TOKYO -- Foreigners are descending upon the northern Japanese ski resort of Niseko in droves, lured by not only its renowned powder snow, but also land prices that remain remarkably affordable even after sharp rises in recent years.
Along an icy road near the slopes sit nine brand-new condominiums with wooden walls and large windows. Upon opening the door to one, the eye is drawn to a high ceiling and a broad spiral staircase.
Stepping inside the wide-open space reveals a two-floor living area that can accommodate 14 people dining together. The five-bedroom residence features indoor and outdoor baths with a view of the snowy white peak of Mount Yotei, Hokkaido's answer to Mount Fuji.
"These condos were finished only a year ago," said Kojiro Morihiro, head of sales management at a local real estate brokerage.
Even with prices in the 300 million to 500 million yen ($2.8 million to $4.6 million) range, six of the nine units have already been sold to buyers in Hong Kong and elsewhere in Asia, to be used as vacation homes or rented to guests for the equivalent of thousands of dollars a night.
Land prices in one district of the town of Kutchan, which is part of Niseko, surged 66.7% this year, according to prefectural data, logging the fastest rise in the country for a fourth year running.
Yet as ski resorts go, Niseko is a bargain by global standards. The area ranked only 31st in prime residential land prices in British real estate services company Savills' annual Ski Report, with an average price of 8,139 euros ($9,000) per sq. meter in October.
This was more than 60% cheaper than Courchevel 1850 in the French Alps, which led the list at 23,030 euros. U.S. resort Aspen placed second, while destinations in Switzerland, Austria and France claimed most of the other top slots.
And returns on investment in Niseko properties can reach 7% in good times, according to a local real estate company -- better than the global average of around 5% for ski resorts. This combination makes the area an attractive bet for investors.
Morihiro, the brokerage manager, starts each day by reading email in English from prospective clients looking to buy, say, a hotel or condo. More than 90% of his customers are wealthy foreigners, and visitors from abroad even show up at his office unannounced in the winter. His client list includes roughly 5,500 foreign names, including executives, investors and celebrities.
As more capital flows into Niseko, the people who buy, develop and use the land are increasingly non-Japanese. Visitors walking through downtown find rows of bed-and-breakfasts resembling luxury apartments, with cafes and shops on the ground floor -- and signs posted only in English.
The bonanza for foreign investors has made life difficult for some locals.
A man running an Indian restaurant downtown reported paying 400,000 yen in rent each month year-round despite only opening in the winter. The property is owned by an Australian.
"If we leave, another tenant will move in right away, and we won't be able to go back," the Indian man said.
"Rents are so high here," a woman working at another restaurant lamented. "I commute an hour by car from the suburbs."
And relying on foreign tourism for growth can create problems of its own. Overdependence on inbound demand creatures exposure to geopolitical and currency risks, said Koya Miyamae of SMBC Nikko Securities.