Japan's ski island attracts investors from Down Under By Chie Matsumoto

dpa German Press Agency Published: Wednesday February 14, 2007

By Chie Matsumoto, Tokyo- Mostly known for one of the world's most-expensive property prices, Japan did not use to attract many foreigners happy to spend money on real estate investments in the past. However, the country's northernmost island of Hokkaido has become a hub of second homes for other Asians, especially vacationers from Down Under, in the past five years.

The first wave of pioneer investors came from Australia who are lured to winter vacation resorts in Hokkaido's south-western region of Niseko.

Since then, their counterparts from Hong Kong and Singapore have jumped on the opportunities to buy island real estate, according to a local real estate company.

Foreign investment started growing rapidly about three years ago, when Australian vacationers decided to buy condominiums and cottage- style housing in the town of Kutchan, the local government spokesman Akihiro Numata said.

The blow-ins from down under are lured to this area of Japan above all for the world's top class quality of snow.

After years of travelling to Canada and Europe, the tourists have now discovered that the Niseko region is just as good for winter fun. Australians stay for 10 days on average, often preferring lodge-style accommodation over hotels which are more expensive.

With only a two-hour time difference, the journey to Niseko is also less exhausting than that the long haul to Europe or Canada. Ever since the 9/11 terrorist attacks in the United States, safety concerns have also tipped the scales in favour of Japan.

The stronger Australian dollar against the Japanese yen rerouted travellers to the Japanese resort, according to a Japan External Trade Organization report released last year.

During a few months in winter, the town of 15,796 people sees more than 7,000 Australians.

"It makes you wonder which country you live in sometimes," the town official Numata said with a laugh.

Because of the strong demand for accommodation, the real estate business has mushroomed.

At Niseko Real Estate, bilingual employers and licensed advisors steer buyers through the legal procedures of buying property across the ocean.

"Some clients consider buying property to raise better profits," Ken Shimizu of Niseko Real Estate said, adding that they usually get loans from banks in their home countries for investment abroad.

Condominiums in ski neighbourhoods, which are furnished and designed to Australians' needs, go for an average of 30 to 40 million yen (331,000 dollars) for a three-bedroom unit.

Another real estate company Nihon Harmony Resorts entered the competition in 2004 when it bought a ski slope and began plans for a resort village, intended to include some 2,000 condominium units within 10 years.

These vacation houses, or second homes, are managed by real estate agencies for rent during the off-season and said to bring in more than 4 per cent dividend a year, according to local newspaper Hokkaido Shimbun.

In the past few years, the boom has more than doubled the property value, especially in neighbourhoods at the foot of ski slopes.

The increasing numbers of blow-ins have also boosted local businesses and benefited residents.

The Kutchan Chamber of Commerce began offering free English lessons to local Japanese. The government-funded course is to help especially high school students expand their future employment opportunities.

Local diners are trying to accommodate their new clientele by adding English menus or hiring bilingual staff. But some are falling behind in the game, the government official said.

Numata admits that the government is also having difficulties catching up with the transition. It has only recently introduced measures to protect the environment as housing development is quick to fill up vacant space.

Since the numbers of Japanese skiers are declining nationwide, Numata said that the government offices and residents in the Niseko region are pleased to see foreign skiers filling the slopes.

But they are also skeptical about how long the boom will last. "We are concerned that Australia may be experiencing an economic bubble and that it will soon die down when the bubble bursts," Numata said.

© 2006 dpa German Press Agency