The Niseko bubble: I stand ‘corrected’

 

By Graeme Glen
Sales manager for West Canada Properties

LAST year, in answer to the question, ‘is Niseko a bubble?’, I stated that Niseko was not a bubble, nor could it become a bubble due to the fact that growth has been fueled by private investment and not leveraged. Private money, generally, does not go where there is no possibility of a return. Thus, balance is maintained. This has held true despite the recent battering of the world economy. However, we find that investors are playing it safe and as a result Niseko is now entering a period of correction.

A ‘period of correction’, for the uninitiated, does not involve wearing a dunce cap and standing in the corner of the classroom, nor does it require a gimp suit and a spell on a throne of humiliation. What it does require to deal with a market correction is patience, long-term vision and a deep understanding that essentially nothing has really changed in Niseko. Periods of correction are nothing new to ski resorts. The poster child for ski resort development, Whistler, in Canada’s British Columbia, has endured no less than five since 1978 and is still going strong as ever. From 1978 to 2007, the average price for plots and chalets went from US$150,000 up to US$1,600,000. Keep in mind that this has happened over 30 years, and Niseko is only in its fifth year of growth. So, even if you buy in today you are still getting in very close to the bottom.

How does all this affect investors? If you are a short-term market player out for a quick profit, you should have gotten out last year; if you didn’t you’ll have to hold on till the markets recover confidence. But for the long-term player, the people with vision and a deep love for the area, the longer term rewards will still be sweet.

In fact, world economic chaos aside, things are getting better in Niseko. The basic element of Niseko’s initial success has not disappeared. Snow. As sure as the sun will rise tomorrow, the snow will fall in Niseko. This provides an unbeatable destination for skiers for which there will always be a market. More and more services are opening, giving the tourists more options. The quality of these services are becoming more and more sophisticated to match the needs of the more sophisticated Asian customers we find coming here. Exchange rates have reduced the numbers of Australian visitors, but the good news is they are being replaced. Visitors from Hong Kong are up 42 per cent, and Singapore and Thailand by 10 per cent. Many of the Australians who are being priced out of the market by the exchange rates are looking to capitalise on exchange rates by selling their Japan assets. This offers tremendous bargains to the Asian market.

So, above all else, enjoy your stay, enjoy the snow and all that Niseko has to offer.