Hanazono: Sold! To the Chinese fellow at the back

[HelperElfMissy 42]

You are spot on...the marketing machine is working wonders = as is the word of mouth about how great the experience is... ALL CREDIT to Niseko to making everyone feel welcome!

 

This Dec/Jan there will be 5 families in Niseko (mostly at the same time, some overlapping) whose son's are in the same class. That is the power of goodwill - the kind of marketing you can not buy!!

[thursday 1]

 Originally Posted By: Fattwins

So thursday he has booked out 100 days from mid dec to the end of march is what you are saying? If that is the case it is a good investment. The condos in Canada dont make that much.

Fatts, you (and myself) will not believe what has happened in the last season. I am ashamed that I was not on the frontline.

[thursday 1]

Mama, I am still dumbstruck.

[Fattwins 0]

Look it comes down to the condo thing. Condos arent taxed at the same rate as a house is. Niseko is one of the only areas within Japan with property values rising. If the Overseas investors decide to sell there is no local market for those condos! You can buy a condo in Yuzawa for 5million yen. Those people made a fortune in the boom but... it went bust . There are more condos in the yuzawa, naeba, area than you could ever imagine. There are towers of them! This is why people and local governments are not on the condo band wagon.

 

IF you are in real estate here do you say we expect a 25% return in your first year when it isnt going to happen? Remember you must be the sole owner.

 

80000 profit still sounds a bit high Thursday.

[Rag-Doll 0]

The gross rate per night is about right, depends on the size of the place obviously. Peak rates tend to run from latish Dec to end of Feb. You're not going to get 100 days and bookings drop off very quickly towards the end of Feb. Our place doesn't go for quite that much and we take about 30% from gross revenue after all costs are taken out, and there are a lot! The places make bugger all during the rest of the year so it is not long before the annual net return comes back into line with a fairly standard commercial property investment. Back when there were very few decent apartments they were offering guaranteed net returns of 4% pa. Now that the market is expanding 100% occupancy during the season is less likely, also don't forget you won't be getting income when you use it yourself. There is a practical cap on capital gains due to the inability to borrow against the properties so buying a place at 40-50mil mark is not going to show particularly good cap returns. Increases in int rates in aust is going to hurt the market as well. The prices for apartments are still less than what you would pay in other ski towns in Aust, the Us, France etc. Partly this is because the market is still developing and partly because of the finance issue.

[Go Native 70]

Yeah but Fattwins there are condos and there are condos. The ones being built in Niseko are luxurious western style. Meaning they have western kitchens, often king size beds, and western bathrooms, often fireplaces (gas), large open lounge areas with western size furniture and nearly all have Sky TV and internet connections. They are being built because this is what the western market wants. I truly believe that Niseko's meteoric success has a lot to do with the type of accommodation available there.

 

I bet in Hakuba there are literally hundreds of old Japanese pensions and hotels that have barely seen an upgrade or new paint job since the bubble burst. It's time to clear out some of that old stuff out and build the sort of accommodation that will bring the wealthy families that are now flocking to Niseko.

[Fattwins 0]

GN I have looked at the floor plans a bunch and but its standard Japanese barrier free 1dk 2dk or 3dk. Add some good paints and some bigger furniture and its sold as western. The Japanese are condo kings no one has done it longer

 

Look You can hammer home that Hakuba needs Sub divided Condos but it isnt going to happen at least not within this mayors turn. The investment is in line with sustainable growth. to have 500 or 600 Units owned by foriegn people is not always a good thing. The Japanese arent going to buy those condos back whether here or there. You have a market that is based say 80% on overseas capital. Only Overseas capital is going to invest at this time in a condo. Japanese banks are not keen on giving loans for second homes to the Japanese. I for one would rather see limited condos here and more Japanese investment.

[stemik 14]

I am dumbstruck too!

I never new the whole picture up in Niseko.

Like FT said earlier, some of us have bought in Hakuba at just the right time, that said no-one is builidng condos (yet).

But there is a mini-building frenzy going on and lots of land available only a short ride to the slopes (but it means having transport)

[stemik 14]

and for the 1st year to get 100 nights sold, is kind of unbelivable....

Thursday - how many rooms/people does it hold?

Is there a live in Chalet girl? (for cleaning,cooking)

[HelperElfMissy 42]

Just to add my 10c in again....

that FIVE families from one school class may well just become SIX.

