Niseko Market Looks To Boom Following COVID Slumber

COVID was hard on the Niseko real estate market, but agents are now reporting a significant return of interest and the beginnings of rising prices as Japan, and the world, digs its way out of the crisis.

Paul Butkovich, H2 Real Estate sales director, said “the volume of sales is currently picking up and close to back to pre-pandemic sales volume”.

Butkovich says a number of factors speak to a starting boom.

For one, the market weakened but never crashed as sales continued, at a lesser volume, through the pandemic.

Add these strong fundamentals to the current situation of pent-up demand and the yen at a 20+ year low and there is ample reason to be optimistic for boom times ahead.

“With brands Park-Hyatt now in the region,” said Butkovich, speaking of the resilience of the Niseko market through the pandemic, “it’s hard to deny Niseko from moving forward despite some of the challenges we will face in growing the resort.”

Agents also mentioned that unlike many other markets, most Niseko buyers purchased their investment properties with cash, meaning that during the pandemic they weren’t under pressure to sell.

Niseko Now More Resilient Than Previous Crises

Another factor tipping agents towards feeling bullish about the emerging, post-pandemic market is that the current rebound appears to be different in nature from previous crises.

Grant Mitchell, Niseko Property director, said the impact on financial markets following the 2008 crisis shook the confidence of typical buyers of Niseko resort properties, ie wealthy residents of Asia.

“This time around, this group has been less adversely affected and willingness to buy in Niseko hasn’t eroded as much,” Mitchell said.

“The other big, recent crisis was the 2011 Tohoku earthquake and tsunami – the yen skyrocketed and the unfolding Fukushima disaster greatly depressed sales.

Weak Yen a Strong Point for Niseko

The yen is now consistently at a 20+ year low and agents are reporting a huge impact on business. A mitigating factor is that inflation is up as well, hitting a seven-year high in April.

“What we could build in 2019,” said Butkovich, “is now in general 15-20% more expensive.”

But according to both Butkovich and Mitchell, the weak yen more than makes up for inflation’s negative impact, and also makes Niseko attractive compared to other regional markets like Singapore and Hong Kong.

“Clients with USD or AUD are seeing this as another discount on the sales price,” said Butkovich.

“I know clients [who] are stockpiling JPY right now in anticipation of borders opening so they can come and buy a property.”

Border Restriction Still Restricting Prices

With all of these factors starting to drive up prices and heralding possible boom times, one pandemic obstacle remains – the inability of new investors to visit.

“Lack of access to Niseko,” said Mitchell, “has been the handbrake for many buyers, particularly those relatively unfamiliar with the area.

“It also meant the stream of new visitors who subsequently become new buyers has been cut off.”

At least some of the lack-of-access impact has been softened by technology, as Butkovich mentioned the use of 360-degree virtual tools and smartphones by agents who have become accustomed to selling to clients based remotely.

But regardless of how sophisticated agents and technology become, nothing replaces a real visit.

“All eyes are on what the Japanese government does after the national elections in July”, Mitchell said, referring to the Upper House elections which will take place on July 10th.

“Even with reduced numbers,” Michell continued, “we are expecting this winter to be the start of Niseko’s next real estate boom.”

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