In Japan, buying cheap land for water rights is become a big deal.

China is currently leading the pack of foreign investors drawn to Japan's low-cost land supply. For the past two decades, Japan's real estate values have been falling. Now, investors are seeing a market opportunity in purchasing forest acreage with water rights at low costs. Because of Japan's permissive land-buying regulations and insufficient land registry, they see a market niche. Hotels

Some parts of isolated woodland in Japan can be purchased for 60 US cents a square meter (10.76 square feet) including groundwater, according to Japanese government sources and numerous media accounts. Japan is the only country in the Asia-Pacific area that does not have any restrictions on foreigners investing in real estate.

According to a UN assessment released in August, Japan, which has a falling population, is in the top 10% of countries in terms of water resources, whereas China and India, which have the opposite demographic trend, would suffer water shortages by 2030.

In a research released on Sept. 12, HSBC Holdings Plc (HSBA) stated that nearly half of China's economy is already situated in water-scarce areas.

Non-Japanese forest purchases have increased the most in Hokkaido, Japan's northernmost island, which is nearly the size of Austria and contains three times the average water reserves of other Japanese prefectures, according to Hokkaido government data. It has about 60,000 square kilometers (23,170 square miles) of forest, accounting for nearly a quarter of Japan's total, and provides 20% of the country's food.

According to Business Week, though non-Japanese land ownership is still limited — 3,700 hectares (37 square kilometers) — about a third of it is on Hokkaido.

According to local government data, non-Japanese investors bought 20 times more land in Hokkaido in 2009 than they did two years before.

In a press conference in Tokyo on October 18th. Governor Harumi Takahashi of Hokkaido expressed alarm over foreigners rushing to buy forest land with water rights, claiming that the government had no idea what development intentions the buyers might have. She stated that Japan welcomes investment from both domestic and foreign firms, but that adequate water resource management is required.

According to Masayuki Mitobe, head of Hokkaido's government's water and land economic research, China is the most active buyer of Hokkaido forest and water rights, with 21 transactions out of a total of 57 sales.

Another nine were made up of Hong Kong buyers who used Virgin Island-registered offshore entities, and eight were made up of Singapore investors. Due to privacy rules, he stated he couldn't name the investors.

According to Business Week, Standard & Initiatives Properties, situated in Tokyo, was created three years ago by Go Okazaki to invest in forest acreage.

", he explained "Japan's land is inexpensive. Water is a relatively simple industry to enter, and it is a finite resource from an economic sense."

The investor went on to say, "It makes sense to buy forest for water resources, given present prices and the limited character of Japan's timber market compared to North America and Russia. Cutting trees and replanting costs roughly three times as much as timber."

According to the Japan Real Estate Institute, a square meter of forest land sold for an average of 47 yen (60 cents) in March, down from a high of 89 yen in 1983.

"How much water you'll obtain and how deep you'll have to drill depends on where you are," Okazaki explained. "However, if you dig deep enough anywhere in Japan, you'll find water."