Buying a Home or Investment Property in Niseko: Pros and Cons

5 months ago 3

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Niseko is famous worldwide as Japan’s number one ski resort. It has also earned a reputation for being one of the most desirable places for foreigners hoping to buy a second home or investment property in Japan.

Real Estate Japan staff recently had the opportunity to speak with local Niseko real estate agents to ask why this picturesque part of Hokkaido is so popular with foreign home buyers and investors. However, buying a property in a four-season resort area in Japan can involve additional issues and costs, which are important to consider when doing your due diligence.

Is Niseko the right place to buy your vacation home in Japan? Let’s take a look at some of the pros and cons.

Why is Niseko so popular with home buyers?

Niseko has risen to the top of many rankings for its accessibility to world-class winter and summer activities and overall lifestyle and livability. Foreign homebuyers are also attracted to the existence of a laidback local foreign community and the ease of getting around without having to speak Japanese.

Overview and Access

“Niseko” can refer to the town of Niseko (Niseko-cho) or the entire Niseko resort area, which consists of the towns of Niseko, Kutchan and Rankoshi.

When skiers and snowboarders are headed to “Niseko”, however, they are most likely going to one of the four major interlinked resorts, Grand Hirafu, Hanazono, Niseko Village and Annapuri, all of which are located on Mt. Niseko-Annapuri.

From New Chitose Airport, it is about a two-hour drive to Niseko. During the winter season, multiple bus companies also offer service between hotels in central Sapporo and Niseko. Another option is to take the train between Sapporo and Kutchan stations, with a transfer at Otaru.

World-class powder snow, stunning landscapes and hot springs

Niseko is renowned for the quality and texture of its powder snow, with an average of over 15-meters of snow each season.

Skiers and snowboarders flock to Niseko for its endless powder bowls, tree runs and off-trail skiing, an option not usually available at other ski resorts in Japan.

All of this takes place against a backdrop of stunning winter scenery, dominated by Mt. Yotei, an inactive volcano standing at 1,900-meters, nicknamed “Hokkaido’s Fuji,” due to its resemblance to Mt. Fuji.

Before globetrotting skiers and snowboarders discovered Niseko, it was famous in Japan as an onsen (hot springs) destination, since many of the mountains in the Niseko area are volcanically active.

Cool summers and farm-to-table dining

For those looking to buy a vacation home that you can enjoy year-round, Niseko offers amazing food, weather and a relaxing outdoor lifestyle in the green season, when the winter tourists have departed.

The Shiribetsu river, considered one of the cleanest rivers in the entire country of Japan, runs through the center of Niseko, and activities along the rivers of Niseko are among the most popular things to do in summer.

Niseko also enjoys amazing summer weather, with highs averaging about 20 degrees C in August. Many people from around Japan come to Hokkaido to escape the high temperatures and humidity that affects the southern prefectures of Japan.

Niseko’s mild summers means that you can enjoy activities like golf, hiking, barbecues, camping and canoeing without dealing with the heat and humidity.

As a resident of Niseko you can also enjoy local Hokkaido produce, dairy, beef and seafood, which are known throughout Japan for their freshness and quality. In fact, many of the world’s leading restaurants procure supplies directly from Hokkaido farms and fisheries to ensure quality.

Winter is Niseko’s busy season and some restaurants and businesses do not operate in the summer months, so this is also a consideration if you are interested in ski-season level nightlife. Hotel occupancy is also much lower in the summer and the bustling winter streets of Hirafu and Kutchan are much quieter in the green season.

Foreigner-friendly and English-speaking community

Niseko’s resorts are very accessible and welcoming to foreign visitors. Hirafu town, in particular, is very foreigner-friendly, and has many restaurants, bars and shops that offer English service. Many after-ski (après) activities can be found in Hirafu.

One of the major advantages of visiting or living in the Niseko area is that, unlike most of Japan, you do not need to know Japanese to interact with the local community. Some of your neighbors will also be foreigners and English is the lingua franca in the foreign community.

Insights from local agents

Real Estate Japan recently had the opportunity to visit with some local real estate agents for their insights on reasons why buyers should consider buying or not buying property in Niseko.

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Here are the key takeaways from our conversations with local agents:

Home ownership

The agents we spoke with mentioned that buyers should consider buying property that they themselves will use, either as a first home or vacation home so you can really enjoy the Niseko lifestyle. Investment yield for many rental properties is not high in Niseko and buyers targeting yield may not be able to find what they are looking for.

Renting out your property

Many foreigners, whether resident in Japan or overseas, buy property in Niseko but do not reside there year-round. This is not necessarily an issue because there are many local property managers in the area who can help you maintain and rent out the property.

Continuing popularity of Niseko

Niseko is continuing to grow in popularity and actively marketing itself as an all-season destination, not just a winter resort. The potential for the area to be further developed is relatively high.

Westernized area

It is easy to get around Niseko without knowing Japanese and there is a strong resident foreign community. Winter season brings an influx of tourists from around the world, giving the town a festive, international vibe.

Price appreciation

Some agents mentioned that there is still potential for price appreciation in Niseko real estate, although perhaps not as much as there was ten or fifteen years ago.

However, there are also some cons to consider:

Relatively low investment yield and occupancy in summer months

The agents we spoke to said that buyers who are looking for investment properties should expect rental yield to be about 2% to 3%, which is not high. Another consideration is that demand is high in the winter, but drops considerably in the summer.

A good reason to buy, therefore, is if you genuinely want to own a property for your own use. If you are looking for an investment property, it is best to consult a local agent, who can help you with your particular investment objectives.

Cost of living

The cost-of-living in Niseko has risen as winter season tourists have descended on the area, a phenomenon that is not uncommon in resort areas around the world. So this should be pointed out as a downside. However, as an anecdotal fact, when Real Estate Japan staff visited earlier this month in May, we found that food prices at the MaxValue supermarket in Kutchan were comparable to those in Tokyo, and prices for some produce and seafood were actually lower.

Maintaining your property

We asked Mr. Chris Pickering, of Uchi Japan, one of Niseko’s leading brokers, about things that buyers sometimes forget to consider and he said that people often don’t realize how hard it is to maintain properties in Niseko. “From minus 20 degrees to 15 metres of snow to plus 25-30 degrees in summer – the strain on properties by the weather is real.”

Conclusion

Perhaps the most appealing reason to buy real estate in Niseko is what Niseko itself offers – a slice of life in Japan’s premiere all-season destination. Beyond location and lifestyle, however, are potential financial benefits and risks and your own purchase goals. As always, it is best to consult a local real estate in Niseko to help you navigate the purchase process.

Contact Uchi Japan

Uchi Japan is one of Niseko’s leading bilingual real estate brokerages with many years’ experience helping foreigners buy their dream home in Japan. Please contact them here if you are interested in learning more about purchasing property in Niseko.

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