 

I just got a call from another family who are keen to book - I emailed them all my contacts so hopefully they will find something (although I KNOW it is hard to get accomodation at this late notice) - but they did say ... "if we can't get in to Niseko and hang with you guys - then we will try Hakuba."

 

......I know I am a long way away - and I know that my interest in Japan and Snow Sports is fairly new... but I see a trend here...

[Fattwins 0]

Trend yes of course.

Question always is for how long? (Japan as a whole)

 

Hakuba at least for now has decided to encourage home building rather than condos. The question might be asked this way. would you prefer 30 to 40 new families that pay tax etc. or do you prefer 50plus condos that are rental units.

 

Each area wins with either of the choices at the moment. Hakuba builds a tax base which is needed. Niseko's investors get rich off of property sepeculation.

 

Checking the whistler page shows apartment prices at around 300 to 400 dollar average per night. peak is 700 to 900+ but that is only dec 20th to jan 6th. There must be some very rich people out there in HK.

 

Mama what are you paying for your vacation?

[neversummer 0]

40,000,000 will get you a 2 bedroom apartment with a studio attachment

 

It would rent for 65,000 - 75,000 per night max

 

Management fees: 30% - 40%

factor in the utilities, snow clearing, maintenance etc

At best, an investor should be 'hoping for' 80 paying nights and that is really pushing it. 15 for Dec, 26 for Jan, 25 for Feb, 15 Mar. outside of that is a bonus

 

Returns are closer to 4.5% - 6%.

 

offset that through the capital appreciation and it is worthwhile but not really as purely an investment for rental returns

[Fattwins 0]

But that is why Im asking over and over again how we have come up with 800 bucks a day in profits?

[Rag-Doll 0]

FT the reason why you're not getting an answer to that is because they're simply not getting that much. Not unless they are doing everyting themselves, which can't be the case. Neversummer's numbers are pretty much on the money.

[Mike Pow 52]

In my limited experience, many of the 'new wave' of owners in the Niseko area are not concerned with rental returns.

 

They're looking for a second home in a snow-sure resort that appeals to their ability level where they can come any time they please, let friends and family use it, and see Hokkiado beyond the white season.

 

And in a repetition of what I've seen in the US, initially UK investment and travel was to the New England states for winter vacations.

 

Once that market was established, UK skiers/snowboarders 'went west'.

 

It is just a matter of time before this market goes south (in a good way) but for the Hakuba area to prosper they have to provide what the Western buyer wants as Go Native accurately described.

[NoFakie 45]

Thanks for the information everyone.

 

Now, does anyone want to rent a fully renovated farmhouse in Hakuba next winter?

[thursday 1]

the example I posted was a simplified version.

 

My friend's place holds 6 and pushing 8. He is letting rent for USD1000 per night through the big boys up there.

 

He'll be using it himself for a coupla weekd in winter and some of the summer.

 

Not an investment, but a fourth home for him.

[Go Native 70]

 Originally Posted By: Fattwins

GN I have looked at the floor plans a bunch and but its standard Japanese barrier free 1dk 2dk or 3dk. Add some good paints and some bigger furniture and its sold as western. The Japanese are condo kings no one has done it longer

Look You can hammer home that Hakuba needs Sub divided Condos but it isnt going to happen at least not within this mayors turn. The investment is in line with sustainable growth. to have 500 or 600 Units owned by foriegn people is not always a good thing. The Japanese arent going to buy those condos back whether here or there. You have a market that is based say 80% on overseas capital. Only Overseas capital is going to invest at this time in a condo. Japanese banks are not keen on giving loans for second homes to the Japanese. I for one would rather see limited condos here and more Japanese investment.

I would say the market here is closer to 95% overseas capital as virtually no one here has been able to secure a loan from a Japanese bank. Japanese banks won't loan the money which is one of the reasons I believe that Japan has remained an economic basket case since the late '80's crash and the rest of the world moved on. Luckily for Australian investors at least one Aussie bank is giving yen loans secured against equity in Australian poperty to buy in Niseko. You are correct that the market here is not part of the Japanese market, it is most certainly a foreign market and unless Japanese banks change the way they do business it will always remain that way. Most Japanese I talk to here also think that Hirafu is just another bubble. I think it has to do with the typical insular thinking and being totally unaware of international property markets.

