Kazuharu Ishikawa, starting at $500.

One gallery owner bent on cultivating overseas interest in Japan's young contemporary artists is Kimiyoshi Kodama, who opened his first outlet in Osaka eight years ago. His three- year-old Kodama Gallery in Tokyo is part of a warehouse of contemporary art showrooms in an area called Kagurazaka.

``It's easy to buy established Japanese artists in New York, but for emerging artists' work, Japan is best,'' said Kodama.

Investment consultant and former banker Yuri Aisaka began collecting art in 2005 after watching prices of works by Murakami and Nara soar from $20,000 to $1 million. She questions the wisdom of Japan's brand-obsessed buyers.

`Matter of Intelligence'

``It's much better to buy a piece of modern art for $3,000, knowing that it will increase significantly in value rather than a brand-name bag for the same price which devalues as it gets older,'' she said. ``It's a matter of intelligence.''

Japan's meager contemporary art market is in stark contrast to the country's centuries-old reputation for aesthetics, said Joni Waka, director of the nonprofit art foundation A.R.T. Tokyo has the highest level of museum attendance in the world.

``It is one of the many ironies of Japan,'' said Waka. ``Rather than art, the Japanese use fashion as their status symbol.''

That's beginning to change, he said. Interest is growing among young Japanese to buy small contemporary pieces for their apartments, with prices for young emerging artists ranging between $1,500 to $8,000, and rising to between $5,000 and $80,000 for more established artists.

``The Chinese, who are buying their own works and competing with foreign interests, are pulling the art market to Asia,'' said Mori Art Museum Director Fumio Nanjo. ``The market is not so strong in Japan yet. It is a good time to buy.''

If you just paid $2.3 million for a work by a contemporary artist in China, that may sound appealing.

(Lucy Birmingham Fujii writes on art for Bloomberg News. The opinions expressed are her own.)

To contact the writer on this story: Lucy Birmingham Fujii in Tokyo at lfujii@gol.com.

Last Updated: March 15, 2007 20:30 EDT