Buying property in ski resorts is increasingly popular with international investors not only because of the booming inbound ski tourism market but because Japanese ski property has some fundamentals that make it a worthwhile investment. Japan is one of the few countries in Asia where foreigners are able to purchase freehold land without complex legal structures or local majority partners, that means ownership is clean, easy and secure.
The challenge in locating a property is deciding where to purchase among the 500 odd ski resorts still operating in Japan. Purchasing too early in a resort that is undiscovered could leave you literally out in the cold while you wait for your resort to be “discovered” and buying too late means you will pay a premium and suffer from low returns. There are some fundamentals to Madarao that make it an attractive investment proposition for international investors or someone just looking for a private lodge for friends and family.
Ski conditions
Madarao is not a large resort but it has incredible terrain, legal tree skiing and a very reliable snowfall; a bad season at Madarao is 9m of snow. To us that makes it more attractive than some of the other larger resorts like Hakuba and Shiga Kogen where the snow can be a little less reliable. Snow reliability is important for international skiers because visitors make a significant investment to come so the security of snow is very important. Amongst the locals in the know, Madarao & Tangram has without question the best lift accessed side country tree skiing of any resort in Japan and a very liberal policy towards riding the trees. Within the ski area boundary there are 13 designated tree skiing locations.
Visitation is increasing year on year
From 2016 there has been a startling increase in the number of visitors to Madarao, the inbound room capacity (rooms that are targeted to foreigners) has been doubling each year and from our own numbers, we can confirm that occupancy is also rising year on year. If you look at booking sites like Booking.com you will see that most of the available rooms will be sold before the season starts.
Prices are already on the rise
Madarao is just being discovered and starting to rise in value as a significant proportion of the property has been purchased by international investors. This means there is a lot less risk because the market has already been established and capital is being invested into renovations, restaurants, bars and ski rental equipment. Properties in Madarao represent good value when you factor in occupancy and yields.
There is no traditional village
Whilst you might think that owning a property in a traditional village would is a cool idea, local villages often have a very different view of development that foreigners and it can often cause friction or problems that will stop you from developing your property. I’ve heard of stories of people buying blocks of land and then being told by the village council that they cannot build on it. Madarao, having been originally built as a ski resort, has no traditional village rules, which means it is relatively easy to build and develop as you wish as long as you stay within Japanese building regulations.
Location
Madarao is blessed when it comes to the location for two reasons. Firstly, because it is only 15 minutes from the Iiyama Shinkansen Station, compared to up to 2 hours for other resorts in the region like Hakuba or Myoko which require long bus rides or bus and train changes. Secondly, because it is geographically central between about seven resorts, including Nozawa Onsen, Myoko Kogen, Shiga Kogen, Ryuoo, XJam, Togari and others. This means that visitors can stay at Madarao and do day trips to other resorts. Being centrally located means that guests will also stay longer increasing their lifetime value to the business.
More Opportunity
Ironically, the extended downturn in the ski industry and Madarao means that a lot of the older buildings have already been knocked down, so there is vacant land in great locations. This land is now being purchased, with the new owners intending to build all manner of hotels and apartments. You don’t see a lot of new construction in Japanese ski resorts, but I believe over the next 2–3 years we could see substantial new development in Madarao which will take the resort to a whole new level further increasing the capital value of established properties.
Final words…
When buying ski property in Japan you need to exercise some caution, not everything that is cheap can be turned to gold…there is a plethora of abandoned, shut down, run down and falling down property. Renovation costs are escalating and you could expect to spend upwards of $500k fully renovating a lodge to operational standard. You'll also find that renovating in Japan will take a lot of time, money, effort and patience because everything needs to be translated so its not for the faint hearted.
Aya Lodge in Madarao is quite literally a "Unicorn"... there is nothing like this on the market being offered as a full turnkey business with a quality building on premium located land and stylishly renovated to meet international guest expectations.