Niseko Market Report

Mt. Yotei View
Mt. Yotei viewed from the Niseko countryside

Niseko: The Time is Now

With fluffy powder snow ranked among the best in the world, plentiful onsen (hot springs) and delicious local produce, Niseko has long been delighting winter sports enthusiasts. Thanks to its natural characteristics and the entrepreneurial spirit of its early international visitors, the small town in eastern Hokkaido has become a thriving ski resort that competes with global favourites like Aspen, Whistler and Courchevel as a top-class destination. 

Though now an established resort, Niseko’s popularity shows no sign of slowing down. Developers’ investment across the town’s five ski resorts in recent years has brought new and varied accommodations, including luxury options that have boosted the brand’s value proposition. There have also been improvements to the entertainment scene and green season, attracting more visitors throughout the year.

Add to this Japan’s booming inbound tourism and foreigner-friendly real estate market and it is clear why investment in the resort is heating up. Here is Housing Japan’s introduction to this lucrative destination. 

History and trajectory

Though winter activities in Niseko date from the early 20th century, the area was a well-kept secret among local skiers until the late 1990s when Australian visitors fell in love with its powder snow and started to tell their friends about it. Some of those visitors saw the potential to offer more than the basic lodgings available, returning in the 2000s to build ski-in, ski-out chalets.

Next came mid-range townhouses and apartments built by development companies before the arrival of luxury condominiums, villas and international hotel brands a few years later. While the global financial crisis in 2008 and the fallout from the Great East Japan Earthquake in 2011 put activity on pause, the market recovered well.

In the past five years, the town has seen numerous new developments, including on land on the fringes of Niseko’s main ski resorts.

It has been a transformation in just over a decade according to Kristian Lund, a 12-year resident of Niseko and publisher of the town’s local magazines, Powderlife and Summerlife.

“When I arrived, the infrastructure was all Japanese and foreigners were just starting to build. The first chalets were very simple in structure and style, now the accommodation is more modern and luxurious. These days, every development wants to outdo the last one,” he says.

With the luxury market in mind, developers have adopted stylish designs, high-end fixtures and fittings and tie-ups with nearby hotels or condominiums to offer the exclusive services of that brand. Properties might benefit from a members’ club, health spa or swimming pool, for example. Many developers are even going the extra mile with a butler or valet service to attract high net worth individuals, says Ken Nakazawa, head of project sales at Housing Japan.

Properties of all sizes continue to join the market, but Lund is seeing more stand-alone four- or five-bed villas to accommodate larger groups as well as villas grouped together. According to Nakazawa, this “community feel” is a key factor in ensuring a property can be a successful return. Other popular trends are privacy while maintaining good access and views of Mount Yotei, often referred to as the Mount Fuji of Hokkaido.  

Onsen in Niseko
Onsen bathing in snowscapes

Attractive characteristics

Niseko boasts a high-quality ski and après-ski offering that combines world-class snow and local, Japanese experiences.

Unlike in other resorts, snow quantity and quality are guaranteed, with an average of 15.3 meters of snowfall over a long season that typically lasts from late November to early May. Visitors can choose from 45 kilometres of slopes (daytime) and 10 kilometres of slopes (nighttime) across Niseko’s four main resort villages, as well as the neighbouring resort of Moiwa, before enjoying the area’s lively culture.

The town’s dining scene utilizes local produce from nearby farmland and ocean to offer high-quality cuisine and Japan’s famed omotenashi hospitality. Soaking in onsen—and increasingly private hot-tubs in villas—also appeals to visitors after a day on the slopes.

“Niseko definitely has a huge vibe day and night,” says Lund, noting the fully booked restaurants in peak season and high footfall on the streets in the evening. “Accommodation is also a big draw, with lots of choice and quality that rich skiers don’t get elsewhere.”

Chart of Trends in Foreign Tourist entry from 2002 of Niseko
Source: Niseko Town Office

Positive influences

Growth in luxury accommodations, in particular, is driving upward momentum in the real estate market.

