Japanese real estate targeted by Chinese and Hong Kongers

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Foreign companies and individuals in China and Hong Kong are targeting Japanese real estate, including forest and land areas with access to water resources in the Kyushu region, raising concerns among local governments and residents.

Acquisition of forest land in Japan by foreign capital reached a cumulative 2,376 hectares from 2006 to 2020, according to the Forestry Agency. Hokkaido accounts for the majority of these investments, while Fukuoka Prefecture ranks fourth.

Buyers come from a wide range of countries and regions, with China (including Hong Kong) topping the list with around 40% of the total with 969 hectares.

The Forest Agency figures do not take into account sales of private land, indicating that the data is just the tip of the iceberg. When it comes to acquiring private land, buyers in China and Hong Kong often target land in Japan.

Why are they attracted to Japanese real estate? And what does this mean for Japan?

As the trade dispute between the United States and China escalates and Chinese government regulation of real estate speculation intensifies, Japanese real estate has caught the attention of wealthy Chinese as a low-cost investment. risk with lax regulation. Fluctuating real estate prices in Japan after the Tokyo Olympics and extensive redevelopment of urban areas are also attracting overseas land buyers.

Some experts believe the “buying spree” could pick up speed once the coronavirus pandemic is over.

Chinese media reported in May survey data from Asia’s largest online real estate company indicating that 27% of Chinese investors currently plan to buy overseas property in the next two years, while that 47% said they could view real estate while traveling. abroad after the end of the COVID-19 pandemic. According to the survey, Japan ranked among the top destinations for these outbound trips.

There are several websites in China that allow users to search for Japanese real estate, and one of the largest, Shenju Miaosuan, lists 64 investment properties in seven prefectures in the Kyushu region.

The Nishinippon Shimbun confirmed private land purchases in Kyushu by companies and individuals in China and Hong Kong, including a natural spring in Kumamoto prefecture and a quasi-national park in Fukuoka prefecture.

Land Purchased by a Chinese National Adjacent to Suizenji Ezuko Park (Rear Left) in Kumamoto City | NISHINIPPON SHIMBUN

Suizenji Ezuko Park

Suizenji Ezuko Park in Kumamoto City, which is home to abundant high-quality water resources from the aquifer under the Aso region, was sold to a Chinese national in recent years.

A Japanese national, acting as a mediator, contacted the park’s landowner after it was acquired in 2016, saying a Chinese was looking for land in Japan.

The landowner sold part of his land – an area of ​​about 1,300 square meters – for about 200 million yen around 2019. The transaction price was considered above the market price.

Based on the new landowner’s registration details, a reporter from Nishinippon Shimbun visited the 14th floor of a building in Beijing where a real estate investment company specializing in land with water resources is located. Only tenants and staff were allowed into the building, and phone calls inside the business were cut off immediately after they were answered.

According to the former landowner, a “villa complex” is to be built on the land. Local residents believe the real target is groundwater in the area, noting that once digging begins, groundwater will spring from natural springs and aquifers.

“It is a natural asset that has been protected by citizens for ages,” said a member of the local assembly. “We are concerned that it will be pumped recklessly.”

Under the Civil Code, ownership of underground resources is interpreted as belonging to the landowner. According to the city of Kumamoto, the city ordinance requires landowners to notify the city if they install a water intake facility, but there are no restrictions on how much water it can take.

The lack of clear information about what the new owner plans to do with the land is fueling local fears about environmental damage.

“We were surprised to learn of the acquisition by the Chinese investor,” a city official said. “At this time, we have no choice but to monitor the situation closely.

Koinoura Garden

In December 2018, a Hong Kong-based drinking water maker acquired the 55-hectare Koinoura Garden inside the Genkai Quasi-National Park in Fukutsu, Fukuoka Prefecture. The land also includes the Speed ​​Park Koinoura racing circuit.

A source familiar with the purchase said officials from the Hong Kong manufacturer showed a blueprint for an extensive resort development plan.

“I think their common sense and rules differ from ours,” said the source, who asked not to be named. “I can’t sleep at night wondering if development is going to take away (the racing circuit).”

The source suggested there may have been a loophole in the legal system that allowed a foreign company to buy land inside a quasi-national park.

When the city of Fukutsu learned of the proposed development, they consulted with Fukuoka prefectural authorities and were told that a large-scale facility could not be built because the site is a quasi-national park.

The city visited the site regularly to monitor the situation, but there were no signs of development or resale of the land.

Landowner Tracking

Some countries, including China and the Philippines, do not allow foreigners to own land. In the United States, there are regulations on land acquisitions that differ by state, and in France, transactions of a certain size of land require prior notification.

Experts say Japan has loose regulations on foreign investment in real estate and further discussion is needed to accurately judge the status of land and whether revisions to existing laws are warranted.

In June, a new Land Use Regulation Act was enacted which enabled the government to collect various information such as land titles and land use activities around facilities deemed important to security. national.

At the local level, Hideki Hirano, a full professor at Himeji University and familiar with land acquisition issues, fears that the increase in land resale transactions between parties in foreign countries may make it more difficult to “ identify the landowners.

At present, it is difficult enough to identify domestic landowners, let alone foreign buyers.

An amendment to the Property Registration Law and the Civil Code, which is expected to come into force by 2024, will finally make the registration of estates compulsory, allowing authorities to track intergenerational land transactions.

However, if the party is abroad, it will not be subject to this particular legislation. If the land is resold, “it will be impossible to identify the real landowner, which could hamper the use of the land and make taxation difficult (for local governments),” Hirano said, adding that it could also hamper disaster recovery work.

“In some cases, acquisitions are made through Japanese companies, and it is difficult to track all cases,” said an official with the policy planning division of the Fukuoka prefectural government.

This section presents Kyushu area topics and issues covered by the Nishinippon Shimbun, Kyushu’s largest daily newspaper. The original articles were published on August 29.

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