Faced with financial woes back home and weak property markets in the United States, Japanese banks and investors drastically cut real estate investment in the US last year, spending only $807 million, according to Kenneth Leventhal & Co., an accounting firm. The 1992 investment was 85 percent less than the 1991 total of $5.1 billion.

"Significant overbuilding and the lingering US recession, combined with mounting problem loans at Japanese banks and a 60 percent decline in Japanese stock prices, have triggered the substantial retrenchment in investment activity," said Jack Rodman, director of the firm's Pacific Rim practices.

In 1988, Japanese investment in the US reached a record $16.5 billion.

Of the $76 billion invested by Japan in US real estate market since 1985, office properties took the lion's share.

Last year, Japanese investment in Hawaii and California accounted for $619 million, or 77 percent of the 1992 total.

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