AXROSS JAPAN REALTY

The Charm and Real Estate Potential of Hakodate City, Hokkaido

About Hakodate, a Popular City in Hokkaido

Hakodate is located at the southern tip of Hokkaido and has a highly developed tourism industry. As of the end of October 2023, the population of Hakodate was 240,903, making it the third most populous city in Hokkaido after Sapporo and Asahikawa. Tourists visit throughout the year to enjoy the beautiful seasonal scenery, including cherry blossoms in spring, the sea and fireworks in summer, autumn leaves, and snowy landscapes in winter. The tourism industry is a key pillar of the local economy, with abundant accommodation, dining, and sightseeing facilities. While Hakodate is famous as a tourist destination, from a resident's perspective, the city offers fewer commercial and entertainment options compared to Sapporo, which could be a consideration for real estate investors.

Tourist Attractions and Highlights

Hakodate boasts abundant tourist resources, including many notable spots:

Night View from Mount Hakodate

Known as one of the world's top three night views, Hakodate's nightscape attracts numerous tourists with its stunning beauty. The view from the 334-meter-high Mount Hakodate is famous, offering a panoramic view of the city and harbor. Visitors can reach the summit by ropeway, bus, or car.

Goryokaku

Goryokaku, completed in 1864, is known as Japan's first Western-style fortification. Its star-shaped design incorporates Western military architecture and features beautiful earthworks and moats. From 1868 to 1869, it was the site of the intense Hakodate War between the former shogunate forces and the new government forces. Today, it is a public park, beloved by both residents and tourists. The park is home to about 1,600 cherry trees, which bloom magnificently from late April to early May.

Hakodate Morning Market

Held near Hakodate Station, the Hakodate Morning Market spans 3 hectares, featuring about 250 shops selling fresh seafood like squid and crab caught off the coast of Hokkaido, local agricultural products, and eateries. The market is known for its extensive selection, friendly service, and the ability to sample items before purchasing. The market is open year-round, from 6:00 AM to 2:00 PM from January to April, and from 5:00 AM to 2:00 PM from May to December.

Motomachi Area

Located at the foot of Mount Hakodate, Motomachi is an area where many foreigners lived when Hakodate opened its port. It features numerous Western-style buildings and churches, creating a unique landscape that attracts many tourists. Historical buildings such as Motomachi Park and the Old Public Hall of Hakodate Ward are scattered throughout, making it an ideal area for historical walks.

Yunokawa Onsen

Yunokawa Onsen, slightly away from Hakodate's city center, is the most famous hot spring resort in southern Hokkaido, alongside Noboribetsu and Jozankei. It has a long history, with a legend dating back to 1653 when a local lord's incurable disease was healed after bathing in the onsen. It is loved by locals and visitors alike, offering both overnight stays and day-use bathing.

Bay Area

Hakodate, which opened as Japan's first international trading port, has developed alongside its harbor. The Bay Area still features warehouses and a post office built during the Meiji period in the late 1800s, now used as multi-purpose commercial facilities. The area hosts seasonal events like summer fireworks and the Christmas Fantasy in winter, offering enjoyment throughout the year.

Gourmet Information

As a prosperous port town, Hakodate is also known as a gourmet city, rich in seafood such as squid, sea urchin, and scallops. Squid is a local specialty, with popular dishes like squid sashimi and squid rice. Hakodate ramen, known for its light salt flavor, is also famous. Visitors can enjoy a variety of dishes, including seafood bowls, sushi, and Jingisukan (grilled mutton).
Additionally, Hakodate is home to the famous local hamburger chain Lucky Pierrot. Established in 1987, it is known for its generous portions made with local ingredients. Each restaurant has unique decor and themes, loved by both tourists and locals. The signature Chinese Chicken Burger is particularly popular. Since Lucky Pierrot only operates in Hakodate, it is a must-try when visiting the city.

Economic Impact of the Hokkaido Shinkansen Extension to Sapporo

Hakodate has thrived as the gateway connecting Honshu and Hokkaido, offering diverse transportation options. From Hakodate Station, it is about a 20-minute ride on the JR Hakodate Liner to Shin-Hakodate-Hokuto Station, where the Hokkaido Shinkansen departs. Currently, the Hokkaido Shinkansen operates from Shin-Aomori to Hakodate, with plans to extend to Sapporo by fiscal 2030. This extension is expected to dramatically improve access to Hakodate, increasing tourist and business traffic. The economic ripple effects of the Shinkansen extension are anticipated to be significant, promoting regional revitalization and expanding the real estate market.

Additionally, Hakodate has ferry terminals connecting Aomori Prefecture and Hokkaido, and Hakodate Airport, the city's air gateway, offers flights to Tokyo, Osaka, Nagoya, and Sapporo.

Pros and Cons of Real Estate Investment in Hakodate

Pros

1. Increased Tourism Demand: As tourism grows, the demand for accommodations and tourism-related commercial facilities increases, making short-term rental properties and hotel investments attractive.
2. Improved Access: The Shinkansen extension will enhance access from Sapporo and Tokyo, potentially increasing the area's value.
3. Balance of Nature and Urban Life: Hakodate offers a high quality of life with its balance of natural beauty and urban amenities.

Cons

1. Seasonal Impact: The tourism industry is seasonal, which may lead to reduced revenue during off-peak seasons.
2. Market Maturity: Hakodate's real estate market is smaller compared to Sapporo or Tokyo, limiting the selection of investment properties.
3. Natural Disaster Risks: Hokkaido is prone to natural disasters such as earthquakes and heavy snowfall in winter.

Recommended Areas for Purchasing a Second Home in Hakodate

Hakodate Station Area

This area offers excellent transportation access and numerous commercial facilities and restaurants. It is suitable for second homes as well as rental and commercial property investments. JR Hakodate Station is a key transportation hub connecting Hokkaido to other major cities and Honshu. The area around the station is home to many office buildings, making it attractive for businesspeople. Major tourist spots like Mount Hakodate and Goryokaku are easily accessible from Hakodate Station. The Hokkaido Shinkansen extension to Sapporo by 2030 will further enhance access to major cities and popular ski resorts like Niseko.

Honcho and Goryokaku Area

Honcho is Hakodate's bustling downtown area, lined with various restaurants, cafes, and bars. This area retains the rich history of foreign exchange from the end of the Edo period to the Meiji era, with many Western-style buildings. The area around Goryokaku is also home to the historic Goryokaku fort, attracting many tourists from Japan and abroad. In spring, the area is renowned for its cherry blossoms, particularly in Goryokaku Park. It is also a popular residential area with a well-established living environment.

Otemachi and Suehirocho Area

Located in Hakodate's city center, this area offers shopping and dining experiences. It is suitable for second homes as well as investments in commercial properties.

Hakodate is an attractive area with abundant tourism resources, gourmet cuisine, and a balance of nature and urban life. The Shinkansen extension will further improve access, bringing economic benefits. While the tourism industry offers significant opportunities for real estate investment, it is essential to consider seasonality, market maturity, and natural disaster risks. For foreign investors, Hakodate presents a compelling investment opportunity, requiring appropriate strategies and research.

Jul 18, 2024