Hundreds of Chinese investors have bought a real estate project in Japan, where the property and wealth are empty, and they risk losing millions of dollars of investment funds.
According to Chinese state media, more than 500 people in Beijing, Shanghai, and other places purchased a project of Japan’s Toyotomi Corporation through the promotion of domestic intermediary agencies.
However, the property rights so far could not be transferred, and the promised investment income has not been realized.
Toyotomi said it was in trouble, with the capital chain in crisis due to the impact of the Covid-19 pandemic. As a result, the Chinese investors’ funds may be lost.
These investors are preparing to report the case to public security, hoping they can intervene in the investigation.
Many Chinese real estate investors have turned their attention overseas in recent years. And purchasing real estate projects in Japan has become a popular investment method.
Jones Lang LaSalle is one of the marketing agencies in mainland China. In January 2021, its salespersons promoted the “TOYOTOMINN Namba project developed by Toyotomi.
According to the information provided by the marketing agency, Toyotomi promises to lease these properties for homestay operation after the houses are handed over. So the company can pay the buyers an amount of income.
In terms of payment, Toyotomi accepts domestic payments in cash in yuan. It helps solve the concerns of house buyers that they cannot purchase foreign exchange to pay for overseas houses, and it is a real estate transaction in name.
Jones Lang LaSalle and other marketing agencies ensured that they had conducted detailed due diligence and compliance review of Toyotomi’s projects, and there would be lawyers to witness their contracts.
Meanwhile, there were some intangible propaganda articles. They said, “If you sell an apartment in Shanghai, you can buy a building in Osaka, or “China’s wealthy began to snap up real estate in Kyoto.” These articles cause some Chinese investors to think it would be advantageous if they buy late.
As a result, the project attracted a lot of Chinese investors, who decided to sign purchase contracts.
However, due to the Covid pandemic, Chinese investors could not visit Japan to see the real estate project.
Toyotomi claimed to have sent information to 503 investors in the material sent to the Chinese investors, which is believed to be the number of investors involved.
In an email sent to the investors in October 2021, Toyotomi said the Covid pandemic had placed the company under pressure, and the rent payment in the third quarter of last year was delayed.
Toyotomi then issued a “Letter to Owners,” stating that the earnings for the third quarter would be paid at the end of 2021. However, many investors said they had not received relevant payments.
The contracts signed by investors and Toyotomi are more than two years old, but the houses have not yet been handed over.
In April 2022, Toyotomi’s legal representative Yuma Nishiyuanji appeared in a short video. He explained that since the Covid outbreak in 2020, Japan’s tourism, hotel, and catering industries had suffered an unprecedented blow.
He said: “The impact of the entire environment has caused a chain effect, which has led to the company’s main business being in trouble one after another, thus triggering a capital chain crisis at the operational level.”
Toyotomi disclosed its financial data in an email sent to investors on May 20. The data revealed that Toyotomi’s opening cash balance was only $2.2 million in July 2019 and $4 million in July 2020. The cash balance increased to $7.6 million in July 2021.
A reporter of Yicai 1℃ found that Toyotomi’s net assets were $13.7 million before the adjustment in December 2021. But after the adjustment, its net assets turned to -$159 million.
That means the company has turned from capital surplus to insolvency.
In response to the current difficulties, Toyotomi’s legal representative said that the company does not as yet have any plans to apply for bankruptcy and liquidation.