Growing Influence of Asians on California REAL ESTATE : Sky-High Housing Prices in Japan Make Even the Most Expensive Homes in the Southland Look Like Bargains

Every day, Yoshiaki Nishiba bounces among three disparate cultures. Raised north of Tokyo, he now lives south of San Diego and spends a good part of every business day at his family-owned manufacturing plant in eastern Tijuana.

He navigates his German-made car knowingly through Tijuana’s pothole-pocked streets, and he talks easily about why he is more comfortable investing his own money in Southern California than back home.

“It’s out of hand in Japan,” he said, his English impeccable. “The stock market is crazy, and the land costs are unreal. The real estate market is steadier here than it is in Japan. It’s a bigger gamble over there.”

Nishiba has bought a pair of homes in Bonita, the suburban neighborhood that has become popular with Japanese executives because it’s a 20-minute drive from their Tijuana manufacturing plants. He also owns an apartment building in Long Beach that, he says, is worth $1.7 million today--up 33% in the 18 months he has owned it.

South side, west side, all around Southern California, the influence of the Japanese in the local housing market is expanding. It is going on slowly, quietly, inexorably--a natural byproduct of Japanese business investments whose profiles in greater Los Angeles continue to grow.

“It’s out there, and it’s happening,” said Jack Barthell, a partner in the Los Angeles office of Kenneth Leventhal & Co. “It’s the next trend.”

The buying almost reflexively generates talk of possible parallels to Honolulu, where the housing market has been tipped on its side in the past 18 months by high-spending Japanese speculators. Some of the best homes in east Honolulu have been bought by Japanese, including more than 100 properties by flashy billionaire Genshiro Kawamoto.

Other Newcomers

“The closest play (to Japan) was Hawaii,” Beverly Hills real estate broker Jon Douglas said. “Los Angeles is the next closest.”

At the same time, the consuming local interest in what the Japanese are doing obscures how the local housing market continues to absorb newcomers from other parts of East Asia. You cannot talk about Japanese investment in Southern California housing without mentioning the immense impact of buyers from South Korea, Hong Kong and Taiwan, local real estate experts point out.

This Asian influence now extends from the San Fernando Valley’s western edge to the Mexican border. As they become more affluent and comfortable here, these buyers are increasingly bypassing Gardena, Monterey Park and Koreatown--their traditional neighborhoods--and sinking roots wherever the streets are safe and school districts first-rate.

Japanese corporate executives have come to prefer high-end neighborhoods in Palos Verdes and on the West Side of Los Angeles. Affluent Chinese gravitate to towns like San Marino and Arcadia. Koreans are finding Orange County and the San Fernando Valley increasingly hospitable places to live and work.

The Japanese contingent includes a cadre of entrepreneurs who are working here quietly, bound mainly by their nationality and a deep belief that residential property in Southern California is a very fertile place to plant money. Some are:

- Haruki Yamada, who buys single-family houses in San Clemente and Laguna Niguel and tries to resell them back home. Japanese consumers find Yamada’s color advertising brochures, complete with photographs of homes in southern Orange County, stuffed in their morning newspapers.

- Financial consultant Katsuo Yoshimoto, owner of two West Side apartment buildings worth more than $2.4 million. He’s looking for other residential properties in places like Newport Beach and Pacific Palisades that will match the annual 66% appreciation on his home in Los Alamitos. “That’s why I’m investing,” he said.

- Soichiro Kawase, manager of a Japanese-owned firm named Haseko (California) in downtown Los Angeles. Haseko recently built 23 high-priced condos in Beverly Hills, 17 of which were bought by Japanese.

- Kyoka Sashida, who operates from a no-frills office in the Sumitomo Bank building that overlooks Long Beach Harbor into which so many Japanese products are shipped. From her 10th-floor perch, the vivacious businesswoman tries to find Japanese buyers for apartment buildings and commercial property.

The Japanese influence largely reflects the tightening financial ties between Tokyo and Los Angeles and the fact that people from Japan are growing increasingly comfortable in Southern California, Japanese executives say.

