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Tuesday, October 5, 2010

Japan property luring Asia's wealthy, says HSBC

The number of HSBC's (HSBA.L) wealthy Asian customers interested in buying Japanese real estate has doubled this year, the head of the bank's Japan private banking business said on Tuesday.

In doing so they are vying with the local rich, who have always had a penchant for land and buildings, for prime locations in Tokyo and other Japanese cities.

Luring them in to Japan's property market are signs of a rebound in real estate prices and a stable market that contrasts with more volatile markets elsewhere.

"They are looking for the really good pinpoint locations," Masahide Ohashi told Reuters in an interview for the Reuters Global Private Banking Summit in Tokyo.

Residential properties in particular are popular because there is no risk of losing a major tenant that may occupy several floors of a building, Ohashi said.

As foreigners pile into Japanese real estate, some of their local counterparts are spilling overseas in a bid to diversify their holdings out of poor-performing stocks at home and away from an overreliance on the yen, Ohashi said.

Popular alternatives, he added, are the U.S. dollar, followed by the euro and Australian dollar assets.

That trend has helped HSBC's private banking business grow by more than 10 percent by assets over the past year. Ohashi declined to say how much HSBC holds in its private banking business. Other foreign bankers also winning business as Japan's wealthy tap their overseas expertise, Ohashi added.

CRAVING STABILITY

But with a combined market share of just a few percent, according to the HSBC banker, foreign-run private banking still has a long way to go to catch up with local securities companies and other financial companies in tapping Japan's reservoir of family riches.

In 2005, according to Nomura Securities' research unit, there were 52,000 households in Japan worth at least 500 million yen with overall assets amounting to 46 trillion yen. It's that group that HSBC targets.

Those with between 100 million and 500 million have another 167 trillion yen spread over 810,000 families.

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