With a sinking yen and a bevy of resort areas to choose from, there’s no better time to buy a ski pad in Japan.
“Honshu is full of bargains and it is still possible to buy a great piece of land close to Niseko for 100k. The Japanese real estate market will continue to grow. The proximity to Asia, the improving infrastructure and great snow and culture will ensure strong demand in the foreseeable future,” says Ruskin McLennan of Peak Property Niseko.
It’s easy to be bedazzled by the low prices of property when on holiday in Japan, especially when compared to back home. Who hasn’t dreamt of packing it all in for a life of powder in Japan?
But it’s not always simple navigating cultural, economic and financial differences on your Japan property journey.
“Sales prices are not public knowledge in Japan so it is difficult for foreign buyers to understand the current state of the market and Japanese banks do not loan to foreigners,” says Ruskin who has been active in the Japan market since 2003.
“Many investors use their Australian property equity to finance their Japanese property investment. Talk to your accountant or financial adviser before you buy. Japanese property has great rewards but it can be risky for inexperienced investors.”
To help your property journey we’ve asked two Japan property owners how they did it. Glenn Cullen lives in Australia and recently bought an apartment in Japan, Dan and Andy Solo started with a ski lodge in Madarao and now own multiple business properties in Nagano.
First Timer
Glenn Cullen recently bought an apartment in Yudanaka not far from Shiga Kogen, and he did it with change from $25,000. Here are his tips for those wanting to do the same.
Hit the web, Google Translate and emails
If you’re thinking Niseko or Nozawa and bargains, you’re 15-25 years too late. For me, I found the town of Yudanaka (12km from Shiga Kogen and close enough to Nozawa and Madarao) to be the sweet spot for convenience, optimal skiing and price.
I used these real estate websites which can be converted to English: House Goo, HatoMark and AtHome. For subsequent inquiries, use Google Translate and email prospective agents about individual properties.
Get over there and get help
You’ll want to check out the places you have an interest in. Even if they are cheap (and there are places for as little as $5,000) there are too many pros and cons to leave it to a remote transaction. I narrowed down where I wanted, flagged half a dozen apartments for viewing and then confirmed with the agents once my flights were booked. Take a local translator with you to each appointment. They are easy enough found through Facebook groups and usually accept reasonable hourly payments.
Size Matters
The cost of management fees in Japanese apartment complexes usually bears a close relationship to the size of the individual property. That cheap 80sqm apartment that you’ve just seen may not seem like such a bargain if you’re paying $8,000 a year in management fees. If you want cost-effective in the long-term and can live with it, consider a studio (30sqm) size where management fees may be $2,500 or less.
Check the reserve too – it’s a small monthly amount that is saved to cover building repairs. If there’s not a good reserve already held, and/or management is not asking you to pay one, that could spell trouble for getting anything fixed.
Read the fine print for usage
If you’re envisaging a leisurely few weeks’ personal usage for your property and then rivers of gold from Air BNB rentals for the rest of the time, you may want to think again. There’s something called minpaku which effectively licences you to run the property as an Air BNB. With it you’re limited to 180 days of rentals, you must have a local management company to run it if you’re not physically there and it can be expensive to set up. All that may be a moot point anyway if the owners’ corporation does not allow short-term rentals. Best to get that clarified early on.
Doing the deal
I found Japanese real estate agents good to deal with and generally far more transparent than their Paco Rabanne and Tarocash wearing Aussie equivalents. Price negotiation is possible but don’t expect huge discounts on an already cheap place.
I made an offer on the apartment I liked the most – and got it. From there I paid an intermediary for around 12 hours’ work, mainly around translations, dealing directly with the agent/local council notary and help setting up subsequent payments/ongoing billing.
I also worked with Nippon Tradings who are well versed in Japanese real estate contracts. I opted for a basic service but they also have a more complete one for those who want help throughout the entire process. Settlement after an offer is accepted is usually around 2-3 months.