Safeguard Against Turmoil

Executives of Japanese corporations, who toil here by the thousands, now often buy their homes rather than rent them, while those who travel here frequently on business stay in newly bought second homes rather than in a hotel. Some acquire homes for their offspring studying at UCLA and USC, while still others want to ride Southern California’s rapidly escalating property values.

The Chinese buyers often want second homes here as insurance policies against possible political turmoil in Hong Kong and Taiwan. Hong Kong is scheduled to revert to mainland Chinese control in 1997. “It’s not just an investment in real estate,” California banking consultant Linda Tsao Yang said. “It’s a future home for them.”

Many Korean buyers are immigrant entrepreneurs who run small businesses such as doughnut shops and liquor stores. “Eighty percent of the liquor stores in Long Beach must be owned by Koreans,” said Ben Hahn, a Korean-born real estate developer in Southern California.

The statistics indicate that the population of immigrants from all Asian countries is growing fast. According to U.S. Census Bureau figures, the Asian population in Los Angeles County--two-thirds of them foreign-born--nearly doubled to 457,000 between 1970 and 1980. According to estimates from the United Way charity organization, that population had grown to as much as 792,000 by 1985.

There are estimated to be 95,000 to 110,000 Asian-born people living in Orange County, including especially large groups of Koreans and Vietnamese. An estimated 340,000 Koreans live throughout Southern California, according to the South Korean consulate in Los Angeles.

The new arrivals have made jolting changes in housing patterns. James P. Garrigus, a vice president at Haseko, said he was amazed when he read the family names on the roster of his daughter’s school band in the San Gabriel Valley. “It’s all Kims and Lees,” he said.

The subject may be touchy as well. Locals are frustrated when rich Asians pay cash or buy homes sight unseen. “They are just loaded with money,” said one real estate saleswoman in Palos Verdes accustomed to Americans who struggle to qualify for a mortgage loan.

But the sensitivity cuts two ways, particularly among Japanese who are weary of continued attention. “The Japanese are tired of being targeted,” says Satoru Jo, vice president of Cushman Realty in Los Angeles.

Multilingual Brokers

The new buyers are certainly changing the chemistry of home sales. Aggressive real estate brokers on Los Angeles’ West Side--such as Douglas and Fred Sands--have gone looking for deals in cities like Tokyo, Taipei and Hong Kong. Potential Asian buyers are met at Los Angeles International Airport and squired around Beverly Hills and its environs by real estate agents who speak their language.

One broker at Fred Sands Realtors, Christine Lee Watt, has a multilingual background tailor-made for the times: She was born in Hong Kong, raised in Japan and went to college in the United States.

Sales agent Michael Lee at Coldwell Banker in Woodland Hills says he is selling Asian buyers six or seven houses a month in west-end San Fernando Valley neighborhoods that have first-rate schools. Lee speaks Korean as well as Japanese.

Hiroko Kimura, a Century 21 saleswoman in Garden Grove, sells homes all over Orange County to Japanese buyers. They include investors from Tokyo and Osaka who want second homes here in exclusive towns like Newport Beach. “The prices here look cheap to them,” Kimura said.

She also told of one Japanese couple in their mid-20s who bought a home in Fullerton with $150,000 received from their parents. Although the Japanese typically give their children financial help, the amounts are increasing sharply, Kimura said, noting: “It used to be the kids got $20,000 or $30,000. Now it’s $100,000 or more.”

Brokers believe that Asian buyers will be even more conspicuous in the years ahead. The Taiwan government, for example, recently liberalized its rules for investments overseas, and the thrifty Taiwanese have huge sums to invest. Others say that Japanese investment in residential real estate will soon emerge from its infancy.

While property values in Tokyo have leveled off and begun falling slightly in recent months, parts of the Southern California housing market are appreciating at annual rates of 20% to 30%. It is “the hottest market in the country right now,” said Yukuo Takenaka, partner in the Los Angeles office of the Peat Marwick Main accounting firm.

