HIRAFU, Japan -- Simon Robinson punctuated a Japanese ski holiday five years ago by taking photographs of land plots in this town in the rural north. The Canberra native bought one of them and then built some vacation condominiums on it.

Today, he runs a $43 million-a-year real-estate business here. His houses and condominium blocks are dotted around the main town. Others have been building too, as tens of thousands of Australian snow lovers have flocked to Hirafu, turning it into a flourishing ski town in Japan's large northern island of Hokkaido. It's dotted with bars, restaurants and live music venues -- a contrast to many other Japanese winter resorts, where people often eat in their hotel and go to bed early.

Niseko, as this resort area is commonly known, is flouting the accepted rules of how Japan works, and providing one idea for how to survive a future with an aging, declining population. Japan was long known as one of the world's most expensive countries, so tourists stayed away. Most Japanese didn't sell their land, making it hard for foreign businesses to set up there. Japan's regions are mostly failing economically and losing population, and property prices are continuing a long slump.

Here, though, land prices are soaring and the local economy is perking up. That's because of foreigner-driven property development, which is riding a boom of ski and snowboard tourists.

Associated Press Australian skiers in a Niseko bar are part of Japan's tourism boom.

The area will be under the spotlight in July, when the Group of Eight summit takes place near Toyako, a lake about 20 milesaway. The Japanese government wants to use the summit to showcase the natural attraction of northern Japan. July will also see the first stage in Niseko's ambitions to become Japan's first major international destination resort, when Citigroup Inc. and Hilton Hotels Corp. open a resort village, trying to bring in summer visitors for golf and rafting. PCCW Ltd. of Hong Kong is also developing a resort that could bring in affluent Chinese tourists.

Some other rural parts of Japan are using Niseko as a case study. Myoko, in the mountainous prefecture of Niigata, also known for skiing, recently sent a delegation to Taipei to try to drum up interest in its local property among rich Taiwanese. Tourism is already increasing in the country as a whole, as word gets out that Japan is cheaper than it was in the past. Last year, 8.3 million tourists visited Japan, up from 6.1 million in 2004 -- though that's still only a handful compared with the nearly 80 million people each year who go to France.

Skiing in Japan grew from the 1970s in step with middle-class incomes, as the young sought a pastime with a chic image. Resort developers quickly built lifts and hotels, but the ski boom faded. The number of skiers and snowboarders slipped from a peak of 16.5 million in 1995 to 11.5 million in 2005.

Niseko gets nearly 20 feet of snow a year, making it one of the snowiest resorts on earth, and Australians started coming after the Sept. 11, 2001, attacks, when many avoided travel to North America and Europe. Australia's currency has risen with its booming mining industry, and Australian visitors to Niseko say it's a cheap way to go skiing.

Grant McMurray, 24 years old, a plumber from Perth, first heard people talking about Niseko on a recent visit to Threadbo, a ski resort in New South Wales. This year, he spent A$2,800 on an 11-day snowboarding vacation, including flight, accommodation and lift pass. Going to Canada would have cost two-thirds that just for the flight, he said. And nearly everything, from drinks to lift passes, costs less than in Australian ski centers.

"The drinks are cheap ... and the powder is dry," he said over a beer in a Hirafu bar. "I'll be back next season."

Property developer Mr. Robinson, 47 years old, was a restaurateur who first came to ski in Niseko with his wife, Joasia, 44, in 2002. They liked the snow and booked a month's vacation for 2003. Shortly before their departure, a bush fire hit their area of Canberra. Mr. Robinson's catering business was destroyed, and their house burned down. As the flames took hold, Mr. Robinson smashed a ground floor window, climbed in, and rescued two new pairs of skis he had just bought.

They stayed in the nearest thing to a holiday apartment offered in the main town of Hirafu, but were unimpressed: a loft studio with a three-legged table, no chairs and a gas heater. It had "paper-thin walls," and the young guests next door came home drunk and rowdy late at night.

Japanese resorts were designed for people who could spare only a couple of days off work. They had hotels, but little accommodation for people staying longer.

Many Niseko landowners had bought land to build pensions during the ski boom. The land then declined in value, their businesses shrunk and they got older. So, when Mr. Robinson and others offered better-than-expected prices, many landowners sold.

The Robinsons decided their new company, called Hokkaido Tracks, should target well-heeled foreigners who could afford to come to ski in Japan. Mrs. Robinson calls their preferred style "contemporary Japanese" -- combinations of wood and concrete that are seen in the posher bits of Tokyo. The latest are designed for rich expatriates, and feature European kitchen equipment and a room with self-contained kitchen for the maid.

The town's emergence as an international tourist resort was not planned by the local authorities, who were at first wary of the newcomers. The Hokkaido government didn't understand the idea of a vacation condominium, and sprung hard-to-understand regulations on them. At first, Mr. Robinson thought he was in the condominium business, building properties whose owners would rent them out like apartments. That's how apartment operators work in big cities like Tokyo, when they are renting out apartments to, say, visiting foreign executives.

But Hokkaido told them that in fact what they were building were hotels, which require provisions for emergencies, such as fire alarms and escape ladders, costing about 200,000 yen ($1,888) per unit. The company also took out a hotel license. "We are just getting as many licenses as possible in order to show that we are a wholesome business," says Minoru Okubo, who looks after legal and government business for Hokkaido Tracks. We even got a travel agent's license, even though we don't actually do travel business."

Both the town and Hokkaido governments have become friendlier recently as they realize the benefits brought by the newcomers. The plot of land the Robinsons bought in 2003 has increased in value 20 times, Mr. Robinson says. A government survey of land prices in another part of Niseko shows a two-year rise of 80% in 2005 and 2006, compared with a national average rise of 10%.

In the business year to March 31, 2007, 14,400 foreign tourists visited the Hirafu part of Niseko, of whom 9,400 were Australians, up from just 910 foreigners including 290 Australians in the year ended March 1998.

Write to Sebastian Moffett at sebastian.moffett@wsj.com

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