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Hiroshima's rental market offers some of the most attractive yields among major Japanese cities, with returns ranging from 4% to 8% depending on property type and location. The city presents a compelling investment opportunity for both domestic and international investors seeking higher returns than traditional markets like Tokyo or Osaka.
Central Hiroshima condos deliver steady yields of 4.5-5.5%, while suburban single-family homes can achieve 6-8% returns. Short-term rental properties in tourist areas can generate even higher yields, though they require more active management.
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Hiroshima offers rental yields of 4-8% across different property types, with suburban homes providing the highest returns. Central condos deliver 4.5-5.5% yields with lower vacancy risk, while short-term rentals can exceed traditional rental returns.
Net yields decrease significantly after accounting for acquisition costs (5-10% of purchase price), annual taxes (1.7% total), and management fees (¥15,000-30,000 monthly for condos).
| Property Type | Location | Gross Yield Range | Monthly Rent (JPY) |
|---|---|---|---|
| Studio/1BR Condo | Central (Naka/Minami) | 4.5-5.5% | ¥60,000-¥65,000 |
| 2BR Apartment | Central | 4.5-5.5% | ¥70,000-¥86,600 |
| Single-Family Home | Suburban (Asaminami) | 6-8% | ¥47,000-¥64,000 |
| Large Condo | City Center | 4-5% | ¥80,000-¥130,000 |
| Short-term Rental | Central/Tourist Areas | 6-9% | ¥246,000 (65% occupancy) |
What are typical rental yields in Hiroshima right now by property type?
Hiroshima's rental yields vary significantly based on property type, with suburban single-family homes offering the highest returns as of September 2025.
Condos and apartments in central Hiroshima areas like Naka and Minami Wards deliver gross rental yields of 4% to 5.5%. Newer units and city-center condos typically fall at the lower end of this range but benefit from consistently low vacancy rates and stable tenant demand.
Single-family homes in suburban areas, particularly in districts like Asaminami Ward and Aki Ward, achieve significantly higher yields ranging from 6% to 8%. Some older or less desirable properties in these areas can even exceed 8% gross yield. The higher returns reflect the lower purchase prices and strong rental demand from families seeking more space.
Older properties across all types face decreasing yields as modern tenants increasingly favor new builds with contemporary amenities. This trend has raised vacancy rates for older stock, particularly properties built before 2000.
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How do rental yields vary across different neighborhoods in Hiroshima?
Hiroshima's rental yields show clear geographical patterns, with central districts offering lower yields but higher stability, while suburban areas provide higher returns with increased risk.
Central Hiroshima, specifically Naka and Minami Wards, delivers yields of approximately 4.5% to 5.5%. These areas command premium rents due to excellent transportation links, proximity to business districts, and cultural amenities. Despite lower percentage yields, these properties maintain high occupancy rates and attract quality tenants.
Nishi Ward presents a suburban feel with average yields of 5% to 7%. This area appeals to both families and single tenants seeking a balance between urban convenience and residential tranquility. The district benefits from good schools and parks, supporting steady rental demand.
Asaminami Ward offers the highest yields in Hiroshima, typically ranging from 6% to 8%. However, investors should note that this area carries higher risk due to its history of natural disasters, including landslides. The elevated yields compensate for this increased risk profile.
Aki and Saeki Wards present growing family markets with consistently above-5% yields. These areas offer better value for money and are experiencing population growth due to new residential developments and improved infrastructure connections to central Hiroshima.
What does average yield look like when comparing small, mid-sized, and large properties?
Property size significantly impacts rental yields in Hiroshima, with smaller units generally offering higher yields per square meter due to pricing dynamics.
Small units under 30 square meters, typically studios or compact one-bedroom apartments, can achieve yields approaching or exceeding 5.5% in central areas. These properties benefit from lower absolute purchase prices but command relatively high rent per square meter, making them attractive to young professionals and students who prioritize location over space.
Mid-sized units ranging from 50 to 65 square meters, usually 2-3 bedroom apartments, typically deliver yields of 4% to 5% in central areas. These properties rent for approximately ¥60,000 to ¥86,600 per month and attract small families or professional couples. The balance between purchase price and rental income makes these units popular among investors.
Larger family homes exceeding 75 square meters show yields that depend heavily on their suburban versus urban location, typically ranging from 4% to 6%. While these properties command higher absolute rents, their elevated purchase prices often result in slightly lower gross yields. However, they may offer better long-term appreciation potential.
The key factor driving these yield differences is that rent per square meter decreases as unit size increases, while purchase price per square meter remains more stable across different property sizes.
How do purchase price plus acquisition costs affect real net yield?
Acquisition costs significantly impact real net yields in Hiroshima, reducing returns by approximately 1-2 percentage points from gross yields.
| Cost Category | Percentage of Purchase Price | Notes |
|---|---|---|
| Agent Fees | 3% + ¥60,000 | Standard real estate commission |
| Registration Tax | 0.4-2% | Varies by property type and age |
| Acquisition Tax | 3-4% | Paid within months of purchase |
| Stamp Duty | 0.1-0.3% | Based on contract value |
| Legal & Administrative | 0.5-1% | Includes judicial scrivener fees |
| Total Upfront Costs | 5-10% | Higher for older/cheaper properties |
For example, a ¥50 million property investment would incur upfront costs of ¥2.5 to ¥5 million. These costs must be amortized over the investment period or considered as reducing the effective yield from day one.
