The Hirafu Property Market
(Extract from “Niseko Alpine Review - December 08″ - to subscribe for your latest edition click here)
Likening the current market to jumping into arctic water when blood rushes from the extremities to the heart; we see the wider Niseko market in the same situation with investment rapidly pulling back to the heart of the region. Today Niseko has only one heart, Hirafu. The slow-down is pulling investment back around the ski portals and infrastructure such as restaurants, bars, ski-shops etc. The core fundamental of “location” is back.
We at NISADE are already evidencing this as enquiry for The Vale is markedly up as people focus on location. The house and land package is, whilst a robust lifestyle investment, will now not be such a strong investment asset unless the house is centrally located so we do expect these sales to slow especially outside of key locations.
Niseko and in particular Hirafu are somewhat insulated for the following reasons:
1. Unleveraged market
The bulk of transactions in the market are not geared. Some obviously have geared up using assets outside of Japan but this is a relatively small component. The effect is that there are few if any distressed sales. Had this market rupture occurred 12 months later the story would have been dramatically different due to higher levels of local gearing.
The dominant buyer profile over the last four years has been Australians who have enjoyed the benefit of a weaker yen. With the dramatic reversal in the last quarter the benefit to these owners has flipped and naturally many are looking to take advantage of this situation. See our article below regarding rates; we think this situation may be short lived.
Overall visitor numbers for this winter look to still be slightly up on last winter, a damn credible outcome in this environment. Few if any other JPY resorts will be able to claim that title and we doubt any in Nth America achieve that result. Occupation rates however will be lower due to additional supply this winter. However in 2009 due to supply restrictions as new projects are delayed occupancy will once again tighten. Pricing will remain the unknown but we expect it to stablise at current levels.
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