I just can't really undertand Japanese thinking on investment in property. Japan wasn't the only country in the world to have a recession after the '87 market crash. Pretty much every major economy in the world did. And now here we have a country that has some of the lowest interest rates in the world (to help stimulate the economy) but the banks will hardly loan money to anyone! I have looked at getting investment properties in Sapporo and every Japanese person I have talked to says you just can't do it, that only big companies do that. This thinking is just so weird when you come from Australia where it seems half the population now has an investment property or two. If the rest of Japan wants to see property prices start to really increase again then they need to allow people to get loans to stimulate demand. International investment groups are now buying up big in Tokyo and other parts of Japan (biliions of dollars worth)and it seems to me that most Japanese are being locked out of the potential preperty boom that is on it's way because of the ridiculous policies of the banks.

I really want to invest more here but because of the crazy policies of the banks it looks like I will be investing back in Australia. There is an Aussie bank that will allow me to get a Japanese yen loan at close to Japanese interest rates (about 2%) to buy property in Australia. This sounds like a great deal to me. I understand that there are negotiations currently with this bank to allow Japan residents to get loans for Japanese property without having Aussie property equity. This may still be a ways off though.

[Rag-Doll 0]

GN,

 

We managed to get a yen loan for our place in Niseko but it was like pulling teeth. In addition to the problems you've rightly listed there are also differences in the way real estate is valued in Japan. Places like Aust will rely on the market as an indicator of the value and work on the (pretty valid) assumption that prices will rise. The banks therefore are able to lend at 20/80 ratio and can be fairly confident that there will be sufficient excess value in the property to cover them. Japan is almost the complete opposite. There is an assumption that property values will decline and so they give very little credence to what the market is doing. We were caught out by this absurdity shortly before we were due to settle on our properties. The TY branch of the Aussie bank we were using had agreed to lend us 80% of the value of the properties - as per Aust SOP. The problem was that we couldn't find a valuer who would look at what the market was doing and basically valued the properties almost according to the value of the construction materials. Seriously, the "valuation" provided by the local valuer was less than half the contract price and bore no relation to the market level. Restricted by their Aust business model the bank we were using could only give us 80% of that value. 12 months of wheeling and dealing to get the deal done collapsed in a single afternoon. It will take a fundamental shift in the real estate industry before banks (Japanese and foreign) start making meaningful loans secured against real estate to foreigners. If this were to change we would see a jump in prices in Niseko virtually overnight.

[Mike Pow 52]

Spot on Rag-Doll

[thursday 1]

so RD, you put in 50% cash.

[Fattwins 0]

Ok I got my answer and that is Thursday was being typical Thursday. 80000 bucks profit and I would jump in and grab something. I figure a 4 to 6% return after loan and other payments is good 10 to 15% means the place is free and clear and boom you making lots of retirement money. Thursday Sometimes I think you are working for some builder cause that was one heck of an over stretch.

 

Japans wows on property are deeper than getting loans. Almost anyone can get a loan for the big cities. If you want to live in Tokyo loans are out there. If you want to live at the place that got the bank burned huge then that bank will say F-you. Right now Niseko is a micro bubble within Hokkaido. There are very few places with increasing prices or even Job opportunities compared to Tokyo. If you go to Tokyo you'll see that the towers are going up again actually as people float in for work. Also with a shrinking population and houses are a supply and demad issue. There is more supply than demand within Japan.

 

I quoted 80 cause Id rather be low than high on figures.

[thursday 1]

I don't see 80,000 a stretch at all.

 

1000 USD a night for 6 people is quite reasonable.

 

25 days a month is also reasonable. 4 months out of the 5 month season is also reasonable.

 

Even if you halve the 80,000, it's still 40,000 x 110 / 40,000,000 = 11 percent.

[Tubby Beaver 209]

In the city where I live, there seems to be loads of houses, pretty big ones at that, that are simply empty. One across the road from mines is a good size with a small garden, but is lying empty. OK its old, but I know some foreigners who would rather live there than the high rise box they are in, my gfriend saw a young guy doing some work on the roof and had a natter with him, it turns out the house belongs to his parents but they have moved back to their home town, they don't want to sell it but tehy aren't gonna rent it either. He has his own place and only maintains the place. I bet the rent would be cheap as well. Mines is. Crazy!!

[Fattwins 0]

Mate its a total stretch 80000 isnt anywhere near 40000. You havent factored in other things either that are going to shoot downt the profits. Guys that own stuff are saying 7% you are the only one that threw out the 20% profit mate like its a gold mine everyone should jump on. Now its down to 40000 bucks soon it will be inline with the 7% but man what an opening 20plus %.