Friday Asia Digest: Chinese Acquire Japan’s Water, UK’s Realty; Turkey & Indonesia Attract Billions


Foreign investors, led by Chinese, have been purchasing extensively in water-rich rural Japan – one of the wold’s top 10% countries in water resources, and also the only country in the Asia-Pacific region that doesn’t regulate property investment by foreigners. As a result, certain land in certain areas – particularly Hokkaido, in the country’s North (pictured on right), an island roughly the size of Austria with triple the average Japanese land water resources – can be bought for 60 U.S. cents a square meter – most importantly, including abundant groundwater.

The biggest spike in forest purchases by non-Japanese is in Hokkaido, widely seen as one of Japan’s “National Treasures” and international holiday skiing mecca, according to local government figures. The island attracted 90 percent of forest purchases and non-Japanese investors bought 20 times more land in Hokkaido in 2009 than two years earlier. China leads the purchases of Hokkaido forest and water rights with 21 transactions of a total 57. Japan, whose population is shrinking, ranks in the top 10 percent of countries by water resources, while China and India, with the opposite demographic trend, will face shortages from 2030, according to a United Nations report. Almost half of China’s economy is already based in water-scarce regions.

Hokkaido authorities have no address information for many of the owners. 10% percent of letters sent to foreign buyers of woodland in Hokkaido were returned with the listed address unknown, authorities said. Chinese interest in Japanese land is a sensitive issue in part due to the territorial dispute over islands, that recently sparked nationwide protests in China this year and led to attacks on Japanese stores, restaurants and car dealerships.

Central London commercial real estate, residential and student housing sectors, as mentioned in previous digests, are also seeing highly increased investments rolling in from China, Hong-Kong, Korean and Malaysian funds, which are broadening their investment focus to not only include London but also key cities across the UK. Chinatown in Liverpool, in the north west of England, where the population is now estimated to be about 30,000, is one such example, as are Birmingham, Manchester, Cardiff, Edinburgh and Bristol, among others. In the past 12 months, as London yields have hardened and capital values have risen, interest in regional properties has returned – including a renewed appetite for prime regional property from global and Asian investors.

Turk-Indo Glitter Beckons Dollars and Euros

Turkey, whose capital Istanbul has in recent months been flagged as “The New London”, mirroring the above in prophetic mockery, is continuing to capitalize on the easing of its archaic foreign property ownership laws. Turkey’s Association of Real Estate Investment Trusts is trying to attract as much as $10 billion a year to the country’s property market from investors in Europe, in a series of presentations in London, Qatar, Singapore and Malaysia.

In Indonesia as well, another of Asia’s “rising stars”, which has stabilized politically, things are looking good – real estate brokerage Jones Lang LaSalle recently labelled it “one of the bright spots in the regional economy”, while Singapore-based Yishan Capital Partners, which has launched a 250 USD million fund to invest in Southeast Asia, testifies that Indonesia is where the company sees its best opportunity currently – having already made four investments there.

Global Gossip

* Singapore joins China in the healthier section of the global property market – home sales may fall as much as 27% in 2013 after climbing to a record this year, as six rounds of housing curbs by the government finally take their toll on the staggering price point graph giant. Private home sales next year may drop to 16,000 units from 22,000 units this year – the island state introduced measures including higher down-payments for second home purchases and new taxes for foreign buyers since the start of 2010.

* This positive effect lies in sharp contrast to Hong-Kong’s realty scene, where such measures, as extensively covered in recent weeks, seem to be having little effect. While numbers revealed last week point to over a million impoverished living in the city slums, this week again advertises the width of the gap, quickly becoming a chasm, between the city-state’s rich and its poor -with the sale of a 6,683 square foot apartment in the Frank Gehry designed OPUS HONG KONG building for a whopping 455 million HKD (58.7 million USD). That works out to more than $8,700 per square foot — setting a record in Hong Kong (pictured on right), and hot on the heels of another unit being sold in the same building for over $55 million. It would appear that government measures have driven capital into other sectors — retail, commercial, industrial mainly – Hong-Kong has recently tipped the world’s lot expensive retail space record, as well.

* The ANZ (Australia New-Zealand) bank has been positioning it’s Automatic Teller Machines (ATMs) in key locations round some of Asia’s biggest cities, undoubtedly turning a neat profit in the process. A revelation this week of the machines being spotted all around Singapore’s fanciest retail destinations – as well of some of it’s seediest nightlife districts – make for a fascinating, albeit slightly alarming read (below).

(Partial list of sources – “South China Morning Post“, “Business Week“, “The Independent“, “Bloomberg“, “Sydney Morning Herald“, “CNBC“)

(Pic 1 – Rural land in Hokkaido, Japan / “Ptrktn“, Pic 2 – Hong-Kong Skyline / “No Lands too Foreign“)

About Author

Ziv Magen

Ziv Magen (G+) is an Australian, and has been living alternately in Japan and Australia for the past decade. "Born and bred" an IT project manager, he has made the transition to full-time real-estate investing several years ago, and subsequently opened a buyers' and proxy agency - assisting others in remotely capitalising on Asia's booming property market.

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