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Real Estate

A Look at How the COVID-19 Pandemic Has Affected Japan and the Real Estate Industry

This year has shaped up to be one of the most unforgettable in history. We have all experienced the global implications of COVID-19 in one way or another, and in this blog post, we take a second to reflect on the aspects in which the pandemic has affected Japan. Specifically, we discuss the impact of coronavirus on the real estate and construction industry.

5 Ways COVID-19 Has Affected Japan

1. The Tokyo Olympics

The Olympics was the first of many sporting events to fall victim to the global pandemic. Re-scheduled to take place in July 2021, the Real Estate market in Japan will benefit from an additional year of attention off the back of the delayed Games. In any given cycle, Olympic host nations typically see real estate prices rise steadily until the games. Looking further ahead, Niseko will be central to a Winter Olympic bid that if successful would see Sapporo host the Games in 2030.

2. International Short Term Bookings

With the strengthening of quarantine measures inevitably came restrictions in international travel. For many countries this has meant that travel in or out closed, and Japan in particular have firmly held a closed border to international tourists.

3. Working Habits

With the acceleration and acceptance of remote work across the country and internationally, and a clear preference of young families to move out of apartment block accommodation, we have seen a steady rise in the number of long term (6 month to 2 year) rental enquiries for standalone properties across our developments. Owners of these types of properties have been able to hedge against an expected lack of demand for short term rentals this winter. Country Resort in particular has had good interest in this regard.

4. Activities and Events

For Japan and the world over, countless sporting events, festivals and conferences have been cancelled or postponed due to concerns over safety. Whilst this has deeply impacted the economy, technology has played an immense role in offering the public experiences that help retain a sense of emotional connection.

5. Construction Pricing

Construction pricing is likely to plateau in the next 12 months. The Olympic infrastructure has been built and we anticipate an increase in supply of construction workers available to work in Hokkaido in 2021. The added layers of uncertainty surrounding the pandemic brings opportunity in the form of discounts from builders looking to confirm builds for 2021. Locking in a build while travel restrictions are still in place and others wait it out could reap rewards. Once builder’s get close to their capacity for the year and demand for construction increases, discounts are harder to come by.

Let's Look at the Ways COVID-19 Has Not Affected Japan

If we look beyond the ways in which our lives have changed as a result of the spread of coronavirus, we can identify areas of life that have remained relatively unaffected.

Domestic Appetite for Travel

Without compulsory lock-downs, domestic travel hasn’t been restricted to the same degree as it has in other nations. Japanese established social norms such as respect for personal space and mask wearing have allowed domestic tourism to continue. This effort has been supported by the generous and heavily promoted travel subsidies such as the Dominwari (どうみん割) and Go To Travel Campaign.

The Weather

The cooler climate that Hokkaido experiences during summer continues to attract mainland (Honshu and Kyushu) based travelers. An adapted version of MnK's hugely popular Edventure Summer Kids' Camp attracted predominantly non-Hokkaido residents, who enjoyed periods of bright sunshine and cool showers throughout their stay.

The "weekend warriors" who travel from metropolitan areas in Hokkaido to enjoy Niseko’s fresh mountain air raised occupancy numbers between Friday and Sunday and during national holiday periods. Early signs show that our domestic summer guests are also keen to visit us in Niseko this winter to see what all the fuss is about.

Listing Prices

As a result of stringent lending laws, much of the real estate in the resort has been paid for outright by owners. The result is less volatility in reaction to events like COVID-19. Not great for buyers who are looking to pick up a distressed bargain, but an excellent outcome for owners and sellers.

Niseko Brand

The Niseko brand goes from strength to strength, and the on-boarding of household hotel operators continues apace. The region is set on a path that will see land prices in the non-Hirafu areas tick-up as demand for a little piece of Niseko and the highly sought after association to names like the Ritz-Carlton, Park Hyatt and Aman Resort (and MnK obviously...) increases.

Food and Culture

Japan is steeped in history and tradition and although Hokkaido is the new kid on the block, the best of what the rest of the country offers has been hand picked by the artisans of Hokkaido for your enjoyment in Niseko. The region continues to deliver high quality cultural and culinary experiences. Unquestioning obedience and strict adherence to safety guidelines ensures you will have access to sanitising spray and be appropriately distanced from other diners and audience members all whilst enjoying the highest level of customer service.

Infrastructure

Construction of tunnels, bridges and over-passes on which the hotly anticipated shinkansen (Japanese bullet train) tracks will be laid has continued throughout 2020. Work has commenced at the Kutchan train station site, which will be one of four new Shinkansen stations due to be in operation before 2030. Kutchan prices have been rising steadily as a result. With a clear plan now in place, there is limited time to pick up a bargain in Kutchan.

For more detailed information on the Niseko market, or to discuss opportunities on how you can enter the real estate market, get in touch with our reliable team by emailing info@mnkrealestate.com or calling +81 (0)136 55 6680.

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