Foreigners lured into Niseko for sharp land price increase

PUBLISHED ON Feb 21, 2020

Foreigners are descending upon the northern Japanese ski resort of Niseko in droves, lured by not only its renowned powder snow, but also land prices that remain remarkably affordable even after sharp rises in recent years.

Along an icy road near the slopes sit brand-new condominiums with large windows. Stepping inside reveals a spacious living area with a view of the snowy white peak of Mount Yotei, Hokkaido’s answer to Mount Fuji.

A number of units in the area have been used as vacation homes or rented to guests for the equivalent of thousands of Hong Kong dollars a night.

Land prices in one district of the town of Kutchan, which is part of Niseko, surged 66.7% this year, according to prefectural data, logging the fastest rise in the country for a fourth year running.

Yet as ski resorts go, Niseko is a bargain by global standards. The area ranked only 31st in prime residential land prices in British real estate services company Savills’ annual Ski Report, with an average price of 8,139 euros ($9,000) per sq. meter in October.

This was more than 60% cheaper than Courchevel 1850 in the French Alps, which led the list at 23,030 euros. U.S. resort Aspen placed second, while destinations in Switzerland, Austria and France claimed most of the other top slots.

And returns on investment in Niseko properties can reach 7% in good times, according to a local real estate company — better than the global average of around 5% for ski resorts. This combination makes the area an attractive bet for investors.

A brokerage manager, starts each day by reading email in English from prospective clients looking to buy, say, a hotel or condo. More than 90% of the firm’s customers are wealthy foreigners. Its client list includes roughly 5,500 foreign names, including executives, investors and celebrities.

As more capital flows into Niseko, the people who buy, develop and use the land are increasingly non-Japanese. Visitors walking through downtown find rows of bed-and-breakfasts resembling luxury apartments, with cafes and shops on the ground floor — and signs posted only in English.

Source: SCMP