Some fear a backlash if, as in Hawaii, the buying assumes ostentatious proportions. Many Japanese were especially galled at Kawamoto’s behavior, saying that his flamboyant style was decidedly un-Japanese.

No Repeat

“If the Japanese start acting (here) like they did in Hawaii, then I’m going to oppose it,” said Jo, the Japanese-born Cushman Realty executive.

Most real estate experts, both Japanese and American, believe what happened in Honolulu will not be repeated in Los Angeles. Not only is Southern California too large for that kind of an impact, Hawaii’s tropical climate, vacation reputation and relative proximity to Tokyo all ensure its special attraction for Japanese investors.

Local real estate seers say, though, that homes ranging from mansions to small pieds-a-terre do hold a growing allure for Japanese businessmen and investors in neighborhoods like Beverly Hills, Bel-Air, Brentwood and Pacific Palisades.

“They love homes in Beverly Hills, particularly if a celebrity has lived there,” said real estate broker Elaine Young.

One Japanese businessman paid $556,000 sight unseen for a “fixer-upper” home in Bel-Air where he will stay while here from Japan on business trips, and a senior executive for Shuwa Corp.--which owns the Arco Tower in downtown Los Angeles--just bought a home in Beverly Hills for $2.9 million.

Kawase’s company, Haseko, is building condos and apartments all over metropolitan Los Angeles--from Beverly Hills to Pasadena--and the buyers are a mix of Japanese and locals.

In one case recently, Haseko took over a condominium rehabilitation project at a stately old apartment building in Hancock Park that was begun by Los Angeles developer Severyn Ashkenazy. After Ashkenazy experienced financial problems, Haseko completed the restoration and sold the 21 units. Four of the buyers were Japanese.

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Haseko has also acquired 10 homes in the San Gabriel Valley that it rents to Japanese executives who are working here on assignment from Japan. The homes were purposely bought in towns where the school systems have good reputations. “This is our biggest concern--the school systems,” Kawase said.

On the other side of Los Angeles County is Kyoka Sashida, a 42-year-old former saleswoman for Century 21 who recently started her own financial management and real estate brokerage firm in Long Beach.

Every month, Sashida sends a newsletter, known as the KSC California Club News, to 400 wealthy potential investors in Japan. One recent “hot property” she listed was a seven-unit apartment building in Hollywood going for $745,000.

Although Sashida remains a Japanese citizen, she came here more than two decades ago and holds two degrees from Long Beach State University. She is mulling an application for U.S. citizenship because she wants the right to vote.

Yet, as Sashida admits, knowing the cultures on either side of the Pacific is no magic formula for drumming up business in Japan, more than 5,000 miles away. “I’m still having difficulty getting clients there,” she says.

One of Sashida’s business colleagues is the 33-year-old Nishiba, the executive working in Tijuana, who has quite a different story to tell.

Born 60 miles from Tokyo to a wealthy family that originally made its money in the silk business, Nishiba left Japan 13 years ago because his older brother had first shot at running the family business.

The second-son status gave the reed-thin, wavy-haired executive the freedom to explore and enjoy. “My brother was raised like Prince Charles,” Nishiba said, “but I’m more like Prince Andrew, more free-spirited.”

Educated at the University of Kansas, Nishiba spent several years as a salesman in the San Fernando Valley before moving to San Diego last year to manage construction of a $6-million manufacturing plant that his father, now 63, wanted to build as a last hurrah before retirement.

Tijuana has been become a popular location for foreign manufacturers because its labor costs are so low. Nishiba’s family business produces plastic and metal parts for appliances like refrigerators and coffee makers that it sells to large Japanese concerns like Sanyo that do business in the United States.

But Nishiba is finding that business life south of the border is rarely simple, noting that getting the right phone system installed at his plant severely tried his efficient Japanese soul. And though his Spanish is improving, constantly jumping cultures and talking business in three languages does not always go smoothly.

“Sometimes,” he admits, “I do get confused.”