Opinions on Japanese ski property

[damian 0]

My thoughts: global warming counter measures and soaring fuel costs make investing in overseas properties that depend on business flow from more overseas people a bad idea. You got 5 years best before the average joe international holiday maker is morally or financially incapable of going skiing in Japan for a week just to visit resorts that simply are not high enough to cope with warm winters anyway. Ironically enough, the biggest hits will land on Australian's, a modern collective of real estate speculators that believe that they can never lose money in property. A lot of Australians with no grasp on the realities of true speculative financial risk or the debilitating psychological impact it can have, getting caught in the hype of buying speculative property in a new sexy market with the allure of allowing them to indulge in their snow hobbies, stepping into a cultural environment that they don't understand with utterly unknown foreign exchange risk and hoping the best from a very uncertain infrastructure, social and environmental future. It is a recipe for disaster.

 

By all means buy a Japanese home and live in it long term, I might even be your neighbour, but be very careful trying to make money from the properties in the coming years. Especially when there are established players on the ground who are already very good at doing what they do.

 

The double whammy will come if you borrowed against the inflated equity in your Australian property, 'cause that one aint staying on cloud nine for much longer neither.

 

Sorry to be a party pisser for investors and brokers alike. Although I needn't apologise, no one will pay any attention to the above as it wont suit their hopes and fears and the difficult days aren't nearly close enough: you can still make cash in the short term.

[chop 0]

Right now Japan is a steal of a buy for a small home near the lifts. You might make something or you might not. Where are you gonna get a cabin near any lifted mountain in North America for under 150000 dollars,

You da man Fattwins, my feeling thoughts exact.

[Rag-Doll 0]

> morally ....incapable of going skiing in Japan for a week

 

All good points spud, but I'm not sure there would be many of these folks - right, I can get the time off work, afford the gear, pay for my flight, but damn it! I just couldn't live with myself if went skiing for a week! - I can't see that happening.

 

As Chop and FT point out, for all the talk about price bubbles and stuff in Niseko, its worth keeping in mind that the price of land/accomodation still doesn't exceed the price demanded in other ski resorts around the world - I know there are lots of factors that should be included but for someone wanting to own something at a half decent ski field, Niseko is still cheaper (or no more expensive) than lots of places around the world.

 

 

One possible consequences of global warming is the termination of the gulf stream, which will (might?) result in significantly colder winters in Europe. So all is not doom and gloom on the GW front.

[Leroybrown 0]

Just like to reiterate le spud' comment on Oz property investors/speculators. In Australia property investment/speculation has quite literally replaced religion as a source of salvation. In Sydney for example you are doing well if your tenant' rent pays HALF the interest plus any strata/body corprate fees and council rates. So who is paying the principal???

 

Any Japanese interested in making some money on property can sell to Aussies and then buy it back in 3-5 years for a 50% discount.

 

In Australia we call this doing an "Alan Bond" Ha Ha Ha!!!!!

 

PS. Back in the late 80' Alan Bond bought a Tv station from Kerry Packer. Kerry Packer bought It back for a 50% discount 4 years later because Alan Bond had no idea like many Oz property investors!!!!

 

How many Niseko property investors have heard of Honshu or God forbid Korea????

[Fattwins 0]

The deals in Niseko are gone though i havent seen anything for under 250000 on the net for some time. mostly ive seen 300000 for tiny stuff.

[thursday 1]

> morally ....incapable of going skiing in Japan for a week

 

yeah, have to ski at least 2 weeks.

[Rag-Doll 0]

Even at those prices it is still cheaper than other popular resorts around the world. Try buying a 3 br place 2 min walk from the lifts at Thredbo or Mt Hotham or Whistler or St Moritz or Wengen for under AUD500,000. Those places have been around for ages and aren't experiencing bubble growth, yet their prices are probably on the whole higher than Niseko. The spectacular growth experienced by Niseko is not a reflection of the inflated price and trendy popularity, but a reflection of just how low the base price was compared to other resorts around the world. The other big resorts on Honshu will go the same way and sooner rather than later if the PRC middle class decide that they can afford overseas holidays and skiing/snowboarding is a cool thing to do. The numbers of investors in Niseko is actually very small, (a couple of hundred perhaps - the place just isn't that big) and so while some may opt out of the market when things tighten in Aust, many probably won't need to - AUD500,000 is a decent wad of cash but there are still plenty of people who can afford it and anyway, not all of the buyers are resident in Australia or are even Australian. Me and 4 mates bought a place and only one of us lives in Aust. A recession in Aust will have zero impact on our investment strategy.

