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Most conversations about Niseko start and end with the snow. Dry, light powder starts falling on this small Hokkaido town in the third week of November, and doesn’t really stop until April. By then the conifers on the slopes of Mount Annupuri are buried under about 15 metres of the stuff. Hardcore skiers describe a sensation of floating. A lot of the time, they say, you can’t hear your skis as you blast down the piste.
Conditions are “easily the best in Asia,” says Nicolas Gontard, a Hong Kong-based Frenchman who spends a third of the year in Niseko. Seven years ago, his pockets jangling with proceeds following the sale of a telecoms business, Gontard bought a small lodging house in Hirafu, the biggest town at the foot of Annupuri. Since then he has opened a restaurant and built a couple of blocks of upmarket apartments.
Times have been tough in recent years, with trade knocked by the global financial crisis and then the nuclear disaster of March 2011. But now that fears over radiation have subsided, and the sliding yen has improved the sums for holidaymakers and investors, Gontard says Niseko is enjoying its “best ever” season in terms of bookings.
Gontard is one of dozens of foreign entrepreneurs who have helped to transform this snug, low-lying resort, located a couple of hours west of Sapporo on Japan’s northernmost island.
Until the late 1990s, when a wave of Australian snowboarders set up businesses targeting expats in Asia, all Niseko offered was a few budget hotels and chalets and almost no après ski. Japanese typically came to Niseko for a few days in winter then headed back home. Cathay Pacific pilots would join them for long weekends, starting their own pop-up bars.
Traffic picked up before long, as word got around of the meteorological conditions – Siberian winds merging with warmer air over the Sea of Japan – that produce more powder in Niseko than typically falls on more celebrated resorts in North America and Europe. The lure of seafood, noodles and hot springs also helped.
Accommodation, however, remained basic, says Simon Robinson, president of Hokkaido Tracks, a developer and tour manager. “Guys would be saying, ‘Isn’t this the best run you’ve ever had?’ Then internationals would say ‘Yes, but what about the toilets?’”
Robinson’s first apartments in 2003 marked the start of Niseko’s gentrification. Before long, bigger developers showed up, along with the usual boutiques, massage therapists and wine merchants. In 2007 Richard Li, son of Hong Kong billionaire Li Ka-shing, invested an undisclosed amount into Hanazono, the northernmost of Niseko’s four linked ski areas. Another Hong Kong developer bought a huge amount of land in Niseko Annupuri, to the southwest.
Business was “insanely good,” says Robinson, who built 40 houses and 140 apartments in the five years before the 2008 crunch. In the five years after that, with lenders refusing to back all but the best-sold projects, the tally was 12 houses and 10 apartments.
“Putting the brakes on was no bad thing, in hindsight,” says South African Greg Hough, managing director of marketing company Explore Niseko. “The pace was unsustainable.”
Now, though, a new generation of wealthy Asian buyers is looking for bolt-holes that offer skiing on a par with the best of Europe and the US, but without the jet lag or long lift queues. Hokkaido Real Estate is offering a three-bedroom, 100 sq metre cottage in Hirafu lower village for Y40m ($387,000) and is asking Y99m for a three-bedroom apartment in one of Gontard’s upmarket blocks nearby.
Further up the scale, Niseko Property is selling a 187 sq metre, three-bedroom penthouse apartment in a ski-in, ski-out complex in the upper village for Y289m ($2.8m).
Agents say that many Asian buyers are not interested in yield, preferring to keep properties empty in their absence, or taking fractional ownership to minimise running costs.
For some of these newcomers, owning a place in Niseko is “a status symbol,” says Darren Wickings, the British-born general manager of Shiki Niseko, the largest upmarket serviced-apartment block in Hirafu, which was opened a year ago.
Low expectations for returns are just as well, as slow summers and high management charges erode income. Net of fees, “I don’t think anyone has a double-digit yield,” says Jeanette Hall, Shanghai-born director of property group Zekkei Collection, who built her first high-end chalet in Hirafu in 2006.
Prospects for price appreciation also seem limited since so much of Hirafu remains undeveloped.
Still, tourist numbers have been so high over the past year that even the longer-term residents are beginning to take notice. Executives from Tokyu Land, which opened the flagship Niseko Alpen hotel in 1986, plan to give it a much-needed overhaul within a couple of years. Meanwhile, the hotel is putting up room rates with no effect on occupancy levels.
Even if some of the speculative money drifts away, ski enthusiasts across Asia and further afield should keep coming back for Niseko’s best asset: masses of powder so fine and dry that if you try to throw a snowball, it falls through your fingers.
“It’s difficult to fathom for most people just how much snow falls around the place,” says Mike West, a Hong Kong-based New Zealander who bought a house in Hirafu four years ago. “You don’t go for the European suntan and lunches on the balcony. You go for powder heaven.”
Ben McLannahan is an FT correspondent in Tokyo
● Property in Japan is freehold so it is very easy to buy under your own name or company name, via an agent, local lawyer or notary
● Taxes are low, at about 1.75 per cent of the purchase price, but agents’ fees are about 3 per cent. Running costs will eat up cash too, as snow needs to be cleared and pipes heated to keep from freezing
● Japanese banks will only lend to locals. So unless foreign buyers have access to a bank in their home country, or a private bank to supply a yen loan, they will have to put down a lot of cash
What you can buy for ...
$500,000: A one- or two-bedroom, 85 sq metre apartment within walking distance of the Hirafu ski lifts
$1m: A three- or four-bedroom, 100 to 200 sq metre apartment in a top-end development
$5m: A 600 sq metre house with views of Mt Yotei, a semidormant volcano called “the Fuji of the north”