One of Taiga's largest projects to date, Ginga is moving along quickly! With 7 bedrooms, media room, garage, man-cave, open LDK, and balcony jacuzzi, it aims to set a new benchmark for luxury.
Kokage House in Lower Hirafu Village was recently featured in the venerable Wall Street Journal! Check out the link to see the story in full:
So what's up with construction prices in Niseko? They are up, part of a bigger trend across the country. Quotes for pending Taiga projects have been up significantly over a year ago, by as much as 20 ~ 30%. Collaborating Sapporo architects have been cringing, since their initial advice based on years of experience rings a little hollow when the quote slides across the table. Unfortunately, the reasons are much bigger than our little Niseko property market:
1) Large infrastructure and peripheral residential/retail projects for the Olympics means the big construction companies are already locking in available labour. The larger construction companies starting telling me this shortly after the Olympics were announced, and I initially dismissed it as an excuse to justify a higher quote. But then I started hearing trickles that rebuilding in tsunami affected Tohoku is suffering, due to the "Olympic labour shortage". The Big Boys have put the word out to form carpenters and steel workers… something like "whether there is work or not, you are with us for the next 6 years".
2) Massive infrastructure projects in the tsunami affected areas are finally underway. Hard to believe, given the tsunami happened in 2011, until you have worked with Japanese bureaucracy. The scale of the rebuilding is hard to fathom… we are talking about 100s of kilometres of coastline.
3) The increase in consumption tax to 8%, and talks of raising it to 10% (currently delayed), has created a construction boom for individual houses and apartments. I have never seen so many new houses in the neighbouring farming towns of Kutchan and Niseko. Locals, who have nothing to do with tourism, have been building homes and renovating in record numbers.
4) The ageing population means tradesmen are starting to retire in big numbers. Walk onto any job site in Japan, and I can pretty much guarantee you the average age is over 50. When the owner of Kazahana came for a site inspection, he marvelled that amongst the 5 regular carpenters, there was a combined experience spanning 180 years. The upside is a phenomenal execution on the details. But the downside is just over the horizon, part of the larger impending population crunch. Sure, construction demand should also decrease concurrently, but it seems in the short term that the pending Olympics and rebuild in Tohoku are going to create a de-linking between labour and demand in the short term.
So let's raise a glass to the weak yen, which has been the only bright light in this builder's market. The diving yen can almost make the increase balance out for foreign investors (harder on us locals!). My parting advice for anyone thinking about building in Niseko is to stock up on cheap yen, because the high construction prices are probably here until the flame goes out at the Tokyo Olympics.
Keith Rodgers is the Managing Director of Taiga Project Management
Winter is on us, but it feels really hot over here. At Taiga Real Estate, we fielded an unprecedented level of enquiries for October and November, and other real estate agencies in Niseko report the same. Transactions are also up, and the local solicitor office has all hands on deck trying to process deals. Ski-In, Ski-Out are constantly requested, as are properties on the middle and lower Hirafu bluffs, but what are the emerging trends?
1. Increase in pure “lifestyle" investments, properties where the owner is not interested in rental revenue. The trend is directly measurable by the number of new properties that are not finding their way into the rental pool. Even with an apartment with fantastic lift proximity, the buyer may elect not to rent it out.
Some of this has to do with the shift to Asia based buyers, people who plan on using the property all year round. In summer, their Hokkaido property is a rare, temperate getaway from the withering summer heat of South-East Asia. For them, Niseko is a second home, which they do not want to share. The increase of high net-worth buyers is also driving this new trend.
2. The emergence of what I call the “Jackson" crowd. Jackson Hole, Wyoming is dotted with estate style properties, beautiful chalets which are secluded away on large acreages. In the past few years Hirafu has seen some beautiful new homes pop up 5 - 15 minutes drive away, and these are often bigger in scale and budget than projects inside the village. Before the global financial crisis, most of the land transactions outside Hirafu village were speculative. Now the majority of people looking for larger lots are committed to building a hideaway home. Concurrently, it is getting increasingly difficult to find truly stunning sites outside the village.
