On August 27 and 30, 2025, the Nikkei featured articles titled “Growing Interest in ‘Condo Hotels’: Strong Sales in Sapporo”.

In Sapporo, newly built condominiums designed for short-term rental and vacation use are being launched one after another, and sales are reportedly brisk.
Amid rising material and real estate prices, these so-called “condo hotels” are drawing attention as a new type of investment product — meeting demand for second homes while offering the potential for high yields.

Sapporo is seeing a surge in condominiums designed for both residential and short-term rental use. Rising construction and property costs have driven investors to seek out alternatives that can serve as a second home while generating attractive returns.
https://www.nikkei.com/article/DGKKZO90910990W5A820C2L41000/?type=my#QAAUAgAAMA

Inbound Tourism as the Key Driver

According to the Japan Tourism Agency, the total number of overnight stays by foreign visitors to Hokkaido in 2024 increased by about 13% year-on-year, and by roughly 20% compared to 2019.
(Source: Hokkaido Transport Bureau https://wwwtb.mlit.go.jp/hokkaido/press/20250822_00005.html)

At the same time, the average daily rate (ADR) for hotel rooms in central Sapporo has risen to around 20,000 JPY per night, with occupancy rates exceeding 70%.
During peak tourist seasons — or when major concerts and events are held — even business hotels become costly and difficult to book.
Traditional hotels alone can no longer absorb the demand, prompting condominiums to be utilized as alternative accommodations.

Rising Land and Property Prices

Land values in Sapporo have increased by about 1.5 times over the past five years.
This environment has allowed “condo hotels” to gain traction as viable investments by combining:

  • Land appreciation → potential for capital gains
  • High occupancy from inbound demand → more stable cash flow

Together, these provide a dual source of profitability.

Investor’s Perspective: Pros and Cons

Benefits

  • Strong occupancy driven by inbound tourism
  • Smaller investment units compared to purchasing an entire hotel
  • Dual use: both investment and second-home potential

Risks

  • Regulatory risk under Japan’s Private Lodging Business Act and local ordinances
  • Seasonal fluctuations in occupancy → revenues often concentrated in peak seasons
  • Potentially higher-than-expected management and operating costs

Regulatory risk, in particular, cannot be overlooked.
By law, private lodging operations are limited to 180 days per year.
While Sapporo has generally taken a favorable stance toward such operations, restrictions in Tokyo, Osaka, and other metropolitan areas can be much stricter, meaning the same investment model may not be directly applicable.

Comparison with the Tokyo Metropolitan Area

Inbound demand is also rising in the Tokyo area, and hotel shortages are widely reported.
However, the development and sale of new condo hotels remain limited.

Key reasons include:

  • Complex regulatory environment (ordinances vary by ward)
  • Difficulty balancing residential and accommodation needs
  • Extremely high land prices, making yields harder to achieve

That said, there is a clear trend toward incorporating inbound demand into hotel development and rental apartment investment projects in Tokyo and surrounding areas.

Summary and Outlook

The boom in Sapporo’s condo hotels reflects three overlapping factors:

  • Growth in inbound demand
  • Rising land values
  • Emergence of new investment products

Similar trends could eventually appear in the Tokyo metropolitan area, though simple replication is unlikely given the regulatory complexity and higher land costs.
More than ever, investors need the ability to analyze local conditions carefully to make sound decisions.

At Ai Construction, we have also seen a notable increase in consultations not only for apartment investments, but also for the construction of wooden hotels, budget lodging facilities, and traditional inns (ryokan).

Key drivers include:

  • Ongoing accommodation shortages in Tokyo
  • Growing demand from inbound tourists for longer stays
  • Higher revenue potential compared to conventional rental housing

The surge of condo hotels in Sapporo underscores these broader trends.
Going forward, the line between “residential” and “accommodation” investment is becoming increasingly blurred.
Flexible thinking will be crucial in choosing the right property strategy.

Ai Construction specializes in fire-resistant wooden buildings and has experience not only with apartment projects but also with hotels, budget lodgings, and ryokan.
For investors considering Tokyo hospitality projects, even in wood construction, we are here to help.