When Julia Chang, a 48-year-old Taiwanese who divides her time between Taiwan and Tokyo, decided to diversify her family’s overseas investments, she settled on real estate in the Japanese capital, where prices have slumped for two decades.

Chang, a former flight attendant, is looking to buy her third apartment in Tokyo, which is increasingly attracting foreign buyers after Prime Minister Shinzo Abe took office in December with a pledge to end the deflation that’s depressed real estate.

“Tokyo properties make a good investment because they are relatively cheap,” said Chang in an interview at her ¥170 million ($1.7 million) three-bedroom apartment in central Tokyo. “It’s a bargain.”

Asian investors like Chang are being lured by returns as high as 8 percent on rental income and signs the property market is recovering. The government’s resolve to keep the yen weak has also made real estate in Japan more affordable compared with Hong Kong, Singapore and Taiwan, where governments have been struggling to contain surging residential prices.

“Japan is cheap considering how much property prices have gained in Singapore and Hong Kong,” said Akihiko Mizuno, international director and head of capital markets at Jones Lang LaSalle Inc. “They expect to receive stable rental income and also have an expectation that prices will rise.”

Home prices in Tokyo are around ¥120,000 to ¥150,000 per sq. foot (.09 sq. meter), according to Chicago-based Jones Lang LaSalle. That compares with about ¥280,000 to ¥400,000 in Hong Kong and ¥200,000 to ¥250,000 in Singapore, it said.

In New York, the average price per square foot for a Manhattan condo is $1,381, or about ¥137,000, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Homes in the best parts of central London sell for about £2,000 ($3,100) a foot, with addresses in Chelsea, Kensington and north of Hyde Park fetching about £4000, CBRE Group Inc said in a June report.

Property prices in major Japanese cities are still less than half their peak at the height of the bubble economy in the 1980s. The average price of a three-bedroom apartment in Tokyo and surrounding prefectures rose 7.9 percent in June from a year earlier to ¥48.3 million, according to Real Estate Economic Institute Co.

A unit of about 1,000 sq. feet (93 sq. meters) in Taipei cost about 19.5 million New Taiwan dollars ($648,250) in June, according to Taipei-based Sinyi Realty Co. The average price of a new 1,000-sq.-foot condominium in Singapore is between 1 million Singapore dollars ($784,000) and SG$1.2 million, according to Savills PLC. A 1,076-sq.-foot apartment on Hong Kong Island cost an average HK$19.1 million ($2.5 million) at the end of May, according to the Ratings and Valuation Department.

Investment in the luxury residential market that has driven major Asian cities is now finding its way to Tokyo, said Sanjay Verma, chief executive officer for the Asia-Pacific region at broker Cushman & Wakefield Inc.

“The capital is very restless,” Verma said in an interview in Tokyo. “If there is idle money sitting there, it will find a way to get invested.”

Sinyi, Taiwan’s biggest listed real estate broker, started selling properties in Japan to buyers from greater China — which comprises Hong Kong, Taiwan, China and Macau — in 2010 and has tripled the number of properties sold in two years, said Kenny Ho, Tokyo-based managing director at the realtor.

Sinyi handled ¥11.3 billion in properties in Japan in the first six months of the year, exceeding the ¥8.6 billion for the whole of 2012, Ho said. The yen’s weakening against the dollar this year has made apartments in Tokyo about 15 percent cheaper than last year, driving up demand, he said.

“It used to be that all we needed to do is to talk about prices,” he said. “Now in some cases, our clients have to enroll into a draw and compete with Japanese buyers to acquire new properties.”

Bidding on new apartments is prohibited in Japan, so buyers are entered into a public draw, a practice adopted during the bubble era when home buyers had to line up for days before a property was put up for sale, according to Mitsubishi Estate Co., the nation’s biggest developer by market value.

Chang’s $1.7 million apartment, located in Kojimachi in Chiyoda Ward, has a view of the Imperial Palace. An apartment that has the same proximity and location with Chang’s unit offers about 5.1 percent of return, according to an estimate by Sinyi.

Chang, who married her husband 23 years ago, said she wanted to diversify the family’s wealth by looking at investment opportunities overseas.

“When making an investment, you want to buy when prices are low and with relatively low risks,” said Chang. “That way, it has more room for prices to go up. Besides, Tokyo is one of the biggest cities in the world after all. Owning properties here makes me happy.”

A one-bedroom apartment that costs less than ¥50 million can offer a return of about 6 percent to 7 percent, while the mortgage rate is at about 2.5 percent to 3 percent, Ho said.

CTBC Financial Holding Co., one of five Taiwanese lenders with branches in Japan, said the number of mortgage loans and the value of mortgage lending in the nation tripled in the first half from the same period last year.