Yet Niseko remains remarkable value for money. Real estate in the resort is 60% cheaper than in Courchevel, the most expensive in the world, according to a 2019 Ski Report by British real estate services company Savills. Despite a 66.7% increase in land price in Kutchan, a district of Niseko, in 2019, the area is ranked only 31st globally in Savills’ list of prime residential land prices.

Demand for holiday properties is forecast to continue to rise amid Japan’s inbound tourism boom. Over 2012–19, there was a 177% increase in international tourists to Niseko, with 45% growth in the past two years, according to data from the Hokkaido Prefectural Government. China and the USA experienced the highest growth, largely due to new, direct flights from Chitose New Airport (a 2.5-hour drive from Niseko) to eight cities in China. With non-stop flights expanded to Hong Kong, Taiwan, Thailand, Malaysia, Singapore and Russia, further uptick is expected.

Niseko also enjoys a friendly environment for international investors. In the Heritage Foundation’s 2019 Index of Economic Freedom, Japan received 84.1 points for property rights, ranking it as “free” and placing it 16th globally.

Investment opportunities

Based on the market, Nakazawa considers Niseko a great investment for a ski property: “Niseko is one of the most sophisticated resort areas in Japan and, compared to other ski resorts worldwide, it is still not developed.” He says the five-star hotels slated for completion throughout Niseko in the coming years will have a “huge impact on the number of inbound tourists.”

Most investors, he says, buy a property in the area as a second home or holiday home, which can give a 1–2% net yield. Buying in a seasonal destination means the cost performance is lower than the average 3–4% net yield of Tokyo, but investors tend to prioritize enjoying the home over the return. Moreover, most have a long-term plan and want to avoid Japan’s short-term capital gain tax, which is imposed on all property bought and sold within five years, regardless of the owner’s residency.   

In Housing Japan’s portfolio, condominiums range in price from USD$1.5 million to USD$6 million, while villas start at USD$6 million, rising to USD$30 million.

Alternatively, some individuals choose to buy land and develop it themselves.

For developers seeking to sell units in condominiums or groups of villas, Nakazawa emphasizes the importance of doing a tie-up with a strong hotel brand. Buyers will be more attracted to properties served by four- and five-star hotels that can be relied upon for luxury amenities and services. “The name is hugely important because it represents prestige and history,” he says.

Lund adds: “There is a lot of land so, for big developers who want to team up with a brand name hotel and make big projects, there are investment opportunities.”

Pie Chart of Trend in Foreign Tourist Entry by Countries

Growth potential

With work ongoing to further advance Niseko, the future of the resort and its surrounds looks bright.

By 2030, the Shinkansen bullet train route will be extended from Shin-Hakodate-Hokuto to Kutchan, which is part of Niseko. The significant reduction to journey times is expected to boost arrivals: “Niseko will see not only foreign, rich investors but also people from the Kanto region [Tokyo and its seven neighbouring prefectures], come without a hurdle. They are the biggest market in Japan,” says Nakazawa.

Other infrastructure improvements include an expanded road between Otaru and Yoichi and an extension of the Hokkaido Expressway from Yoichi to Kutchan.

International visitors to Japan rose by 8.7% year on year in 2018 and continued growth is expected. Part of the national government’s tourism efforts is driving more visitors to regions, including Hokkaido, and attracting more European and North Americans who tend to travel further, stay longer and spend more money in Japan.

Locally, work continues to improve Niseko’s green season offerings in a bid to make it more of a year-round destination. In 2017, the summer season accounted for 48% of the yearly visitors to Niseko. According to Lund, boosting Niseko’s green season could increase the resort’s current 100-day season to 200 days, giving investors more return on investment.

The time is now

With good value real estate, the promise of good returns and developments in the pipeline that could bring added value to the entire resort area, Niseko presents great investment opportunities for both individuals and property development companies.

“Everything is pointing towards Niseko having a bright future with lots of international interest, similar to what happened in Bali, Koh Samui or Phuket,” says Lund. “All the luxury brands seem to want to stake a claim on Niseko and that turns it into an iconic destination.”

Certainly, as the world keeps watching Niseko, its value can only rise.