Sight-Unseen Investment Drives Niseko Property Gains Up To 60% Through COVID

Niseko Town and surrounds at the foot of Mt Yotei are attracting interest Photo Aaron Jamieson

Niseko resort real estate has displayed its resilience with values holding – and in many places increasing – despite 18 months of border closures.

Niseko Property consultant Frank Ferretti said there was no shock sell-off or price drops seen following the outbreak of the crisis, and transactions continued steadily.

“Land has remained popular with buyers throughout the pandemic.

“Land is straightforward compared to houses and condominiums, which buyers usually want to view in person before committing.

“A general knowledge of the land’s location is often sufficient for buyers to feel comfortable to commit.

“We’ve seen a slowdown in second-hand condominium purchases, largely due to buyers being unable to visit them and the significantly reduced yields due to the lack of overseas visitors.

“Owners not being able to use them due to closed borders is another negative factor.

“Despite the overall drop in sales volume, our sellers have shown little interest in reducing their prices – a pattern we observed during the Global Financial Crisis.”

Where Prices Increased Throughout COVID

Ferretti said prices held in the bluechip strongholds of Upper and Middle Hirafu, as well as Kutchan, meanwhile enclaves outside the resorts had seen the biggest gains.

“One location that has boomed in value through COVID has been Royal Town in Moiwa, with land prices increasing by about 50%,” he said.

“This translates as a standard 330sqm plot increasing from around JPY10 million (USD90,000) to around JPY15 million (USD130,000) in 18 months.

“And what’s more, onsen water is piped throughout the neighbourhood, saving expensive drilling costs.”

Ferretti said the township of Niseko – smaller and quieter than the main town Kutcahn – was also on the move.

“Land in Niseko Town and its surrounds have also increased in popularity and value, with both foreign and Japanese buyers- both for vacationing families and long term residents.

“Open borders are likely to accelerate this trend and add different types of buyers to the mix.”

Resort Outskirts Pique Interests

H2 Real Estate Sales Director Paul Butkovich backed up the observations noting price gains in Royal Town, Kondo and Soga – all within the vicinity of Niseko Town and a short drive from the ski lifts.

“There is more value further away from resort, the views are good, the land size is generally bigger and it’s cheaper.

“Plus the market is starting to better understand the area and how to navigate it.”

Butkovich said demand for luxury and lifestyle properties had softened temporarily due to the fact visitors weren’t able to make it here to experience and view such opportunities.

“We’re not seeing the volume of enquiry or trading these types of properties would normally get when borders are open,” he said.

“There have been fewer condos and luxury estate land sales, but that will change when people can come back.

“Just look at all the construction going on – owners of real estate here are not in a panic, they are actually getting a little more bullish on their position.

“In some cases I’m seeing listings coming off the market as vendors are getting excited to come back.

“Why sell one of the hottest lifestyle property markets in Asia?

“Condominium market sales are slow, land sales are constant and homes are interesting for people who want to get their family back here for skiing, summer and fresh Hokkaido food.”

Niseko Market Fundamentals Underpinning Resilience

Butkovich said the desirability of Niseko and lifestyle real estate.

“The longer buyers can’t get here the more they want it,” he said.

“You know what it’s like when you want something but you can’t have it – it makes you want it even more.

“The market fundamentals have not changed despite the pandemic and in fact, it’s the fundamentals that are probably driving the continued interest in the region – natural beauty, four seasons, powder snow, food, Japan/Hokkaido brand, lifestyle.”

Increased interest in Niseko from large Japanese developers is another positive note for the year-round resort market.

“Domestic institutional investors are looking at the area and laying the foundations for lifestyle and hotel assets – they’re gearing up for the post-pandemic travel boom which this will see more tourists, investors, workers and overall population growth,” Butkovich said.

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