3. The buyer demographic has broadened, which has produced a real deepening of the market. Just 4 years ago, the market was dominated by Australia and Hong Kong, but these days the buyer is just as likely to be from Malaysia, Singapore, and increasingly from Thailand, Taiwan, and Indonesia. This has resulted in greater stability for the Niseko market, and economic hiccups in any one country will have a lesser effect. Although the Japanese press loves to play it up, buyers from mainland China are still relatively rare.
4. As a local, I have always enjoyed the diversity of Niseko. Even back in 1996 when I first moved here, the mountain population was varied. Purely Japanese, but from all over the country, and often well travelled. These days, interesting people from all over the world are coming to work here. You may not know it, but Kutchan and Niseko Towns are amongst just a handful of towns in Japan with a growing population. Whether you drive 10 or 15 minutes to work doesn't make any difference, so secondary properties closer to the main towns and schools have been moving more briskly.
5. While I wouldn't call it a full on trend yet, I have started to see a small trickle of soon-to-be retirees. Often half of the couple is Japanese, and they are planning a “return". Hard to stay away from the clean living, safety, and amazing food!
These trends all point to a healthy resort that is starting to mature as an international property market. The medium and long term outlook is positive, which is why I personally continue to invest predominantly in Niseko. My parting advice for buyers is to look for properties with intrinsic value, meaning views, natural setting, proximity, or size. Stating the obvious, but these core qualities will produce positive outcomes in 5 to 10 years when you decide to sell.
Keith Rodgers is the Principal of Taiga Real Estate and his two little girls have recently helped him to graduate from backcountry to the bunny slope. Please contact him for any questions on property in Niseko.
Japan is a country where you can drop your wallet on a subway bench, and find it an hour later with all the cash and cards intact. So it is hard to imagine wholesale industry theft, thousands and thousands of Japanese being duped out of their savings by unscrupulous real estate agents. The Japan bubble years must have been one big roller coaster, people so flush with cash, en masse they would buy property site-unseen. Some property agents took advantage in a big way.
All around the Niseko area, you can spot the remnants of fraudulent development schemes. Buyers in Tokyo and Osaka would be shown a subdivision plan in idyllic Hokkaido, often with photos of completely non-related developments, which displayed paved roads and infrastructure. Only after settlement would the buyer realise they had bought a postage size piece of land on the side of a mountain.
Have a look at the map at below, and you can see that within the nearby vicinity of Hirafu there are several such developments (circled in red).
The developer usually held ownership of the common road (although often it was not registered as such), and when they went bankrupt in the 90s (most did), the buyers were left with no clear access to the main road. And since the development was never property surveyed, even if access can be guaranteed, the property markers cannot be defined without contacting and confirming with the other 50 buyers in the sub-division. Many of whom have thrown away the worthless title. The end result - you cannot get a building approval on your land.
From time to time we get a request to list some lot with an address we have never heard of, and often it ends up being in one of these subdivisions. It is pretty hard to tell the poor owner that we cannot even list their land. Perhaps the only upside is that Japan is dotted with what I call "private parkland", since effectively it is impossible to do anything with it!
Suffice to say that with so many people getting burned during the bubble, many Japanese take a pretty dim view of realtors. Some of these jokers are back to their old tricks, and unfortunately some of the original victims are getting duped on the exit as well. Have a look at this interesting piece in Japan Property.
Anyone who has travelled in Japan has stories of how honourable most Japanese are. Yet even here, it all comes back to "buyer beware", asking the right questions and getting the right information. When considering a purchase, be sure that the lot is registered with the town office, and has clear access to the road. If the subdivision is connected by a private road to the main road, make sure the private road is actually registered as "road". If not, then see if an easement can be put in place to your land, or joint ownership arranged for the private road. And perhaps most importantly, fly over and have a look with your own eyes!