Chinese tourists in Japan swap cosmetics for real estate as yen stays weak

Chinese tourists who once flocked to Japan to stock up on cosmetics and electronics have shifted their attention to Japanese real estate, analysts say — a trend driven by the rising competitiveness of Chinese manufacturing and a persistently weak yen that has made Japanese property relatively affordable.

Japanese business outlet Toyo Keizai said Monday that Chinese spending patterns in Japan had changed dramatically, describing the country as currently in a "bargain sale" state.

Japanese cosmetics and electric rice cookers were once the go-to purchases for Chinese consumers. Chinese tourists would buy cosmetics and electronics in bulk at Japanese duty-free shops — a phenomenon so widespread it spawned the coined term "Chinese binge buying."

At the time, popular travel itineraries included two-night, three-day trips connecting Tokyo and Osaka, with stops at major shopping centers to pick up cameras, luxury watches and souvenirs.

But the mood has shifted, Toyo Keizai said.

Electronics have dropped out of the top purchases among Chinese visitors to Japan, and cosmetics and perfume have fallen from first to third place.

"The performance of Chinese-made electronics is no longer significantly different from Japanese-made ones," the outlet said. "Cosmetics and perfume can now be found easily at duty-free shops inside China. The distinctly Japanese products still worth buying in Japan are limited to unique snacks, food items and Japanese alcoholic beverages."

Wealthy Chinese, meanwhile, have been moving aggressively into the Japanese real estate market.

They are buying housing in well-known tourist destinations such as Hokkaido and Okinawa, as well as in smaller regional towns and hot-spring resort areas, at relatively low prices, the outlet said.

"About 900,000 Chinese nationals are already living in Japan, and with the development of smartphones and other communication tools, information about Japanese real estate is now shared abroad as well," Toyo Keizai said. "Japan's real estate market is also essentially an open, free market — there are almost no restrictions on foreigners purchasing property."

Japan's stable social and economic environment was also cited as a factor driving overseas demand.

"Japan is one of the most politically stable countries in Asia and, even if somewhat diminished from its peak, remains a major economic power," the outlet said. "Japan has long been seen as an aspirational country in Asia. On top of that, the current weak yen has in effect put Japanese real estate on a bargain sale, and it is proving widely popular."

Industry observers say foreign purchases of Japanese real estate are likely to continue for now as long as the weak yen persists. However, they note that if the expansion of foreign investment pushes up housing prices in some areas, debate over real estate regulation in Japan could resurface.