Singapore's PCG to reopen fund for luxury Japan ski resort as weak yen beckons
14/03/2024 08:37
By Mariko Katsumura and Rocky Swift
TOKYO, March 14 (Reuters) - Patience Capital Group, the
Singapore-based investor behind a $1.42 billion luxury ski
project in northern Japan, is in talks to reopen its fund to new
investors eager to get in before tightening by the Bank of
Japan.
PCG's initial 35 billion yen ($237 million) fund, announced
last year to transform Myoko Kogen in Japan's Niigata prefecture
into a winter sports destination at par with Aspen and Whistler,
may grow to 60 billion yen as new money from domestic and
foreign investors piles in, said PCG founder Ken Chan.
Japan is riding twin booms in investment and inbound
visitors, boosted by a weak yen that makes the country a bargain
for foreigners. Chan set up PCG in 2019 to benefit from both,
investing in accommodation and resort properties.
The BOJ is expected to move as early as next week, beginning
a lengthy normalisation from about two decades of easy money
policy. That shift, along with possible interest rate cuts by
the Federal Reserve, is likely to drive the yen up from the near
three-decade lows it trades at now, Chan said.
"It's clear from a macro perspective, this year is a very
important year to put funds into yen assets, because the yen is
too cheap right now," said Chan, who founded PCG after 19 years
with Singapore's GIC sovereign wealth fund, where he acted as
its Japan head.
"I think in the next few months, you will continue to see
investors coming in to take an investment position in this
market," he added.
Chan, who was born in Japan and spent his early childhood
there, last year sketched out a plan to turn the Myoko Kogen
area into a high-end winter paradise that can attract wealthy,
globe-trotting snow fans.
His fund, which caters to institutional and high-net worth
investors, has bought about 350 hectares of land which includes
two existing ski slopes.
Chan said he is looking to buy other ski areas in the Myoko
area if he can find willing sellers, and he has been in talks
with railway operator Tokyu 9005.T to purchase its Tangram
resort nearby.
Although the full build-out will take about a decade, Chan
aims to have the first two luxury hotels ready by 2028. That is
a year later than originally planned due to a major earthquake
on Noto peninsula on Jan. 1 that has pulled away construction
resources.
PCG expects to raise money for the project in two additional
funds around the 35 billion yen size, with the spending power of
all funds doubled through borrowing leverage.
Total spending is still benchmarked at the 210 billion yen
level, but it could "absolutely go beyond (that figure) because
there's so much land waiting to be developed," Chan said.
LABOUR CRUNCH
Although Japan enjoys annual dumps of some of the best
powder snow in the world, much of the nation's ski industry is
suffering from aging infrastructure and a shrinking base of
domestic customers.
The number of Japanese skiers and snowboarders fell by about
75% from its peak in 1998 as of 2022, according to the Japan
Productivity Centre. Global warming has also led to less snow in
all but the most northern parts of the country, leading to seven
ski resort bankruptcies in 2023.
Myoko is about 200 km (125 miles) northwest of Tokyo, and
cold winds coming off the Sea of Japan produce some of the
deepest snow in the world. But the area has so far missed out on
the attention and investment seen in nearby Hakuba or Niseko on
Japan's northernmost island of Hokkaido.
Another hurdle for PCG or any other would-be developer is
Japan's tight labour market. The retail and hospitality sectors
have not recovered from an exodus of workers during the
pandemic. Skilled, multi-lingual staff needed by high-end
resorts is in short supply.
Chan hopes to solve that problem by building dormitories and
housing in the Myoko area and making it an attractive township
that will draw in foreign and domestic workers through multiple
seasons.
"The local, liveable area is something that we need to
actually address right from the beginning," he said.
($1 = 147.8200 yen)
(Reporting by Mariko Katsumura and Rocky Swift in Tokyo
Editing by Tomasz Janowski)
((rocky.swift@thomsonreuters.com;))