Owner of Islands Claimed by China to Talk Price With Tokyo

Three uninhabited Islands at the center of a territorial rift between Japan and China are on the market. The seller: a 69-year-old property investor from the suburbs of Tokyo who may get up to $500 million for the property.

Kunioki Kurihara began talks with Tokyo Governor Shintaro Ishihara in December to sell his holdings in the Senkaku Islands to the Japanese capital, said Toshio Matsumura, a manager at Hishiya Kaikan Co., a real estate firm operated by Kurihara.

Ishihara, 79, is interested in using public funds to buy the islands, said Motoyuki Nakazawa, a spokesman for Tokyo’s government, citing comments the governor made in a speech in Washington April 16. The real estate is part of a five-island chain about 1,900 kilometers (1,200 miles) southwest of Tokyo, in the East China Sea between Taiwan and Okinawa Prefecture, which administers the territory.

Such a deal may fuel tension between Asia’s two biggest economies, which both claim the islands, known as Diaoyu in Chinese. The feud was underlined by a 2010 collision between a Chinese fishing trawler and two Japanese Coast Guard vessels in nearby waters. Control over the area would give the holder rights to undersea natural gas and oil fields, and the countries have yet to implement a 2008 agreement to jointly develop them.

Ishihara’s remarks prompted China to reiterate its sovereignty of the islands. Any unilateral acts from Japan won’t change that they belong to China, Foreign Ministry spokesman Liu Weimin said in a statement on the ministry’s website yesterday.

Provocation to China

Discussions in Japan about buying them are a provocation, the state-run Global Times said in an editorial today. “A military option is not an easy choice today, but Asian countries still have flexible means to solve this problem,” it said.

Japanese Prime Minister Yoshihiko Noda said in parliament today that his administration wants to confirm the intent of the landowner. Chief Cabinet Secretary Osamu Fujimura said yesterday that the government could pursue nationalizing the Senkakus “if necessary.”

It’s difficult to estimate the value of the three isles, which could range from zero yen to 40 billion yen ($492 million), according to Hishiya Kaikan, based in Saitama, a prefecture that borders Tokyo. The company and the Tokyo Government haven’t started talking about price, Matsumura added. He declined to comment on whether the central government approached Kurihara.

Kurihara wants to offload the islands, named Uotsurijima, Kitakojima and Minamikojima, because he doubts whether an individual can protect their environment or manage any disputes between the countries over the territory, Matsumura said.

Plants, Animals

“Ishihara and we have a mutual understanding that it’s time to hand over the lands to the government,” he said. “We wonder if it’s appropriate for an individual to own them as the area is sometimes dangerous and contains a variety of peculiar animals, insects and plants.”

The chain has unique species of moles, mantises, ants, crabs and azaleas among others, according to research by Japanese universities.

“The Senkaku Islands are very small and no one lives there, but the surrounding waters are critical because of their natural resources like oil and fisheries, and because of national security,” said Yoshihiko Yamada, a professor at Tokai University’s School of Marine Science and Technology.

Kurihara bought the isles from businessman Zenji Koga about 40 years ago, according to Matsumura. Koga inherited them from ancestors who explored the area during the Meiji Era of 1868- 1912, he said.

Past Antagonism

Ishihara is seeking to reach a formal agreement with the landowner by the end of December after receiving approval from the metropolitan assembly, the governor said at a symposium at the Heritage Foundation in Washington, according to Nakazawa, who attended the conference.

Ishihara has antagonized China in the past. In a 1990 Playboy magazine interview, he denied Japan slaughtered Chinese civilians in 1937 in Nanjing. He has also called for “tearing up” Japan’s pacifist constitution in response to China’s growing economic and military influence.

In his speech, Ishihara vowed that Tokyo would protect the islands and he noted the wealth of fisheries in the surrounding seas, Nakazawa said. The governor will discuss details after coming back to Tokyo on April 19, he said.

Ishihara didn’t say his city would buy the other two Senkaku islands, one of which is owned by the Japanese government. The other is held by Kurihara’s sister, Kazuko, who doesn’t plan to sell, according to Hishiya Kaikan.

Apart from its five main land masses, Japan has 6,847 islands that are home to about 700,000 people, according to Tokai University’s Yamada.

The Senkakus aren’t the only islands in the country that are for sale. Aqua-Styles, Japan’s only real estate company that focuses on unpopulated islands, is advertizing Komariyamajima in Wakayama Prefecture for 150 million yen. The 3,384 square-meter islet has a white sand beach and is surrounded by clear waters, according to the company’s website.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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