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Yokoso! Niseko
A little town in Hokkaido is making big news on the ski resort front
| Text : Elizabeth Kerr | Photo : www.thinkstockphotos.com |
In October, Malaysian conglomerate YTL Hotels won an award at 2010’s Hotel Investment Conference Asia-Pacific for its acquisition of sleepy Niseko Village in Japan. HICAP recognised the genius of YTL’s US$66 million purchase of over 400 hectares of freehold land, which comprised the Hilton and Green Leaf hotels (a total of 700 rooms), golf courses, onsens and ski lifts.
In a press release, YTL president James McBride said, “Niseko Village presents a unique opportunity to develop a world-class ski resort destination in Asia along the lines of Vail in Colorado, Whistler in British Columbia and sister city, St Moritz. Rarely are you able to start with a blank canvas of some of the most beautiful countryside in the world to re-energise a mountain resort community and transform Niseko Village into our vision of Asia’s premier resort destination.”
So much for sleepy. Clearly YTL thinks the town of about 5,000 is investment-worthy, but Niseko has only recently been making waves as a destination — or as a property hub. “It’s always been something of a Japanese hippie town,” begins Julian Bailey, a sales associate at boutique developer Hokkaido Tracks Resort Properties. “This isn’t the first boom cycle in Niseko. This was a real estate agent’s dream in the ’80s.”
It looks like things are about to change permanently. Niseko has become a favourite spot for skiers who appreciate a challenge, as well as summer tourism in its infancy. Hokkaido Tracks and other developers have remedied the lack of international-grade accommodation and gone a fair way to putting Niseko on the global map. As Bailey sees it, “Expectations could be dashed if people are expecting Whistler and the shops and the restaurants and Starbucks. But Whistler was exactly like this 20 years ago. This is right at the beginning of that kind of development.”
For anyone seeking a quiet getaway, Niseko has been a valid investment option for quite a while. True, it looks awful, it’s poorly planned, buildings are scattered willy-nilly and the appeal of such an “ugly little village” can seem mysterious. “From some people’s perspective that’s all it will ever be: a strange, not particularly attractive village lacking infrastructure,” Bailey theorises. “But there’s another group who come here and they absolutely fall in love. I think it’s a combination of not getting too bogged down in the built environment and accepting it for what it is.” It helps that Niseko is blessed with stunning natural beauty, great food and a friendly, internationally experienced local population. The random development by both Japanese and enamoured foreign nationals has created a, “really weird amalgam of all of it. [Owners and visitors] don’t spend too much time analysing that and they get on the mountain in winter and say ‘This is the best skiing I’ve ever done, anywhere.’ And that’s very, very powerful.”
That’s what Hokkaido Tracks, YTL and others are banking on for the future, and so the perceived lack of infrastructure could be a problem. “These places are in very rural Hokkaido farming communities … there are probably some parallels in Canada, in terms of British Columbia and Alberta as far as the region goes. It’s very definitely rural Japan: pretty unsophisticated, agricultural, fishing and forestry with a community that supports those industries. In that sense there’s not a classic resort infrastructure.”
But bigger, incoming institutional developers have the ability to make the necessary changes the town needs. Following the boom years of the 1980s, things slowed down and the maintenance stopped. Which is not to say the area collapsed. “You’re also in Japan, a very advanced economy that’s extremely fastidious about infrastructure,” Bailey reminds. Basically, the liveable imperfection was a large part of the charm.
Hokkaido Tracks newest properties are a direct response to the mature environment, which now includes custom homes requested by CEOs and other affluent purchasers looking at the long term, lifestyle condo buyers not as interested in returns and smaller flats designed to respond to the pressure on rentals and which appeal to entry level buyers. “I would define [the market] simply as pre- and post-Lehman. The pre-Lehman model was around having what you want — a place to spend time for a holiday — that could get you a rental return of 3 or 4 percent. When there were fewer apartments the returns were good and you could fill them without much trouble. Of course there’s more supply now, more interest and those yields have been squeezed. But the vast majority of property has been sold on the premise that you can have your nice place in Niseko and other people’s holidays will help to cover costs.”
One has to wonder whether or not the world needs yet another glitzy ski resort town: Colorado, BC and Switzerland are doing just fine. “There’s an interesting tension developing now. For five years companies like ours were a big fish in a small pond. At that level we’ve been able to take advantage of opportunities on a modest scale,” says Bailey. “I’m sure the people here think we’re doing quite radical development. For the local people we represent corporate foreign interests. But we’re a small business. We’re just here because we like it. We’re also able to earn a living … Much bigger fish have recognised a much bigger opportunity.” Like the upmarket YTL, who could feasibly accomplish in three years what Hokkaido Tracks and others have in ten. “Those interests are there, I think those people have put their money down and whether or not I like it or the locals like it, I suspect we’ve crossed the Rubicon as far as that goes. It will be vastly different in a decade.” Different yes, but does it need to be? “I’m not sure that’s even relevant.”
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