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Photograph by James Whitlow Delano/Redux Photograph by James Whitlow Delano/Redux

Morihiro Oguma’s phone rang every day with calls from brokers representing foreign investors who wanted to buy his Japan Mineral water-bottling business. “In many cases I was told I could name my price,” Oguma says, adding that he has no interest in selling the Hokkaido-based company. “It seems what they really wanted was our rights to groundwater.”

A two-decade slump in Japan’s real estate prices and the country’s lax rules on selling foreigners forestland with water rights attached are attracting overseas investors, with the Chinese leading the pack. Some areas of remote woodland in Japan, the only country in the Asia-Pacific region that doesn’t regulate property investment by foreigners, can be bought for just 60¢ a square meter, including the groundwater beneath. Groundwater is the water from rain and snow that seeps into the land, where it eventually ends up in aquifers that can be tapped by drilling a well.

Japan ranks in the top 10 percent of countries by water resources, while China and India will face shortages starting in 2030, according to an August report from the United Nations. HSBC analysts estimate that almost half of China’s economy is already based in water-scarce regions. The UN has warned that two-thirds of the globe may be “water-stressed” by 2015, while parched locales such as India’s Rajasthan region have already banned new bottling plants and breweries to conserve aquifers.

In Japan, the biggest spike in forest purchases by foreigners has come in Hokkaido, its northern island. It’s about the size of Austria and has triple the average water reserves of other Japanese prefectures, according to Hokkaido government figures. The island has about 60,000 square kilometers (23,170 square miles) of forest, a quarter of the nation’s total. While the land owned by non-Japanese investors remains small—37 sq. km.—almost a third of the foreigner-owned land is on Hokkaido. China leads the purchases of Hokkaido forest and water rights with 21 transactions out of a total of 57. Hong Kong buyers using Virgin Islands-registered offshore companies accounted for another nine and Singapore investors eight, says Masayuki Mitobe, the head of water and land economic research for Hokkaido’s government. He says he cannot name the investors due to privacy laws.

Hokkaido Governor Harumi Takahashi says she’s concerned about the lack of information about some of these land purchases and the development plans of overseas investors. “There emerged cases where we weren’t sure about the reasons why investors were purchasing such vast areas of land,” Takahashi said in a Tokyo press conference on Oct. 18.

Chinese investors have been eyeing the water assets in Japan with the idea of exporting bottled water back to China, says Hokuto Okudera, head of M&A Support, a Tokyo-based broker focusing on mergers and acquisitions for small and mid-sized companies. The safety of drinking water is a big issue in China. The Chinese investors may also want to cultivate crops for export to their home country, or even set up factories, such as steel and paper mills, that require lots of water. This kind of investment is a sensitive issue in Japan, which clashed in September with China over the ownership of the islands known as Senkaku in Japanese and Diaoyu in Chinese.

Near Mount Fuji, Osaka-based Seven Yellow pumps 500,000 liters of water a month from a well and exports as much as 80 percent of it to China, where it sells for 150 yen ($1.89) or more a bottle. “Some people know and some people don’t” know that the company’s biggest shareholder is a Chinese citizen, says Katsuhisa Yoshida, the managing director. The textiles company expanded into water and organic farming about a year and a half ago at the suggestion of its Chinese shareholder, who wanted to go into health foods, Yoshida says. He adds that water companies like Seven Yellow bring jobs to areas that were often in decline.

Plenty more water deals are possible. “Japan’s land is cheap,” says Go Okazaki, who founded Tokyo-based Standard & Initiatives Properties three years ago to invest in forestland. “The water business is quite easy to get into. And from a commercial standpoint, it’s a limited resource.” A square meter of forestland sold for an average of 47 yen in March, compared with a peak of 89 yen in 1983, the Japan Real Estate Institute said in a September report. “What water volumes you’ll get and how deep you’ll need to drill depends on the place,” says Okazaki. “But if you dig, you’re bound to strike water anywhere in Japan.”