Niseko direct flights gone? Real estate impact?

[tripitaka 0]

Rag Doll, great summary. In this day and age, many people have some pretty unrealistic expectations from property.

[HelperElfMissy 42]

 Originally Posted By: Rag-Doll

The biggest impact on property prices in Niseko will be if the Asian economy and particularly Aust, HK, PRC, etc completely tank, then you'll see visitor numbers drop and people needing to liquidate assets and sell apartments. I don't think even the interest rate increases will force many people to sell. If you've got enough cash/equity to stump out as collateral for a loan to buy one of those places, a few % points on the mortgage is only going to be an inconvenience.

OK we have looked into buying (and very nearly did), and have friends who have bought.

From what we see the vast majority of Aussies who have bought in to Niseko in a 'buying into the dream' landholding (not major project) have done it without borrowing. The only way to borrow money to purchase a property in Japan was to have an unencumbered property that we could borrow against in Australia. Mostly it was too hard to swing, and the people we know ended up selling shares or property and just paying cash.

The way the Perth property market is at the moment owning something somewhere else is diffusing risk - Perth is currently overheated, and prices are tumbling on the lower end properties.

Rag-doll is right in saying that Niseko is a market unto itself, but the Japanese way of property has certainly made it harder for foreigners to buy in - the devaluation of properties etc is just very different to the way things happen elsewhere. But when there is huge foreign ownership, and those owners sell to foreigners - the market will respond differently to the Japan norm. It will be interesting to see what happens when the economic bubble bursts in the AsiaPacific region though...

[Go Native 70]

 Originally Posted By: tripitaka

Mama, you show me anywhere in Japan where you can buy a property and resell it without a loss. If you can, I will eat my hat.... and then my shoes. Yes, some people have made a big investment. Those are the developers. Those are the people making the money. It's definitely not the buyers.

Hope your hat and shoes are tasty trip. Niseko is definitely a place where the average buyer has done very well, at least up until now. It is not just the big developers. Individual buyers have and continue to get impressive capital gains on their investments. I spent some time as property manager for a company in Niseko and got to know many owners very well. They were not all mega rich developers. Many have gone on to sell their properties with very healthy gains on their original investments. And many have used those gains to reinvest in Niseko. The rental returns now are around 3-4% net and capital gains are still the highest found anywhere in Japan.
Prices now in Niseko have gone beyond most average investors and I suspect that for those that can still afford to buy here that they will be little affected by little things like higher interest rates. And I can tell you one thing with surety, the numbers of people wanting to come here has not slowed even the slightest but has continued to increase every year I've been here. Sometimes on these forums you may get the impression that interest in Niseko is waning as everyone has been swayed by the flat terrain, too many foreigners and no culture arguments. Believe me that this is not the case. The current supply of apartments is nowhere near meeting the demand in peak season.
Also if you still want to buy in up here at ridiculously low prices, just look 10mins down the road at Kutchan. Show me a satellite town to a major ski resort that doesn't also end up doing pretty well. You can buy a decent little holiday home down here for less than the deposit you'd need to buy something in Hirafu. And cars are cheap as chips in Japan.

[thursday 1]

Go Native, so true. My friend bought last year when I said, "forget about it, it's way over the top now." But he bought anyway 'cos he thought I was an idiot and he had the cash anyway. He's not concerned whether prices go up or down, he's a holiday home junkie.

[HelperElfMissy 42]

You also have to look at what you get for the money.

 

In Japanese terms it might be over the top, but if your mate was to buy the same place in Australia, on the snow, he would likely be paying the same (at todays prices in Hirafu) or less (if the lucky bugger bought in last year).

 

Now what are the downsides?

It is further away, but depending on how far the buyer lives from the Aussie snowfields it might not be worth even mentioning - a plane trip is a plane trip! Perhaps that family and friends can't access the place unless they have a passport and are prepared/cashed up to travel (although they would still need to to get to the place in OZ and spend when they got there). Language, cultural and monetary differences - ohh wait - is that an upside - for some yes!

 

What are the upsides?

Snow. Owning property outside of your own market, diffuse investment. Snow. Being able to take regular vacations in a place where booking accomodation can be tough unless you do it 12 months in advance! Snow. The sense that you are getting more for your ski shack dollar than if you bought elsewhere. Snow. Knowing that other offshore investments (USA, Europe) are not as close as the short plane flight to Japan. And of course there is the SNOW!

[Mike Pow 52]

What about the snow?

[thursday 1]

not enough emphasis on the snow.

[tripitaka 0]

Only Aussies could export a property bubble to Japan!! I will eat my hat and shoes with sweet Thai chilli suace.

[Fattwins 0]

Prices will go up and then they will go down and they they most likely will go back up again. That is what investments always do. One fact will remain though the Japanese wont buy those apartments if the foreign market dies.

 

Take Yuzawa for example: you can walk into a modern apartment with a swimming pool and get it for 5million yen. It would seem like a good buy really but yet, there are still many empty places.

[tripitaka 0]

 Originally Posted By: Fattwins

Prices will go up and then they will go down and they they most likely will go back up again. That is what investments always do. One fact will remain though the Japanese wont buy those apartments if the foreign market dies.

