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Niseko Swaying in the COVID-19 Pandemic – Difficult Resort Development Part 2

Projects Stuck in Pre-construction Phase

In Niseko, the construction of large accommodation facilities has been continuing even after the spread of COVID-19 in Hokkaido. The resort development seems to be going well, but some of the pre-construction projects have had to be suspended or postponed.

Wellspring Realty Investments, a foreign-affiliated real estate developer, plans to build luxury hotels and villas on 22 ha of land adjacent to the slopes of Niseko Moiwa Ski Resort. One of the hotels was scheduled to be completed by the end of 2023 as Aman Niseko, operated by the ultra-high-end brand Aman Resorts.

After the start of land preparation in the spring of 2019, disaster control was completed. The rest of the construction, however, has been suspended because of COVID-19. It is expected not to resume until the situation has settled down, and the specific timing is unclear. The completion will be postponed for about a year.

“We decided on a temporary suspension after judging all the merits and risks of proceeding with the construction,” said Nobukatsu Mizuma, president & CEO of Wellspring Realty Investments. He added, “It is difficult for foreign nationals as the main purchasers to come to Japan this winter, so sales activities cannot be smooth. That is one of the big problems.”

Hong Kong real estate development company Metropoly Holdings has planned the construction of the large-scale complex “Aruku-zaka Street” near Hirafuzaka in Kutchan Town, the central area of Niseko development. However, the project has made not the slightest progress.

Thirteen new buildings with a total floor area of 53,000 m2 are to be constructed on a 2.9 ha site. In addition to a hotel bearing the luxury hotel brand name of Amari, the complex will also include condominiums and restaurants, attracting attention as a major project. The construction was scheduled to start in 2020.

However, due to the worldwide spread of COVID-19, it was decided to defer the start of construction with no set date for resumption.

Some people in the town have questioned the feasibility of the project, while Michelle Lee, Creative Services Officer at Metropoly Holdings, keeps a positive perspective on its progress, saying, “We are making adjustments so that construction can be started as soon as the risk of infection is reduced.”

Eigou Kasai, Chief Representative of the Hokkaido Bank Niseko sub-branch office, who is familiar with Niseko’s investment trends, said, “We are aware of several other cases where construction has been postponed.” Regarding the causes of stagnation, he speculated that it is still difficult for property buyers and business operators living oversees to come to Japan. “Moreover, it may be hard to raise funds because investors don’t yet have stability in their core business,” Kasai added.

The plans of the advancement of these famous hotel brands are proof that Niseko has tremendous potential as an international tourist destination. When will the concerns about COVID-19, which is becoming a hindrance to further development, be dispelled? Business operators are anxious for the earliest possible end of the pandemic.

(Excerpt from an article on December 23, 2020)

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