Japanese Selling Property in Hong Kong : Real estate: Investors from other countries snap up the structures that are put on the block as pinched banks call in debt.

HONG KONG —  Japanese investors are feverishly selling property in Hong Kong to help offset losses they have taken in the plummeting Tokyo stock market.

Experts say Japanese investors have sold more than half their property in the colony in the past year as troubled Japanese banks have called in debts.

Japanese share prices have been falling for two years, but dramatic plunges in the Nikkei average in recent weeks--with no indication yet of when it will hit bottom--are expected to continue Japanese investors’ search for liquidity.

Yet the frenzied selling activity, which would send property values into the cellar in many world markets, has had little effect in Hong Kong. The peak property prices of the late 1980s are being matched as investors from the colony and China buy as soon as the Japanese put property on the market.

For some in the colony, Japan’s pain has become Hong Kong’s gain.

“Property prices are increasing in Hong Kong. But property stakes in other parts of the world aren’t moving, so Japanese property investors are liquidating their more valuable assets. And the more valuable assets in today’s terms are very much invested in Hong Kong,” said Dominic Leung, a director of property agent Richard Ellis Ltd.

A recession in Australia, Britain and the United States has hampered efforts by Japanese investors to sell assets in those countries, increasing the pace of withdrawal from Hong Kong.

“Although many Japanese property investors aren’t willing to sell, they have no choice. They have to regulate their assets in Hong Kong to pay back their bank loans at home,” said Tatahira Ogawa, chief representative of research for Nikko Securities Co. (Asia).

Hong Kong’s no-capital-gains tax policy has made it one of the region’s most inviting property markets.

A study by the University of Hong Kong and property developer Jones Lang & Wootton found that the Japanese invested an estimated $2.8 billion in Hong Kong from 1986 through May, 1989. But the optimism that spurred that pace changed as Japan developed economic problems.

Nevertheless, some Japanese investors have done well buying commercial properties and selling them via strata-title investments--investments in floors of a building, or sets of floors.

One of Hong Kong’s most visible strata-titles is the twin-towered Bond Center. EIE Development (International) Ltd. purchased the building in 1989 for an estimated $309 million. That same year, it sold several floors to generate $254.8 million for its financially strapped parent, EIE International Co. of Japan. The buyer was Indonesian tycoon Mochtar Riady’s Hong Kong-listed company, Lippo Asia Ltd.

Hong Kong tycoon Li Ka-shing’s Cheung Kong group recently bought the Mandarin Plaza for $258.7 million from Japan’s Chisan Group. Cheung Kong and China International Trust & Investment Corp. had sold it to Chisan a few years ago for $232.8 million.

“Chisan sold the commercial block a bit below market price, which seems to indicate that the Japanese are desperate to get the money back as soon as possible. Although they still made a profit, it was smaller than expected,” said Law Cheung-kwok, chief economist for South China Brokerage.

Other recent Japanese sellers include Masao Sen, a singer and managing director of Abe International Venture Capital Ltd. He got rid of two hotels.

“Sen sold both properties--one in 1990 and one in 1991-- because he was tied up with loans used to finance properties in Europe and Australia. His investments were very profitable. But pressures from Japanese banks forced him to sell,” said Yasushi Fujii, an associate director at Jones Lang & Wootton.

Perhaps the most vivid example of Japan’s retreat from Hong Kong was a decision last year by Japan-based golf membership broker GGS Co. to stop construction on the nearly completed Ritz Carlton Hotel.

“After GGS went bankrupt last July, its banks seized the property and are now looking for a buyer,” Ogawa said. Brokers estimate that the hotel is worth $200 million.

It will be at least another year before Japanese investors can afford to take financial risk overseas, experts say, adding that many are now focusing their attention on the government’s handling of the domestic economy.