Main­land in­vestors take a fancy to Ja­panese re­alty

Short­age of ho­tels cre­ates de­mand for B&B units; guest­houses mush­room in Ja­pan


The global eco­nomic growth has been slug­gish, but not the Chi­nese in­vestors’ shop­ping spree for as­sets world­wide. They are now eye­ing the Ja­panese prop­erty mar­ket, es­pe­cially bed-and­break­fast fa­cil­i­ties.

In a sense, it marks the evo­lu­tion of Chi­nese shop­ping in Ja­pan. For long, the Chi­nese have been load­ing up on the Ja­panese con­sumer goods rang­ing from elec­tronic toi­let seats to rice cook­ers and cos­met­ics.

Now, it’s Ja­panese prop­erty. Prices surged nearly 30 per­cent in the last cou­ple of years on the back of de­mand for hos­pi­tal­ity-re­lated re­alty, par­tic­u­larly B&B units, from Chi­nese in­vestors.

Prop­erty agen­cies in Ja­pan think Chi­nese in­vestors are con­vinced mil­lions ofChi­nese tourists visit­ing the Land of the Ris­ing Sun ev­ery year present great in­vest­ment op­por­tu­ni­ties.

They are pump­ing in big money into the Ja­panese prop­erty mar­ket.

In July alone, a record 2.29 mil­lion trav­el­ers vis­ited Ja­pan, bulk of them from the Chi­nese main­land, ac­cord­ing to the Ja­pan Tourism Agency.

In the first half of 2016, 11.7 mil­lion for­eign­ers vis­ited Ja­pan, up 28 per­cent year-onyear. Of them, a lit­tle over 3 mil­lion were from the Chi­nese main­land.

Ev­ery year, about 20 mil­lion for­eign­ers visit Ja­pan. The Ja­panese govern­ment is aim­ing to re­ceive 40 mil­lion vis­i­tors by 2020, the Tokyo Olympics year. By 2030, it is tar­get­ing to re­ceive 60 mil­lion vis­i­tors.

In some bustling tourist at­trac­tions like Tokyo and Osaka, there is a se­ri­ous short­age of ho­tels. Last year, the oc­cu­pancy rate of ho­tels reached 82.3 per­cent in Tokyo, and 85.2 per­cent in Osaka, ac­cord­ing to the JTA.

A 21st Cen­tury Busi­ness Her­ald re­port quoted UBS Se­cu­ri­ties in Ja­pan as say­ing that if “the oc­cu­pancy rate of a ho­tel reaches 80 per-

the ho­tel is re­garded as op­er­at­ing with full load. If vis­i­tor num­bers rise by 5 mil­lion a year, the ho­tels in Tokyo and Osaka won’t be enough”.

In­ad­e­quate num­ber of ho­tels have made bed-and-break­fast guest­houses pop­u­lar. Pri­vate fam­ily homes of­fer overnight ac­com­mo­da­tion and break­fast for trav­el­ers, par­tic­u­larly the younger, lot among them who pre­fer hav­ing good ex­pe­ri­ences on a tight bud­get.

B&B units al­low them to stay in down­town ar­eas among lo­cal com­mu­ni­ties and ex­pe­ri­ence lo­cal cul­ture. If such units have Chi­nese hosts, so much the bet­ter for Chi­nese vis­i­tors.

Xin Xin, a young of­fice worker in Bei­jing, said she stayed at one such unit in Osaka last Septem­ber as it was the peak travel sea­son, and ho­tel rooms were ex­pen­sive and hard to find.

“My friend rec­om­mended this op­tion. It was cheaper. I booked one through Airbnb. It is lo­cated in down­town Osaka and about 500 me­ters away from the ho­tel I in­tended to book. The room charged about 600 yuan ($90) per night, which is only half of the ho­tel room rate,” she said.

“It was a one-bed­room apart­ment, very clean and close to the sub­way station. I al­ways stayed at ho­tels on my pre­vi­ous trips, and had to check out be­fore noon, which used to in­con­ve­nience me as I couldn’t storemy lug­gage un­tilmy de­par­ture time.”

It is mil­lions of trav­el­ers such as Xin that are cre­at­ing in­vest­ment and busi­ness op­por­tu­ni­ties.

For in­stance, de­mand, and on­line searches for B&B ac­com­mo­da­tion has made the US-based lodg­ing web­site Airbnb pop­u­lar among tourists, par­tic­u­larly Chi­nese, visit­ing Ja­pan. The app is also hot in the Chi­nese main­land, its fastest grow­ing mar­ket.

Real es­tate agen­cies said more than half ofChi­nese in­vestors in­ter­ested in Ja­panese prop­er­ties mainly fo­cus on pri­vate home ac­com­mo­da­tion.

This trend has be­come par­tic­u­cent, larly pro­nounced ever since the stock mar­ket rout of mid-2015, which made re­alty the al­ter­na­tive in­vest­ment op­tion.

So much so that in the Ja­panese re­alty mar­ket, main­land in­vestors are now next only to those from the United States, Hong Kong and Sin­ga­pore, ac­cord­ing to data from Real Cap­i­tal An­a­lyt­ics, a New York-based re­search firm that tracks com­mer­cial real es­tate pric­ing.

The trend could deepen go­ing for­ward as the busi­ness of prov­ing pri­vate home ac­com­mo­da­tion to trav­el­ers is likely to be made le­gal by the Ja­panese govern­ment in the near fu­ture.

Be­sides, Tokyo is set to hold the Olympic Games in 2020. The fouryear run-up is ex­pected to prove a tonic for the Ja­panese real es­tate sec­tor, ac­cord­ing to a re­port by Nikkei Busi­ness Daily.

In gen­eral, the rate of re­turn on prop­erty rentals in ma­jor Chi­nese cities like Shang­hai is 3 per­cent. In Tokyo, it could be up to 5 to 8 per­cent.



Chi­nese youth learn how to cook lo­cal food in Takat­suo in Ja­pan. They get to ex­pe­ri­ence the Ja­panese cul­ture by stay­ing in lo­cal bed-and-break­fast fa­cil­i­ties.

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