FAQ
Frequently asked questions about purchasing property in Niseko.
Why invest in Niseko?
Let’s tackle the big question first.
In addition to Niseko offering an incredible lifestyle investment choice for all ages, it has more importantly proven itself to be an outstanding and consistent market performer over the past decade. Weathering the storms of the ‘07-‘08 GFC and 2011 tsunami that ravaged the Eastern coast of Japan, Niseko emerged from these difficult times not merely unscathed, but with such strength and force that it is now widely regarded as a first-class global ski destination for the world’s elite.
With Niseko now brushing shoulders with the big-boys of Whistler, Vale, Chamonix and Val D’Isere, and with a practically untapped summer season offering a plethora of championship golf courses within easy access, delicious fresh produce, stunning scenery, nutrient-rich onsens, and unmatched air quality in the Asian region. Hokkaido’s Niseko, and surrounding areas, are increasing in popularity each year and are cementing themselves as a truly international force in global tourism.
Demand for high quality accommodation and facilities continues to drive the market, especially in the luxury segment. Winter continues to be strong and the summer season is showing encouraging growth. As Niseko moves from its well-established reputation of Asia’s premier winter-wonderland and into the year-round destination of activities, wellness and culinary delights, the time to enter the Niseko story has never been better.
The benefits of 100% freehold ownership and the lack of restrictions on foreign buyers, elevates Niseko from a mere lifestyle investment to a very sound, financial investment, of which many astute investors in the Asian region and beyond have taken advantage of. Niseko investments are now found in the portfolios of some of the largest and most recognisable property investment firms in the world.
Niseko continues to remain the fastest appreciating real estate market in Japan and the area is showing no signs of slowing down its growth-trajectory as an Asian destination.
What are the expected returns?
Returns differ across property category and vary according to specific location. Historically, bookings in Hirafu Village generally and Nisade Real Estate properties specifically, have consistently experienced 90-120 days of letting per year.
With the summer season growing each year in popularity and with feet on the ground increasing year-on-year, the number of nights booked is set to increase and enhance returns.
Although Niseko has made incredible progress in terms of international reach and reputation, property prices are still well below comparable resorts in both North America and Europe.
Average yearly returns in Niseko have typically ranged between circa 2.5-5.5% and indicators suggest this range remains an accurate forecast for the immediate future.
Major factors affecting returns include specific units’ size (number of beds) and location (access to ski lifts). Higher returns will be realised if the property is available to the rental market over peak periods including Christmas and Chinese New Year.
Management
Who will manage my property?
Niseko has a good number of operating management companies to choose from. However, as it is most likely that your new property acquisition is already managed, we recommended to remain with this company for the immediate future, allowing yourself time to make a more informed and experienced decision – unless of course you have a specific reason for changing.
What does the management company provide?
Services generally include:
- Reservations
- General maintenance
- Utilities & other bill payments
- Snow clearance
- Cleaning and laundry
- Accounting and Tax services
A concierge service may also be provided by certain management companies.
What are the costs for year-round management?
Typically, management fees total circa 35% of the nightly rate plus an annual expenses fee.
These fees breakdown as follows:
- 10% Management fee of gross rental income - covers managing owner’s accounts and reports, paying all utilities and other charges
- 25% Letting Management fee of gross rental income
Utilities and other outgoing expenses (e.g. maintenance, cleaning, insurance, tax) are paid for by owners. This represents an estimated 20% to 30% of gross rental income.
Owner Stays
In order for properties to generate the healthy returns typically enjoyed in Niseko, owners and direct family will generally be allowed a minimum of 14 nights in winter and 14 nights in summer usage. A management fee of circa 10% of the rack rate is usually applied to additional stays. Different developments have different policies and as such Nisade recommends buyers request and understand the specific policy of their chosen development to ensure they make an informed decision.
Agent Commission
No commission is typically charged on the sale of off-plan developments.
For secondary market properties and land acquisitions, commission is 3% of the agreed sale price. A flat fee of 60,000 yen will added to the cost if contracts are signed here in Japan. However, if contracts are signed off-shore there is no additional cost.
Purchase-related Costs and Taxes
NISADE Real Estate recommends buyers account circa 5% of the agreed sales price for purchase related costs. Typically, these purchase associated costs amount to less, especially for land purchases.
Associated costs for property acquisitions include the following:
- Stamp Duty – 2 kinds:
- Contract Stamp Duty – calculated based on the sales value of the property (paid by both buyer & seller)
- ¥20,000 for properties valued @ ¥10m - ¥50m JPY
- ¥60,000 for properties valued @ ¥50m - ¥100m JPY
- ¥100,000 for properties valued @ ¥100m - ¥500m JPY
- Stamp Duty Registration – calculated based on the local council’s value of the land and building (1.5% of land value + 2% of building)
- Contract Stamp Duty – calculated based on the sales value of the property (paid by both buyer & seller)
- Solicitor’s fees – calculated based on the agreed sales price – charged @:
- ¥157,500 for sales price under ¥50m JPY
- ¥210,000 for sale price greater than ¥50m & under ¥100m JPY
- ¥262,500 for sales price greater than ¥100m & under ¥150m JPY
- Property Acquisition Tax – calculated based on the local council’s value of the property @ 3% for land & 4% for building (generally equates to circa 1% of agreed sales price)
- Bank Charges – associated bank charges for wire transfers to and from solicitor account paid by the buyer
- Sales commission – 3% of agreed sales price
- Contracts are registered in Japan by local solicitor firm Satoshi Yoshida
Solicitor Fee
Vary depending on the size of the transaction.
Calculated based on the agreed sales price & charged @:
- ¥165,000 for sales price under ¥50m JPY
- ¥220,000 for sale price greater than ¥50m & under ¥100m JPY
- ¥275,000 for sales price greater than ¥100m & under ¥150m JPY
(These fees increase by ¥50,000 JPY for every ¥50m JPY above ¥150m JPY)
Title Registration Stamp Duty
Calculated based on the local council’s value of the land and building (typically much less than the agreed sales price)
- 1.5% of land value +
- 2% of building
Acquisition Tax
- Calculated @ 3% for the land and 4% of the building, based on the local council’s value of the property
- Generally, equates to circa 1% of agreed sales price
Annual Fixed Assets Tax
Calculated @ 1.4% of the local council’s property value. Payable pro-rata for the year of purchase.
Financing
- On the whole, finance is not available to foreign investors who do not hold Japanese residency
- Recently however, some financial institutions in buyers’ home country have offered financing. NISADE Real Estate recommends exploring all avenues open to buyers in their home country and/or country of residence
- Some new developments may offer financing - please contact us for information
Freehold Title
- 100% free hold title
- No restrictions on foreign ownership
How long does it take to buy property?
- 4-6 weeks is the standard timeframe for transfer of ownership in the Niseko resort area
- This timeframe can be shortened or lengthened as required and requested
How does the sales process work in Japan?
Offer & Acceptance
Once a buyer has decided on the property they wish to acquire:
- An offer is made by the buyer and communicated to the vendor
- Vendor will either except, decline or counter
Once the offer is accepted by the vendor:
- A purchase price and payment schedule is agreed upon by both parties (deposit & settlement amounts – typically 20% & 80%)
Contract Settlement
- The Japanese legal office couriers the buyer Power of Attorney and Statutory Declaration documents for the buyer to sign, have notarized and return
- NISADE Real Estate emails the buyer settlement payment information for the property purchase•
- Buyer transfers payment of the settlement balance and related charges on
settlement day
Title Transfer & Ownership
- The Japanese legal office sends the title to the Title Registration Office
- The legal office couriers the new title naming the buyer as owner to the buyer
- NISADE Real Estate couriers the sales agreement and Statement of Important Matters documents to the buyer