Photo/IllutrationKyoto Hotel Okura, background, stands 60 meters tall along Oike-dori avenue in this photo taken on Dec. 11, 2018, in Kyoto’s Nakagyo Ward. A plan for granting an exception to Kyoto Hotel, the predecessor to Kyoto Hotel Okura, from height limits came to light in 1990 and caused much controversy. (Yoshiko Sato)

KYOTO--After touring several properties here, a Chinese man decided to buy a Japanese-style house worth about 100 million yen ($926,000) and spend several tens of millions of yen on renovations.

“This could be useful if my child happens to come to study here,” said the buyer, a company operator in China, who made the trip to Kyoto with his family.

Japan’s ancient capital has increasingly become a hot market for wealthy Chinese looking to buy villas and other properties while they are still available.

As a result, real estate prices in Kyoto have soared to levels that are out of reach of the locals, many of whom have already expressed resentment over changes to their city made to accommodate the ever-growing stream of overseas tourists.

The Chinese buyer was shown around Kyoto by an employee of Tanimachikun, a real estate agency based in Osaka’s Chuo Ward for Chinese clients.

“Kyoto is special for Chinese,” said Cui Ling, 35, president of Tanimachikun. “Historical objects have been preserved more carefully in the city than in China.”

A group of Chinese who engage in foreign trade and online retailing set up the company in March 2016. Tanimachikun set up a Kyoto branch in Kyoto’s Nakagyo Ward last spring.

The company’s main clientele are wealthy individuals with assets exceeding 1 billion yen.

Rental income and resale rank high among their motivations for buying properties in Tokyo and Osaka. But when they are looking in Kyoto, many cite a desire to “own a villa.”

“I like the Kamogawa river,” an executive with a well-known Chinese company said in buying an apartment in Kyoto for several tens of millions of yen.

“I have a child studying at Ritsumeikan University,” said a friend of the executive who also bought an apartment, referring to the university in Kyoto.

Deals on the spot for secondhand properties worth around 10 million yen are not rare.

Tanimachikun has organized customer briefing sessions at luxury hotels in large Chinese cities, such as Shanghai, Beijing and Guangzhou. Clients often introduce their friends to the company.

Tanimachikun has so far brokered about 500 properties in Japan to Chinese clients, including 100 or so in Kyoto. Properties in the city’s Nakagyo, Shimogyo and Higashiyama wards are in high demand.

Chinese purchases of real estate in Kyoto grew in number about three years ago, according to the company.

There is also rising customer interest in Kyoto’s traditional townhouses.

“Chinese have the impression that there are fewer traditional properties in Kyoto, so they wish to own ones while they remain available,” Cui said.

PRICES SOAR BEYOND REACH OF LOCALS

Apartments in central Kyoto were priced at 100 million yen or more when the Heisei Era began in 1989 amid the asset-inflated period of economic growth.

But they lost about three-quarters of their value after the “bubble” burst in the early 1990s, according to officials of a real estate agency that has been operating for more than three decades in Kyoto’s Sakyo Ward.

The dot-com boom of about 20 years ago helped prices increase gradually, but they plunged again following the collapse of Lehman Brothers in 2008, the officials said.

Prices began to pick up around 2011.

A new three-bedroom apartment with a living-dining area and a kitchen in central Kyoto was once worth about 35 million yen. Now 15 years old, that same apartment can be traded at more than 50 million yen.

The surging number of inbound visitors has prompted a hotel building rush in recent years in Kyoto. Land plots for apartment houses cannot be acquired easily in central parts of the city.

“Local residents cannot afford to buy apartments in their own areas,” the agency’s president said.

Hotels are not the only accommodation facilities that are growing in number.

Kyoto had 2,797 “communal lodging houses,” or guesthouses and other facilities shared by multiple visitors, as of the end of November 2018, about seven times the number five years earlier.

Kyoto city authorities in July 2016 set up a counseling service on matters related to private lodgings and common lodging houses. The service center has received more than 3,000 reports, including complaints about midnight noise and concerns about public safety.

“Some complain that we are so focused on tourism that we are perhaps making light of the residents,” a city government official said. “We hope operators will ensure good quality of their accommodation facilities by pursuing harmony with their neighborhood communities.”

AVERSION TO NON-JAPANESE BUYERS

Not far from Nijo Castle, a UNESCO World Heritage site in Kyoto’s Nakagyo Ward, the Ane-Omiyacho Nishigawa neighborhood association oversees a community of about 20 households.

Three accommodation facilities are expected to be opened in the community by the end of fiscal 2019, including a common lodging house that will be operated by a Tanimachikun group company as proxy.

“We cannot just oppose any plan,” said Michio Naiki, the 85-year-old head of the neighborhood association. “We hope guests will never make loud noises in the middle of the night or carelessly handle fire.”

Cui, the Tanimachikun president, was born in China’s Jilin province. She came to Japan in 2007 and studied business administration at the University of Tsukuba graduate school.

“I wish to help, on the economic front, to make Kyoto into a more active city,” Cui said.

Tanimachikun and its group company employ a total of about 40 people, 10 percent of whom are Japanese, including a former executive with a major real estate agency.

Some property owners tell Tanimachikun officials that they don’t want to sell to non-Japanese buyers.

Company officials said they hope the owners will eventually put confidence in the real estate agency and its clients.

“You cannot operate a business in Kyoto unless you pay enough respect for people’s sentiment and culture,” Cui said. “But I believe they will understand you as long as you behave properly.”

KYOTO’S LANDSCAPE POLICY

Eager to preserve the landscape, the Kyoto city government in 2007 modified its ordinances and urban plans to strengthen regulations on building heights, designs and outdoor advertisements.

The maximum limit on building heights was lowered from 45 meters to 31 meters, and new limits of 12 meters and 25 meters were also introduced in some areas.

Around 30 percent of Kyoto’s urban areas were affected by height limit reductions.

City authorities are currently weighing a possible review of their landscape policy against the backdrop of rising demand for apartments and offices.

For example, they have floated a plan to ease height regulations in areas along Gojo-dori avenue to redefine a balance between respect for landscapes and community revitalization.

Public opinions about the plan are now being sought.

Kyoto’s inventory of traditional townhouses built in 1950 or earlier is shrinking because of difficulties in their maintenance and repair.

A detailed survey taken by the city government in fiscal 2008-2009 confirmed there were 47,735 traditional townhouses, but the number dropped to 40,146 in fiscal 2016. Some of the lost premises were replaced by parking lots.

The city government in 2018 enforced an ordinance on the “preservation and succession of Kyoto’s traditional townhouses.” It also set up a subsidy system applicable only to traditional townhouses.