Until very recently, when most people thought of selling property to Chinese buyers, almost exclusively, one thought of mainland Chinese buyers.
Recently though, we have seen what I think is the beginning of a trend moving forward and that is the already-overseas Chinese individual looking to bring their wealth closer to home.
The reason I believe this is because in the last quarter, we have seen trades where the buyer was Chinese who was liquidating another overseas property and using those proceeds to purchase in Tokyo.
The Chinese government’s crackdown on capital flight is well known but what isn’t as well understood is just how voluminous the wealth is that has left China over the past 30 years. You see, back then when many countries began lifting visa restrictions for Chinese travelers, many HNWI Chinese were eager to own assets in what they saw as prestigious countries; mainly North America and Europe.
For an individual, the simplest asset to purchase is real estate which is where many Chinese buyers looked to park their wealth. Only a cursive look at Vancouver and Sydney reveals the extent to which this phenomenon happened.
That was then, and this is now. When I asked our recent Chinese clients who fit this profile what the motivation was for buying in Tokyo, the answer was the same; while they still enjoyed the prestige of owning property outside of China, they are now aging and have a strong desire to be closer to home.
When these clients originally purchased their first overseas property way back when, they envisioned spending more time than they actually did there. In reality, properties ended up being used by family members going to school in the same city and rented out the rest of the time.
Over the last decades, this unmet expectation of personal use combined with property management issues that arose when renting out property in far-flung places wore down the appetite for continuing to own that far away from home.
Hence, Tokyo. While it is geographically close to Shanghai and Beijing, the prices are not as steep as other close by places like Hong Kong or Singapore. Tokyo offers a very stable environment to let out property with highly regulated property management firms offering more and more services in Chinese and English.
When I noticed this trend of overseas Chinese trading in Tokyo, I began asking pointed questions to the rest of my network about whether they are thinking of doing something similar. I was surprised by the affirmative answers which makes me feel this type of buyer will be a growing segment moving forward.
What does this mean for you as a seller? It doesn’t mean you can charge sky high prices but more along the lines of market rate if not a little above. That said, this overseas contingent of Chinese buyers are not very price sensitive, especially if your property adheres to Feng Shui principles.
Editor’s Note: Shirley is Sales Director for Housing Japan. She has sold billions of yen of real estate and arguably has the highest client satisfaction rating in the industry. Shirley writes a weekly column for Housing Japan readers to help illustrate common challenges buyers and sellers have when trading Tokyo residential property.