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Japanese Investors Tap Residential Sales Boom : Peninsula Draws Buyers From Pacific Rim

February 26, 1989|ADRIANNE GOODMAN | Times Staff Writer

Of the 100 school districts in Los Angeles County, the Torrance and Palos Verdes districts combined have 42% of all Japanese-speaking students, according to a report by the California Basic Educational Data System, a research office of the State Department of Education.

Foreign-Born Children

Between 1985 and 1988, officials for the Palos Verdes Unified School District reported gradual but steady increases in the numbers of foreign-born children, with the heaviest representation from Japan, Taiwan and Korea, said Rosemary Claire, who directs the Palos Verdes district's special programs, including English as a Second Language.

In 1985, for example, there were 1,365 foreign-born students, with 346 from Japan, 214 from Taiwan and 150 from Korea, Claire said. The remainder of foreign-born students were from Iran, the Philippines, Mexico and Latin American countries, among others, she said.

In 1988, there were 1,559 foreign-born students in the district, with 434 from Japan, 249 from Taiwan and 193 from Korea.

Even more dramatic growth is evident at Hermosa Beach's International Bilingual School, Los Angeles, a private Japanese school started in 1979 with six students. The school now has 270 students, and moved last fall from a 14-classroom facility to one with 21 classrooms, said business manager Takatsugu Watanabe. About 90% of the students are children of Japanese executives, he said.

A Tremendous Increase

"More and more companies are establishing businesses here," Watanabe said. "Naturally, they bring their families and try to look for a school system that will not let the children fall behind when they return to Japan."

Those increases in school enrollment have been paralleled in the South Bay real estate market, brokers said.

Tawada of Best Realty said Asian home buyers are on the buying or selling end of half of his company's transactions. "In the last two years there's been a tremendous increase," said Tawada. His company, which specializes in attracting overseas investors, did $200 million in business on the peninsula last year.

For many Asians, a major attraction of the South Bay market is the cost of buying versus renting, Tawada said.

As the rents for peninsula homes have escalated, more and more Pacific Rim business executives and companies have abandoned renting residential property, Tawada said.

Large Cash Downpayments

Four years ago, Sumitomo Special Metals America Inc., a Tokyo-based electronics parts distributor, was paying monthly rents of $1,800 to $2,000 for Rancho Palos Verdes homes for its four employees, said President Masaru Yokokura.

"We had to negotiate on a yearly basis and the owner increased the rent every year," Yokokura said.

Sumitomo officials decided it would be more cost-effective to buy. Now the company owns three houses in Rancho Palos Verdes valued at about $500,000 each and is looking for a fourth, Yokokura said.

Often, Asian executives are able to pay large cash down payments or pay entirely in cash for homes that cost hundreds of thousands or even millions of dollars, according to a number of South Bay real estate agents.

"We usually pay cash," said Yokokura of Sumitomo Metals, "because we are not so familiar with your banking system, and it involves a rather high interest rate compared to Japan." Interest rates in Japan average between 6% and 7%.

Real estate broker Pamela Nicholson of Century 21-Torrance Realty said Asian clients with ready cash reserves come straight to the peninsula because "homes elsewhere in the South Bay wouldn't compare with what they may have seen in those areas. . . . Many times they have talked to others who have been here on previous trips and were told this is a very desirable area."

Kenneth Leventhal & Co., a Los Angeles-based accounting firm specializing in real estate transactions, monitors the impact of Japanese investment on the American economy. According to the firm's 1987 survey on Japanese real estate investment, the Japanese spent $12.5 billion on American commercial and residential real estate, a 70% increase over 1986.

Jack Rodman, a Leventhal managing partner, said the peninsula is the most preferred residential neighborhood in the Los Angeles area for Japanese businessmen, followed by Pasadena, San Marino, Arcadia and, to a lesser extent, Hancock Park near the Japanese embassy.

"The attraction in Palos Verdes is the ranch-style homes, which are more like a Japanese home--single-story, spread out," Rodman said. "The ocean is very attractive. And Palos Verdes is a little less expensive than the Pacific Palisades, Bel Air and Brentwood."

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