UE4 is constantly updated by Epic, it means nothing that it has been released before Dragon Engine.
Yakuza team always had some very skilled modelers and animator. They put a lot of effort modeling believable characters, but that has little to do with the quality of the engine itself... their models were marvellous also during PS3 era.
On the other hand, I think this led to something I always hated about Yakuza series: the extreme discrepancy between main characters and generic NPCs. I missed recent releases and I don’t know if they improved this, but low poly, statics, redundant and undubbed NPCs always bothered me a lot, expecially when they stand next to the super-detailed Kazuma.
I understand it’s impossible to achieve the same main character models quality for all NPCs, but I hope for Shenmue III that Yu will take in account this aspect as he did for the previous episodes... I would prefer lesser detailed main characters and equally detailed NPCs!