The bank is offering a floating mortgage rate of 2 percent to 3 percent, which is tied to the one-month Tokyo interbank offered rate, or Tibor, said Keiken Matsumoto, a Tokyo-based mortgage loan officer at the bank.

The interest rate CTBC charges is higher than the about 1 percent being offered by Japanese banks because the risk of lending to non-Japanese residents is higher, Matsumoto said. The 15- to 20-year lending period is shorter than the maximum 35 years offered in Japan partly because the borrowers tend to be wealthy individuals who repay mortgages earlier, she said.

“Our clients feel that this is a market that is full of potential,” said Matsumoto. “They see now as the timing to invest and we are trying to match that demand from our clients.”

Noticing the overseas interest, Jones Lang LaSalle has held half a dozen seminars in Singapore since November, advertising Japanese properties. The broker has so far sold more than 100 Tokyo homes, with prices from ¥40 million to as much as ¥200 million, for Japanese home builders, including Mitsubishi Estate, Mizuno said.

The broker has also started marketing apartments in Japan to Hong Kong investors following the success in Singapore, Mizuno said. The company may triple its staff in charge of international sales in Japan to match the rising demand, he said.

Tokyu Livable Inc., a Tokyo-based broker that opened its office in Shanghai in 2012, began to sell apartments overseas for the first time this year after declining sales of luxury units at home, according to Toshihiko Kitagawa, senior executive director at the company. It has also conducted sales drives in Singapore and Hong Kong, Kitagawa said.

“Developers weren’t used to going out of the country to sell their properties,” he said, declining to provide sales data. “We are selling quite well since the start of the year.”

Japan’s largest developers are set to benefit from rising apartment sales, said Yoji Otani, a Tokyo-based analyst at Deutsche Securities Inc. Sumitomo Realty & Development Co., the third biggest, has the most land bank in greater Tokyo, with the potential for about 30,000 apartments to be built, said Otani. Mitsui Fudosan Co., the second-largest, and Mitsubishi Estate have the capacity to build as many as 15,000 apartments on the land they hold, said Otani, who has buy recommendations on all three companies.

Mitsubishi Estate on July 31 reported a 44 percent gain in first-quarter profit after a sevenfold increase in profitability at its residential business.

“Condo sales are buoyant,” Otani said in an Aug. 1 report. “This trend is not limited to Mitsubishi Estate.”

Mitsubishi Estate’s shares fell 0.2 percent to ¥2,654 in Tokyo, trimming the year-to-date gain to 30 percent. Mitsui Fudosan dropped 1.1 percent while Sumitomo Realty fell 1.7 percent. The Topix Real Estate Index, which was 0.7 percent lower, has risen 45 percent this year.

Completed condo inventory in the Tokyo metropolitan area is at its lowest level since at least 2000, according to the Real Estate Economic Institute.

Japan’s housing starts rose for a 10th month in June, the longest streak since the period ended December 1996, the Ministry of Land, Infrastructure, Transport and Tourism said July 31.

Prime Minister Abe’s pledge to end 15 years of deflation through monetary easing by the Bank of Japan have helped bolster consumer confidence, fueling expectations that property prices will start rising.

Masayuki Taniguchi, a 51-year-old real estate broker, spotted the trend early. Three years ago, he set up a home page in Chinese to sell properties in Tokyo to investors from Taiwan, Hong Kong and China. He didn’t get any response until late last year and has gotten about 200 inquiries since Abe took office in December.

“At first, I was just stunned,” said Taniguchi, the president of Mikuraya Co., a Tokyo-based hotel and home-share operator. “I knew there was demand. I just couldn’t believe how rapidly the situation changed. With ‘Abenomics,’ people expect the yen to decline, which makes the properties here cheaper to invest for overseas investors.”

An apartment in Tokyo can generate returns of about 6 percent to 8 percent, Taniguchi said. After interest, the return is about 3 percent to 5 percent, he said.

Investors prefer apartments in Tokyo’s central five wards, with a price tag of ¥40 million to ¥100 million, because they offer more stable rental income, said Taniguchi, who plans to wind down his company’s hotel and home-share division and focus on the brokerage for international buyers.

The supply of new apartments in the metropolitan area rose for two straight months in June, gaining 22 percent, according to Real Estate Economic Research Institute.

Sinyi’s sales in Japan will double this year as the country’s economy heads for a recovery, Sinyi’s Ho estimates.

“The surge in sales we have seen has a lot to do with Abenomics,” Ho said. “Even after the cost of borrowing, our clients can get a rental income of at least 4 percent.”