Last month, Gendai Business published an interesting article about the glut of empty resort condominiums throughout Japan and what some local communities and businesses are doing about them. This blog has addressed the “resort mansion” problem, which stemmed from a post-bubble construction boom of vacation properties. Many of these condos were built near popular ski resorts, since there was also a ski boom in the 80s and 90s that eventually went bust. Consequently, the owners of these condos stopped coming to ski and didn’t keep up their properties. Market values plummeted, sometimes, as Gendai points out, to as little as ¥100,000 for a standard 50-square meter unit. The reason for the cheap price was more than just low demand. Resort condos have higher monthly management and repair fees owing to extra facilities, like large, collective bathing facilities and ski lockers. Absentee owners were not paying these fees and anyone who bought the units were expected to pay them retroactively. There were also property taxes that local governments were keen to recoup.

Gendai’s take on the matter is optimistic, starting with the idea that, as inbound tourist traffic goes back to pre-COVID levels and the yen remains low vis-a-vis the dollar and other currencies, foreigners have become interested in these properties. The novel inference in the article is that most of the interested parties are rich Southeast Asians for whom snow is a fascinating draw. The reporter states that while “there are high mountains” in other Asian countries, “the snow doesn’t normally accummulate,” meaning that a sport like skiing isn’t feasible in these countries. Even China had to manufacture snow when it hosted the Winter Olympics. So if Asians do partake of skiing and they have money, Japan is a much more convenient destination, because ski resorts are eash to access from Tokyo or any other city with an international airport. 

The reporter may be stressing this point beyond its natural flexibility, but what he wants to show is why one ski resort town, Yuzawa in Niigata prefecture, is seeing a Renaissance in its property market. Yuzawa is an hour and 20 minutes by Shinkansen from Tokyo; 3 hours if you take a highway bus. And while some ski resorts in Japan have seen less snow in recent years, Yuzawa still has enough of the stuff to maintain its ski and snowboard cred. It may not be Niseko in Hokkaido, which is treasured by world ski freaks for its natural powder, but Niseko is also expensive and more remote and, besides, it seems to be overrun with Australians during the high ski season. So Yuzawa is accessible and affordable to a wider cross section of tourists. Moreover, it has hot springs, which are just the frosting on the cake for Asian travelers. And, in fact, as Gendai points out, this aspect at first made Yuzawa a problem for Asian tourists, since most Japanese tend to think of Yuzawa first as a hot spring destination rather than a ski resort, which didn’t really show up until the late 80s, so there are still some inns in the region that don’t welcome non-Japanese speaking guests. 

But Yuzawa has plenty of resort condos, and local real estate companies, not to mention the local government, are keen to introduce them to foreign buyers. Last February, another business publication, Toyo Keizai, ran an article focusing on the condo market in Yuzawa. Since the end of COVID, prices have almost doubled, which may not necessarily say much since, as Gendai pointed out, some units were going for as little as ¥100,000. But Toyo Keizai claims that the average price for a resort condo in Yuzawa now is more than ¥2 million. 

There are still too many: 57 buildings comprising 14,665 apartments. The magazine doesn’t say just how many are now vacant, but prices had bottomed out by 2019, with some going for even less than ¥100,000. But then the pandemic happened, and people who turned to teleworking started looking for cheap properties in regional centers, since they didn’t have to travel to city centers. If they also happened to be into skiing or hot springs or winter landscapes, Yuzawa was perfect. As one realtor put it, in the last year inquiries for resort condos have doubled, both to buy and to rent. What’s particularly attractive is that, while prices have gone up considerably, they are still low enough so that people can pay with cash. Consequently, the decision is made that much easier: half the people who come to inspect properties in Yuzawa through his company end up buying something. The reasons these properties are attractive is not just their low price, but their condition. Though many buildings may look shabby on the outside, once a potential buyer gets inside they are impressed with how well the common property is kept up. Some buildings have front desks that are manned all day, and staff on duty 24 hours a day. The common bath is also open 24 hours a day, and housekeeping is available. Most buyers can move right in without having to do any renovation.

These attractive features are due to the strong management companies that run the buildings for the homeowners associations. Of course, because of these strong management companies, the monthly fees are higher than they would be for a comparative condo in the city, and HMOs in resort condos are pretty ruthless about collecting their fees. Having been burned in the past by absentee owners, many have changed rules so that if fee payments are delinquent for a certain number of months, the HMO can purchase the unit from the owner at whatever the market rate is. That way, they can maintain the quality of the units to a certain standard. 

What we found particularly interesting about the article, however, is how at least two of the larger buildings have liberalized their regulations so as to allow owners to rent out their units for short-term stays, the way Airbnbs operate. The units in these two buildings have been selling exuberantly and at higher than average prices. What’s even better is that the management companies work with the real estate companies to promote and manage the short-term rentals so that they owners don’t have to do it themselves. The change has led to a boom in visitors that run the gamut from ski freaks to extended teleworkers and even to music fans (the Fuji Rock Festival is up the hill at the Naeba ski resort), meaning that Yuzawa has become a year-round resort area. It’s not just for skiing (or onsen) any more. Unfortunately, most HMOs, as elsewhere in Japan, are not keen to allow strangers in their buildings on a short-term basis, but the success for those who are seem to point to a potential business model that has a future in a country where the population is dwindling but the housing supply isn’t.