 

I'm not promoting Niseko over any other place and if anything I would say that the opportunity for small investors to make big returns has probably already gone from Niseko, but people need to keep things in perspective.

 

Leroybrown - lots of people have heard of hakuba (but not as many as have heard of or been to Niseko) but see my earlier post for reasons why a Hakuba investment isn't as easy from offshore as a Niseko investment is.

[thursday 1]

There are far more productive investments for the Chinese middle class than Japanes ski resorts.

 

There is also a Chinese national resentment in investing in Japan.

[panhead_pete 27]

Fattwins or others. Where's a good real estate web page for Hakuba? Any agents you reccomend? Would ceratinly be looking at property this trip.

[Fattwins 0]

I dont know how much higher the prices will go. I really dont think they will jump again. another 33% percent on average around the area of Niseko. As a property investment, the money making chance is done for the small investor.

 

Also the tax laws here for flipping a house arent favourable.

 

Im pretty sure the tax rate on flipping a house for a profit is 47% within 5 years of buying a place.

[Rag-Doll 0]

Thursday, I had in mind more the rental return rather than purchasing of the properties. There may some Chinese angst about investing in Japan, but there is still a large number of Chinese living and working in Japan so obviously not all Chinese people have a problem with investing - financially or otherwise - in Japan. As I'm sure you apprecaite, there are just so many of Chinese that it would only take a very small % of them to get keen on snow trips to Japan for it to impact enormously on the resorts. By way of example, look at Niseko's experience with Australians - I don't know how many Australians actually visit Niseko each season 5,000, 10,000, maybe 15,000 max and it has had a major impact on the place (not saying its all good). If a similar proportion of the PRC population were to decide Japan is a convenient place to go skiing, what would be consequences? But this is off the point a little - I was trying to say that whilst the Aust market is important to Niseko, it may not always be and that eithe way, a down turn in the Aust economy (short of a complete economic meltdown) will only have an incremental effect on people's investment in the resort.

[Rag-Doll 0]

PP - google hakuba real estate, hakuba property, etc. There are a few english sites already up and running.

[Fattwins 0]

I would like to know myself if my comment on the tax laws are correct. I was told that by someone in Hakuba. I just read elsewhere that there arent punitive taxes.

[thursday 1]

RD, I get your point.

 

My point is that the China ski industry is a feotus right now. The ski resorts near Beijing are packed to dangerous levels. There are massive opportunities in China. Compared to the mature industry in Japan, China is an enormous emerging market. Therefore, middle class ski investment money will stay in China. And real estate speculative money will be in Shanghai and Hong Kong, though the tax measures now will cool Shanghai.

 

There are loads of negative posts on this forum about Niseko. And the posters admit they have never been there!!

 

I love the place, but if you ask me to put my disposable on property there, I'd rather take a share in one of the established hotels.

[Rag-Doll 0]

FT- For what it is worth, I've heard the same.

[Rag-Doll 0]

Thursday - I agree completely. The Chinese ski industry thing is interesting. There was an article in the SCMP last year I think about resorts near Beijing (I think). The drought conditions meant that they were riding on man made snow in the middle of a barren countryside. But even this didn't reduce their enthusiasm for the sport. Hence my (possibly misguided) view that once they appreciate what is available just a couple of hours' flight away, things will go crazy. Some good marketing would make a world of difference - though on reflection, for the Japanese ski industry it probably won't happen.

[Fattwins 0]

Posting will vary from forum to forum. People here knew about Niseko years ago when it was uncrowded. Long time members tend to know what will interest them in Japan as well. Seeing as we have a season and not a weekend the thinking will be different.

 

I know enough about areas from friends who went and came back. They tend to like the same things as me. If they refer as place to me then ill at least try. I dont want to waste my money as you dont want to waste yours, different tastes i think.

 

Now if someone pays me to go or im given a sled to explore with a partner then ill go and ski it.

[bigjimmystyle 0]

I would just like to add the simple observation that the Japanese ski industry is still in the midst of incredible competition (what I believe to be the real reason for low prices). Japanese investors in the ski resorts have been unable to cut their losses and are still holding on for whatever reasons. I don't pretend to understand what keeps them from letting go, but it is good for you, the investor.

 

My theory is that eventually, 10-20 years from now, Japan will only have 2-3 resorts, to include Niseko and Hakuba, that the entire region (Japan, Aus, China, even Korea) will patronize. All the others will have been eliminated by the invisible hand of competition. When there are only a few resorts, there will consequently be fewer housing markets, and fewer housing. At that point you will be able to realize a return on investment.

