G
lobal investors, including those from Hong Kong, are shifting their focus to Japan's residential property market as returns on mainland China assets dwindle. According to market consultants, they invested US$11.2 billion in Japanese real estate in the first quarter, a 6% increase above the five-year average and making it the fifth largest recipient globally. The top contributors were investors from the US, Singapore, and Hong Kong.

    Even Chinese investors are redirecting their capital eastward, pouring US$1 billion into Japanese real estate in the same period, more than double the five-year average. In the residential sector, local and foreign funds spent US$1.2 billion in the first quarter, a 16% increase from a year earlier. Masahiro Tanikawa, head of investment services at Colliers Japan, notes that Hong Kong investors have traditionally focused on China but are now turning to more stable markets like Japan and Australia due to the collapse of the Chinese real estate market.

    The pivot away from mainland China coincides with the slide in the Japanese currency, which has weakened about 1% against the US dollar over the past month. This depreciation bolsters the appeal of local assets to foreign funds, while inflation remains a concern at 3.5%.