- The two homes were the most expensive sold since 2004
- Chinese visitors to Japan have doubled to 3.35 million in 2015
A Chinese investor paid the highest price for two newly built Tokyo houses in more than a decade as residential property values in the Japanese capital accelerate.
The unidentified investor in August bought two adjacent houses in Akasaka, a high-end commercial district, for about 690 million yen ($5.8 million) and 680 million yen, said Mitsuo Hashimoto, the president of Housing Japan K.K., which developed and sold them. That is the most expensive price for a new house in Tokyo since at least 2004, according to data from the Tokyo-based Real Estate Economic Institute Co.
Residential property prices in Tokyo have climbed for the past three years as Prime Minister Shinzo Abe seeks to defeat deflation through monetary and fiscal stimulus. With wealthy Chinese snapping up luxury homes from Sydney to Vancouver, real estate agencies have also been bringing property buyers to Japan as the yen has declined against the yuan.
“If you compare Japan to the world’s other major capitals, ownership of property by foreigners in Tokyo is tiny,” said Hashimoto in an interview Tuesday. The recent downturn in China’s stocks is prompting wealthy mainland investors to put money into less volatile property assets, he said.
Prices in Tokyo pale in comparison to places such as Hong Kong and Sydney. In a Hong Kong building designed by Frank Gehry, a 5,200-square-foot (483-square-meter) apartment sold for HK$497 million ($64 million) in June, setting a record for Asia, according to the South China Morning Post. The company of a Chinese billionaire bought a A$39 million ($28 million) Sydney mansion that it was eventually forced to sell earlier this year after the Australian government cracked down on illegal home-buying by foreigners.
Residential property prices in Tokyo’s 23 wards gained 2.1 percent in the year to July 1, accelerating from a gain of 1.9 percent a year earlier, according to a Land Ministry report in September. Land prices for homes in Tokyo are still less than 60 percent what they were during Japan’s property bubble in the late 1980s.
There are very few Western-style luxury houses in Tokyo for sale at 500 million yen or more, Housing Japan’s Hashimoto said. Unlike in many Asian nations, owners in Japan can also gain title to the land that accounts for about 70 percent of the value, he said. About 30 people came to see the properties with the final buyer among three bidders.
“The number of wealthy Chinese is increasing and Japan is near so we’ll probably see more purchases,” said Masahiro Mochizuki, a Tokyo-based real estate analyst at Credit Suisse Group AG. Overseas buyers currently purchase only about 5 percent of new homes in Tokyo’s central wards, and that is predominantly apartments, he said.
The two three-story houses are a five-minute walk from the Canadian Embassy in Akasaka, which is home to the U.S. and other embassies, and each has a floor area of about 390 square meters (4,200 square feet). The homes, which have a gray exterior, sit on top of a hill where there are older existing residential apartments. Both have a roof terrace area.
In one of the properties, it is possible to lower a car to the basement level for display, in an area adjacent to a theater room and wine cellar, according to marketing material from Housing Japan. The developer completed the properties in February on land that previously housed a dormitory of Tokyo Electric Power Co. , according to Hashimoto.
Visitors from mainland China to Japan more than doubled to 3.35 million in the first eight months of 2015 from the same period a year earlier, making them the single largest group, according to data from the Japan Tourism Agency. An additional 2.47 million visitors came from Taiwan and 991,800 from Hong Kong.