 

Of course, my theory doesn't address what to do during those 10-20 years to stay solvent. However, if you have a house in either one of those areas, you are incredibly lucky - read the article on Fun in Japan on Outside.com to see why!

[montoya 0]

Even in Japanese, I've yet to see any good comprehensize books about the Japanese ski industry. If anyone knows of one, please let me know,

 

I did, however, recently finish Hal Clifford's " Downhill Slide ". The subtitle of "Why the corporate ski industry is bad for skiing, ski towns, and the environment."

should let you know where he is coming from. Mainly it's about the "Big Three" ski companies - Vail Resorts Incorporated, Intrawest Corporation, and American Skiing Company - corporations that control many of the largest ski resorts in North America and the effect that they have had on ski towns and the environment. Might give

you some insights into the J-industry as well.

[mattlucas 0]

Because that isn't the real addres if you actually want to read the article click on the Interesting read blue letters

 

It's kind of good

In a cheezy Japanese travel article for Americans

[NoFakie 45]

Old places are cheap because they've depreciated a la second hand car. Why should they start appreciating at some imagined point in the future? Especially when they now cost far more to heat than they used to.

 

If you buy, buy to live or buy to operate as accommodation and then get it up and running as soon as possible. Buy for utility, not as an "investment" for capital gain on the property. To make money on an old structure in Japan, your only hope is to sell to another foreigner. Even if *land* prices have gone up in Kutchan, I bet the assessed value of old structures on pieces of land there have not. Not in the eyes of Japanese buyers at least.

[TJ OZ 0]

Foreign investment in Hakuba is in its infancy. Nobody can truely say which way it's going to head. I have backed my research with my money but this is a lifestyle change for me as well. You can't match it with the Australian market which has seen rises of over 200-300% in the last 10 years. If you have a bit of spare cash and you want to buy a place in the snow in Japan then you will be able to purchase a property for less than half of what you would pay in Oz. The snow will be better, the mountains bigger and the travel time is not excessive. I am going to Hakuba for the powder snow and the big mountains. The powder should extend my boarding life another ten years.

[panhead_pete 27]

Wow just been scanning the net and prices are good!

 

Does anyone know building costs per m2 in Habuka? We work on $1200-$1500 over here for medium quality build and fit out.

[holo 0]

Some very interesting comments in this thread. A great read.

 

My thoughts are this. I want to ski more, an overseas trip can cost me and my better half A$15,000 and more quite easily. I also only get limited holidays a year.

 

I could afford a place in Hakuba which might say cost A$160,000. That is the cost of say 10 or so overseas trips, but I also then have ongoing property ownership costs over that.

 

The market, may or may not improve. I can't help think that Japan is one of the few places left in the world where you can buy something so close to a ski hill where snow conditions are often excellent. In that scenario prices sooner or later are likely to increase, especially if the country is just beginning to emerge from an economic slump. I realise that is simplistic as other economic conditions and factors need be met.

 

Travelling to Japan is not too difficult for Europeans and Australians at least. Much of the future investment is likely going to be overseas money so it can't be too difficult to travel to.

 

Besides, whilst I am not a fantastic skier I love it, I really do, it is my wife and my passion. There are many others like us. So, we often travel massive distances, 36 hours door to door to get to a resort, without too much trouble. Somewhere closer appeals, not just to us, but to others I am sure.

 

So, any purchase for us, would be just that, something we can use a few times a year, hopefully reducing our holiday costs and being able to ski more, using Xmas and Easter hols for example. (Fights may also be a tax deduction to inspect your "investment" property.)

 

Also, there is perhaps an opportunity to rent it out, if the demand is there. We won't make a fortune I know, it may help a little though. We are not loaded with cash, like perhaps many of you we are just trying to find a way to ski a little more without changing our lives too dramatically. Who knows, we may decide Japan is not for us and move onto researching another area, but research itself is a lot of fun

 

Now, if money were no object I would probably buy in Europe,say Zermatt or Chamonix. I am English and to have a place back in Europe with the ease of travelling to other countries and to other world class resorts close by would appeal enormously. However I can't really aford to and it is too far away from Oz, at this stage in my lfe.

 

Now.....back to the reseach

[world.asia.japan.tokyo 0]

It is very interesting discussion. I am Japanese and buying ski resort property is very low on my list of things I would want do. I hope they success for you and interesting to see the result in 5 or 10 year.