Building a lodge empire
Dan and Andy Solo first visited Japan in 1997, now they own Snowball Chalet ski lodge in Madarao, developed and manage Shiki at Tangram and Madarao Snowman Apartments and renovated and launched, Snowball Studios and Yukimi at Sano. Here they share their intel.
What do you wish you knew when you started?
We didn’t know buying an old building in a climate as extreme as the Japanese Alps means you will spend a lot more on a property that hasn’t been renovated than you would think.
The headline cost of a property, especially one that hasn’t had a recent refurbishment is only part of the picture. You have to budget for the renovation and a big chunk of change for contingency. The real cost of the property is all those things put together and once you add it all up it could be better just to buy a done property.
Of course, we had absolutely no idea how enormously rewarding it would all be and we have never been happier. If I could go back to talk to myself I would also be saying “Do it! But do it like this…”
Why Japan?
The powder and just huge amounts of snow, the incredibly rich culture, the food (oh the food is so good) and the people are just so lovely. Choosing Japan was easy. It is a fantastic place to live year round and the winters are superb. I can’t count the powder days I have had even the ones that have been more than 80+ centimetres.
Financial benefits to investing in Japan?
The AUD$ to ¥ is super favourable. No matter which side of property you are interested in, buying and running your own ski lodge, building something new or having a managed investment the returns can be amazing. Also working with Japanese tradespeople who do what they say they will do on budget and on time makes it easy to have much more confidence that you can make the projects work financially.
What are the challenges?
Japanese real estate doesn’t really work the same way as other places. There is no auction system and with a few exceptions there are no real estate aggregators like domain.com.au or realestate.com.au and even when there are, only a small fraction of available properties are listed.
I think a big factor is also knowing you need help and that you should try and surround yourself with smarter people than you are. You also need to think strategically about what and where you buy because that one decision has a monumental impact on the rest of your business life in Japan.
We chose the places we have purchased in because they are right near the Bullet Train from Tokyo bringing all locations to within about 2 hours total travel and they are all within close proximity to excellent skiing, lots of snow or other fabulous destination products. Madarao, Tangram for skiing and Sano for the Snow Monkeys and skiing in Shiga Kogen.
When we bought Snowball Chalet I knocked on the door of the building and asked if they would like to sell the property. Suzuki san grabbed my hand and pulled me inside. We did the deal in the lounge in 5 minutes.
What about risk?
For us from a risk perspective it makes more sense to invest in Madarao and the area now than it did before. Even though we can no longer buy a ski lodge for ¥20,000,000 or less in a prime position on the mountain, we no longer have the risk that the ski resort is going to go bankrupt.
The huge amount of work that all the owners in the area have put into renovating properties and marketing has had a really positive impact here. There is still lots of capacity, it is nowhere near saturated from both the guest accommodation perspective or from the infrastructure perspective with lift queues normally being a few seconds and the snow just keeps on falling.
We realised there were a lot of people who wanted to invest in Japan but didn’t know how so we are making other opportunities available with fully managed investments ranging from ¥25,000,000 (roughly AUD$240k) to ¥150,000,000. Investments that you don’t need to change your life to run but will give you a fantastic return and a future connection to the snow of Japan.
There are other areas that people could also explore in Japan that still have that really low buy in cost.
In Northern Nagano/Niigata region Kagura, Naeba, Kurohime, Ryuoo Snow Park and Togari Onsen and up in Yamagata prefecture, lovely Zao Onsen to name a few. Remember with these resorts the risks can be higher (particularly Kurohime and Ryuoo Snow Park) but the rewards can be high too.
The main thing if you are thinking about buying a ski lodge to run yourself is don’t do it if you aren’t going to be an owner operator, at least for the first 3 or 4 years. We haven’t seen one example really work, or at least nowhere near as well as the ones that have the person with skin in the game on the ground. Trying to do it remotely is impossible, or at least impossible to ensure guests have amazing experiences and for you to absolutely love it.
