R.E; Unreal Engine.
It has the tools and systems to achieve "photorealism" as much as any other top-level engine going right now, but just because it's possible doesn't mean it's automatically the right art decision for a game or possible on a budget that fits the desired scale of the game.
Shenmue III could, for example, look super realistic if like Hellblade YSnet used photogrammetry of actors/models, but it's expensive and only really seen in games with big budgets, or limited casts. The idea of unique NPCs would be right out the door, and you'd be seeing the same dozen faces repeated over 200+ characters like Kingdom Come: Deliverance. I also think YSnet would still be hearing complaints about existing characters not looking like themselves to be honest.
If Shenmue is to still
be Shenmue, and especially on a budget, then we'll have to accept stylised graphics.
IMO they're hitting a very comfortable groove right now with stuff like this: