Contrary to what the glitterati maintain, there are great ski spots around the world — global warming or not — outside of Vail, Whistler and the Alps. Some of which are actually for skiing. Tucked away in western Hokkaido is Niseko, a village of around 5,000 that ranks as the second snowiest location on the planet (behind Mount Baker in Washington state) according to Forbes that is quickly becoming the go-to location for devoted ski bums.
“It’s really Asia’s playground. It’s within a five-hour flight of more than 50 percent of the world’s population. There’s no other resort in Asia that has as much infrastructure as it does,” begins IP Global consultant Chris Lane. “All the services are getting better and better. There’s a core rental portal that manages all the beds in town. And the government has finally agreed to spend some money … There’s a main drag that goes through the middle of the ski resort so they’re paying to put some power lines underground, maybe some road heating. They do see it as one of [Japan’s] main tourist areas.”
Niseko is one of the few locations in Japan that has seen significant real estate appreciation since 2001, despite the town’s relative lack of overall infrastructure. Nonetheless the area has sprung onto many regional developers’ radar over the last few years. As it stands independent, private developers currently dominate the industry but major organisations like PCPD (PCCW’s development arm) and Malaysia’s YTL are taking an active interest. Though many investors are interested in the swanky village vibe and chic shopping and dining found in spots like Whistler and Gstaad, Niseko’s singular brand of low-key, low-traffic vacationing has its share of diehards. “There’s perhaps not enough footfall through the village,” for “cool” village status says Lane. “There’s a cap at the airport and the train. There are only so many flights you can do. I don’t think the footfall can validate a real five-star resort right now,” he explains. But Lane also compares Niseko now to Sanya 20 years ago — long before it was the so-called “Hawaii of China.” Niseko just needs time. “If you go [to Sanya] now there are hotels scattered everywhere and there’s been a serious level of upscale construction,” reasons Lane. And the operators that did best are the ones that recognised opportunity before the big boys took over.
The newest addition to Niseko’s old school, unaffected landscape is IPG’s Akazora, located on central Momiji Street about five minutes from the resort’s premier chair lift. With tourist arrivals up 103 percent in 2011/12 (and some of the biggest jumps coming from France, Canada and the US), powdery snow practically every day and already a shortage of accommodation (good luck finding a room for Christmas, New Year or Chinese New Year now), Akazora is an investment for real skiers with an eye on yields as well. “That’s why we’re putting our money into that little village. Downtown is really where it is. It’s where all the mom and pop stuff is and it’s the only place that’s growing organically. The Gucci and Louis Vuitton will come some day — probably if they team up with the high-speed train. But everyone loves the character of Niseko,” says Lane.
The just completed Akazora comprises 24 one- (ranging in size from 617 to 671 square feet) and two-bedroom (900 to 955 square feet) apartments (studio units are sold out) priced from US$400,000 (HK$3.1 million). The building’s design is a marriage of Japanese and Western design with interiors by Hong Kong-based Indigo Living, and include facilities specific to skiers’ needs. Like many ski resorts, Niseko is increasingly a four-season destination, with bikes now allowed up the mountain on the gondola, and a wealth of golfing, hiking, onsens, horse riding and fishing in the immediate area. Niseko was host of an Iron Man race in 2012.
All that makes for a strong investment. Lane notes that returns on chalets barely break even due to the prohibitive cost of snow clearing and that yields are generally better on developments that are not ski in-ski out projects. “The price premium you pay on ski in-ski out is so high that it doesn’t validate the yields you get. We think that our project — in the middle of the village near all the restaurants and bars — can sell at a significant discount and the rental rates per night are relatively the same. We don’t sell lifestyle properties so much so we’re looking for balance. I like clients skiing, not just making money. That’s great for Manhattan or Chicago. But [Akazora] should see 2 to 4 percent net gains,” Lane states.
Lastly: the elephant in the room. Aside from significant real tragedy, how did the 2011 radiation scare affect Niseko? “People have very short memories. This season is going to be absolute gangbusters,” says Lane. Not surprisingly 2011 was slow, but the village has strong holding power and transactions are picking up. “The resort is still amazing and we’re 700 kilometres north of the radiation. It’s not an issue.”