March 9 (Bloomberg) -- The sons of two Asian billionaires are trying to turn a Japanese village into the region’s Aspen, with $620-a-night rooms and $1.3 million apartments.
Richard Li, son of Li Ka-shing, is investing $1.2 billion on a resort, and Francis Yeoh, son of the founder of Malaysia’s YTL Corp., just gave the Green Leaf Hotel a $10 million facelift in Niseko on the northern island of Hokkaido. The village has an average 3.3 meters of snow (11 feet) in February, making it the world’s second-snowiest resort after Washington’s Mount Baker, according to the Best Snow website. The powder snow that has drawn Australian snowboarders for a decade is now attracting developers like Horst Schulze, founder of U.S.-based Capella Hotels.
“The development of the area is definitely a sign that Niseko is catching up to global standards as a luxury resort,” says Tadashi Endo, chief researcher at Hokkaido University’s Center for Advanced Tourism Studies. “Skiers from Asia prefer to stay at luxury hotels and dine out.”
As the skiers depart at the end of this winter, they may return next year to a very different Niseko, which has a population of 4,600. By the peak season in 2012, Schulze, former president of the Ritz-Carlton Group, plans to open a development designed by Tadao Ando, the architect behind Tokyo Sky Tree, the world’s tallest tower.
Richard Li’s Pacific Century Premium Developments, a property arm of PCCW Ltd., is investing 100 billion yen ($1.2 billion) in two hotels, a hot spring and 3,000 condominiums in the resort’s Hanazono area, Naomi Tofukuji, a Tokyo-based spokeswoman for Pacific Century Premium Developments, said on Feb. 24.
‘Aspen of the East’
Malaysian builder YTL, which reopened the renovated Green Leaf hotel in December, is developing Hinode Hill, a residential project including penthouses with private onsens, or traditional Japanese baths. The Kuala Lumpur-based company spent $66 million on the land, according to spokeswoman Michi Uchiyama.
“We aim to establish Niseko village as the ‘Aspen of the East,’” Yeoh said in a statement on Dec. 14.
Backpacking snow seekers in the early 2000s from Australia -- where a similar time zone to Japan’s means there’s little of the jet lag associated with trips to Europe or North America -- brought Irish-themed pubs, Tex-Mex eateries and pizza joints.
Now, as tourists from mainland China, Hong Kong, and Singapore head to Niseko for the deep powder lines, five-star restaurants and designer boutiques may replace the cheap eateries, a trend seen in Aspen, Colorado.
Aspen “grew organically. It is not because there is a collection of world class shopping and dining (establishments) - - that came later,” said Jeff Hanle, a spokesman at Aspen Skiing Co., operator of ski resorts in Aspen. “I don’t know that it is possible to recreate.”
Still, YTL plans to include shopping streets with luxury businesses like LVMH Moet Hennessy Louis Vuitton SA, said James McBride, president of YTL’s hotel division.
“We’re working on serving the affluent through retail, residential, and restaurants,” McBride said. “What this all will eventually lead to is people flying in on private jets.”
The latest wave of visitors is from mainland China, with their numbers almost doubling in 2009 from a year earlier to 92,700, according to the Hokkaido prefectural government. Access is being made easier after Japan eased visa restrictions in July and China Eastern Air and Air China added direct flights from Shanghai and Beijing to Sapporo’s New Chitose Airport, an air link that’s about 90 minutes from Niseko by car.
“The snow here is awesome, it’s really dry and I love it,” said Frances Li, a 35-year-old sales manager from Beijing who is not related to Richard Li. “I’ll come back.”
YTL’s Green Leaf Hotel, which charges as much as 51,000 yen a night, was fully booked over the Feb. 2-5 Chinese New Year’s period, even at double the usual room rate, according to Uchiyama. A night at the end of February costs about $300, according to the hotel’s website.
The number of middle-income and affluent consumers in China, the world’s most populous nation with more than 1.3 billion people, may almost triple to 415 million in 10 years, the Boston Consulting Group Inc. said in a November report.
The local government is also responding to the arrival of Chinese visitors. Last June, Niseko hired Wenxuan Han, a 33-year-old from Dalian who studied at Hokkaido’s Otaru University of Commerce, to handle translation work and promote tourism.
‘No Place Like It’
“Chinese are keen to learn about Japan, and especially Niseko,” she said. “There really is no place like it in the region where you can enjoy wild landscape all year round.”
The Yamada Onsen, a hot spring hotel at the base of the Hirafu ski runs and one of Niseko’s oldest landmarks, was last year sold to a Chinese investor by Sapporo-based Kamori Kanko. The company, which owns about 40 properties including hotels and golf courses in Japan and abroad, said it received offers from investors in Australia, China and Hong Kong.
“The Chinese investor offered the highest price,” said Yasushi Miyazaki, Kamori Kanko’s managing director. He declined to identify the buyer.
Niseko isn’t the only place trying to capitalize on the growing interest in luxury skiing. In November, Paris-based Club Mediterranee SA opened a luxury resort in Yabuli, China, where Lawrence Ho, son of Macau billionaire casino tycoon Stanley Ho, is developing three luxury hotels on Sun Mountain.
The growth in foreign investment in Niseko also poses risks for the town in case of another economic slowdown in Japan’s precarious economy, said Michio Kitamura, who analyzes tourism and regional development for Nomura Research Institute.
“They should look back at what happened in Okinawa, where some developers from abroad pulled out after the 2008 financial crisis,” Kitamura said. “Niseko should know foreign investors won’t hesitate to abandon projects half-completed and don’t think much about the effect of overdevelopment.”
While land prices in Japan have fallen for the past 19 years in 98.5 percent of plots tracked by the Ministry of Land, values in Niseko’s Kutchan area have been steady, according to reports released in September.
Craig Meikle, whose Meikle & Associates real estate agency promoted Capella Residences in campaigns held at luxury hotels throughout Asia, said contracts have been signed for a “good amount” of the condominiums, without giving a specific number.
As the snows melt, owners won’t have to wait till the next winter to use the resort either -- there are already eight golf courses around the village.
To contact the editor responsible for this story: Drew Gibson at email@example.com.