Hakuba Land Prices Increase

Over the last several years, land prices in Hakuba have seen an overall increase with the average sales price for land transactions executed during 2021 being recorded at JPY 10,847/m², a 6.97% increase YOY and a 20.65% increase since 2019 when the average was JPY 8,889/m².¹  Moreover, Hakuba is one of only two towns in Nagano prefecture to see such significant rises in land prices.²

Nestled in the Northern Japanese Alps and just west of Nagano, the host city of the 1998 Winter Olympics, Hakuba Village is well-known for its premier ski resorts (10 in total), traditional Japanese inns, natural open-air onsens, and is a popular destination for both international and domestic tourists.  In 2019, prior to the COVID-19 pandemic the Hakuba Valley region received 1.35 mln. visitors, 350,000 of which were foreigners.³  The region is also well known for the quality of its snow with the last two winters having neared 10-year highs in snowfall.⁴  The cool temperate climate is also ideal for hiking and other outdoor activities during the off-season summer months.

Drivers for this increase

As a limited supply of land exists, demand is the primary factor that affects prices, causing demand-pull inflation.  But what is behind this sudden increase in demand?  We have identified two key areas and are as follows: a general desire to relocate/own vacation property, and natural inflation in asset markets.

Throughout the COVID-19 pandemic, many global urban areas have seen populations shift to more rural areas as remote work replaced in-person interactions, providing employees with the ability to work from nearly anywhere online.  This includes both permanent relocations and temporary housing arrangements; facilities for work-vacationers have also opened as a result.  Additionally, one of the many attractive features of Hakuba is its ease of access via rail from three major cities (Tokyo, Osaka, and Nagoya), allowing those who may need to commute occasionally the ability to do so.

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A handful of places spread across Japan are common amongst foreigners to reside and Hakuba Village has become one of these spots in recent years.  With many services offered in English, including education (Hakuba International School), and the already established international community, the village has experienced an influx of foreign residents moving in, thus adding new buyers to the real estate market.  Of the 8,575 residents in the village, 353 are non-Japanese.⁵   However, with limited travel to Japan during the COVID-19 pandemic, it is domestic buyers who have taken a particular interest in Hakuba making up nearly all new investments.  This flood of new investment has thus pushed up prices and is expected to continue emerging from the pandemic as investment from overseas returns.

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At the macro level, a general trend in the appreciation of real estate values over time exists.  This combined with several rounds of economic stimulus pumped into the economy has further inflated prices in asset markets.  That is to say, the Japanese Yen’s purchasing power regarding real estate has depreciated while real estate itself has appreciated.

What this means for investors

Real estate values in Hakuba are expected to continue to increase at an incremental rate and the economic outlook for the area is very strong.  Furthermore, in anticipation of post-pandemic times and the reopening of Japan’s borders, investment into the area has poured in, particularly from domestic buyers, further driving up land and other real estate prices.⁶

Sources

1. Chika Hakuba 2021 Data; 2022
2. Tochidai Hakuba 2021 Data; 2021
3. ZUUOnline 2021 Prices Increase; 2021
4. World Weather Online Hakuba Climate Weather Averages;
5. e-Stat Population Census 2020 Hakuba-mura; 2021
6. Nikkei Land Prices Increase; 2021

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