The kickstart of Japan's tourism sector and the favourable dollar-yen exchange rate is likely to revitalise the real estate transaction market in the short to medium term, as pent-up demand would induce a market tailwind, according to C9 Hotelworks.
Based on tourism trends, more international airlines such as Scoot from Singapore and Starlux Airlines would resume flights by the fourth quarter of this year, said C9 Hotelworks managing director Bill Barnett.
However, given the real estate sector’s close connection to the winter tourism market and high-value foreign segment, particularly in the popular ski village of Niseko region, some setbacks may persist.
In the first quarter of 2022, domestic visitors grew 14% year-on-year in Niseko, a town in Hokkaido prefecture, Japan, despite a two-year international border closure policy.
But, commercial land prices decelerated in the midst, echoing a similar trend with residential land prices where growth was 12% in 2022 from 40% in 2020 and 25% in 2021.
In comparison with Niseko, other Japanese alpine resort areas recorded slightly higher growth, such as Furano at 18% and Hakuba at 17% growth this year.
“Hanazono, Hirofu, and Niseko Village or Higoshiyomo remain the top three destinations in the project pipeline. There remains a strong push for luxury projects outside of the mainstream Hirofu area, driven by the lock of prime land and rising prices,” Barnett said.
He noted two factors that might hamper wider destination growth, which are “aging ski facilities” and “potential changes to the area development and more restrictive zoning by the government”.
Circling back to the tourism trends, Barnett said because the Niseko tourism market is dependent on foreign staff, it is facing “critical shortages” this coming winter.
On a lighter note, the Sapporo extension of the Hokkaido Shinkansen is on track for completion by the fourth quarter of 2030, with 54% construction done.
As for property trends, broad property market transactions have been muted, though sales of resort-grade condominiums and land plots have remained active, Barnett said.
“Only 21% of the total pipeline is on time. Many residential projects are facing delays or have been put on hold.
“Resort-grade branded residences are expected to grow, highlighted by notable new projects, Cassia Niseko Residences and Capello Niseko Residences,” he added.