Take Yuzawa for example: you can walk into a modern apartment with a swimming pool and get it for 5million yen. It would seem like a good buy really but yet, there are still many empty places.

FT, that's been my experience. I was looking at an apartment in a fading resort town in Wakayama with a marina berth for 5 million yen!! During the peak, these places were going for 40-50 million. If that isn't some extreme deflation, I don't what is.

With a bunch of buddies, 5 million isn't much and yachts in Japan are given away as well.

[Markie 0]

Modern apartment with swimming pool for only 5 million yen in Yuzawa! Fatts, you got to show me some of these places. Or better still, any nice houses in the Hakuba/Aokiko area with a nice view.

[Fattwins 0]

I can help you look markie but the best thing to do is contact powderhouse Mick as he lived there before. I can go and inspect the houses that you are interested in.

[Markie 0]

That sounds like a good excuse to fly down there in Autumn after my　いんたい and bum around a bit.

Oh, but almost forgot, I'm no longer a free man, have to check with the lady first.

[thursday 1]

is that swimming pool shared?

and if not, is it inside the apartment or outside?

 

And in Japan, it's got to be heated.

[Fattwins 0]

It is a shared pool Thursday

[Stuntcok 0]

You have to look at the ownership structure of condos in Yuzawa. I forget the details and the exact terms but many are co-ops and the building management do not have recourse to eviction or repo if you do not pay your maintenence fee. As such, delinquent payers place an ever increasing burden on existing tenants until maintence falls off and the amenities depreciate in quality. Make sure of the structure before you buy. Anyway, look up himawari on the web, they specialise in selling Yuzawa condos.

[tsondaboy 0]

Sunts, how much tax do you pay for your place in Yuzawa every year?

[NoFakie 45]

 Originally Posted By: Markie

Or better still, any nice houses in the Hakuba/Aokiko area with a nice view.

We've got one of them, but it won't be cheap to get us out!

As for Niseko or anywhere else, you've actually got to sell and cash out to make money. Its no good saying this is worth xxx or whatever, because that can change fast enough. All you need is a critical mass of places to go on sale at the same time. The USA is full of property that was worth loads more just eighteen months ago. The same goes for those Yuzawa places, marina apartments, golf club memberships, ....

[Markie 0]

Mr Wiggles, how about you just rent me a room or something and I can help you baby-sit and stuff.....that is, of course, after I get my Karate black-belt which is needed for that job.

[Fattwins 0]

Speaking of which when is the party Mr. Wiggles

[NoFakie 45]

I'm off the sauce till the next little terror appears. Shouldn't be long now. After that, we'll need all the help we can get Markie!

[stillnoprogress 0]

 Originally Posted By: tripitaka

SNP, land prices are only one component of the costs of owning a property. Talk to anyone who has an understanding of Japanese property and they will know what I'm talking about. Successful property investors are usually developers, not buyers.

Dude, I'm well aware of the fact that real estate in japan has seen deflationary prices for the last 15 years or so, but to argue that no one has made money in japanese real estate is absurd. I will also just point out that real estate isn't entirely about capital gains and japan has fairly high rental yields given the extremely low interest rates. The tax advantages from the aggressive depreciation schedule in japan is also worth noting. It's not hard to imagine that you could still make money on a property that's declining by 5-10% annually in japan if you had efficient cash flow mgmt (and that's for and individual - not a developer).

[tripitaka 0]

 Originally Posted By: stillnoprogress

 Originally Posted By: tripitaka

SNP, land prices are only one component of the costs of owning a property. Talk to anyone who has an understanding of Japanese property and they will know what I'm talking about. Successful property investors are usually developers, not buyers.

Dude, I'm well aware of the fact that real estate in japan has seen deflationary prices for the last 15 years or so, but to argue that no one has made money in japanese real estate is absurd. I will also just point out that real estate isn't entirely about capital gains and japan has fairly high rental yields given the extremely low interest rates. The tax advantages from the aggressive depreciation schedule in japan is also worth noting. It's not hard to imagine that you could still make money on a property that's declining by 5-10% annually in japan if you had efficient cash flow mgmt (and that's for and individual - not a developer).

You're right. Some people do make money, as I've pointed out. Please tell me about these "tax advantages" on depreciating property in Japan. I can't really grasp what this means.

[HelperElfMissy 42]

You are able to offset depreciation costs against your taxable income therefore reducing your taxable income and saving you from paying it all over to the government of your jurisdiction.

 

A penny saved from the tax man is akin to a penny earnt.

[tripitaka 0]

 Originally Posted By: Mamabear

You are able to offset depreciation costs against your taxable income therefore reducing your taxable income and saving you from paying it all over to the government of your jurisdiction.

A penny saved from the tax man is akin to a penny earnt.

Hang on Mama. You're talking about negative gearing, which has nothing to do with "depreciation costs." Also, don't assume the system in Aussie is the same as in Japan.

The only possible advantage from depreciation that I think can be gained is decreasing land taxes and/or rates.