Beyond acquisition costs, investors face annual expenses including property tax (1.4% of assessed value) and city planning tax (0.3% annually). These ongoing costs total approximately 1.7% of the property's assessed value each year, further reducing net yields.
What taxes, management fees, and ongoing costs affect real returns?
Ongoing costs in Hiroshima real estate investment are substantial and must be carefully factored into yield calculations to determine true returns.
Annual taxes include property tax at 1.4% of assessed value and city planning tax at 0.3%, totaling 1.7% annually. These taxes are based on government-assessed values, which may differ from market prices but typically represent a significant ongoing expense.
Condominium properties incur monthly management and maintenance fees ranging from ¥15,000 to ¥30,000. Older buildings often require higher contributions to repair funds, potentially adding another ¥10,000-20,000 monthly. These fees cover common area maintenance, building insurance, and major repairs.
Additional ongoing costs include property insurance (typically ¥30,000-60,000 annually), vacancy allowances (budget 5-10% of potential rental income), routine maintenance and repairs (1-3% of property value annually), and property management fees if using professional services (5-8% of rental income).
Investors should budget approximately 15-25% of gross rental income for all ongoing costs, meaning a 6% gross yield might deliver only 4.5-5% net yield after all expenses.
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How does financing with mortgage versus cash change the effective yield?
Financing decisions significantly impact effective yields and cash-on-cash returns in Hiroshima real estate investments.
Mortgage rates in Hiroshima currently average 2.2% to 2.8% for investment properties, based on 2024-2025 market conditions. Using mortgage financing reduces net cash flow due to interest payments but allows investors to leverage their capital across multiple properties.
Cash purchases eliminate interest expenses, resulting in higher net cash flow from rental income. However, this approach provides lower returns on invested capital since no leverage is employed. A 5% gross yield becomes approximately 3.5-4% net yield after all costs when paying cash.
Leveraged investments can achieve higher cash-on-cash returns if the property yield exceeds the mortgage rate plus costs. For example, a 6% gross yield property financed at 2.5% interest rate may deliver 8-12% cash-on-cash returns depending on the loan-to-value ratio and down payment amount.
The optimal financing approach depends on individual risk tolerance, available capital, and investment strategy. Leverage amplifies both gains and losses, making it crucial to maintain adequate cash reserves for unexpected expenses or vacancy periods.
What's the difference between long-term and short-term rental yields?
Short-term and long-term rental strategies in Hiroshima offer distinctly different yield profiles and management requirements.
Long-term rental yields in Hiroshima range from 4% to 6% for most property types, providing steady and predictable income streams. These arrangements typically involve 2-year lease contracts with automatic renewal options, offering stability for both landlords and tenants. Management requirements are minimal once quality tenants are secured.
Short-term rentals, particularly Airbnb-style accommodations, can generate significantly higher yields in well-located properties. Centrally located short-term rentals average ¥246,000 monthly revenue with 65% occupancy rates, potentially delivering gross yields of 6% to 9% or higher.
However, short-term rentals require substantially more active management, including guest communication, cleaning coordination, maintenance scheduling, and regulatory compliance. Operating costs are also higher due to frequent turnover, utilities typically included in rates, and higher insurance requirements.
The short-term rental market in Hiroshima benefits from tourism to historical sites and business travel, but occupancy rates can be seasonal and sensitive to external factors like travel restrictions or economic conditions. Long-term rentals provide more predictable returns but with lower upside potential.
Can you provide concrete examples of monthly rents for different property types?
Hiroshima rental rates vary significantly by property type, size, and location, providing clear guidance for yield calculations.
| Property Type | Size (m²) | Location | Monthly Rent (JPY) |
|---|---|---|---|
| Studio/1BR Apartment | 25-35 | Central Hiroshima | ¥60,000-¥65,000 |
| 2BR Apartment | 45-60 | Central Hiroshima | ¥70,000-¥86,600 |
| 3DK Family Unit | 60-75 | Suburban Areas | ¥47,000-¥64,000 |
| Large Premium Condo | 80+ | City Center | ¥80,000-¥130,000 |
| Single-Family House | 100-150 | Suburban | ¥65,000-¥95,000 |
These rental rates reflect current market conditions as of September 2025 and represent typical asking rents for well-maintained properties in their respective categories. Premium locations within central districts or newly constructed buildings command rates at the upper end of these ranges.
Suburban properties generally offer better value per square meter but may require longer marketing periods to secure tenants. Central properties typically rent quickly but at premium prices that may impact overall yields despite higher absolute rental income.
What tenant demographics dominate Hiroshima and how do they impact yields?
Hiroshima's tenant demographics directly influence rental yields through their preferences, payment reliability, and lease duration patterns.
Students and young professionals represent a significant portion of Hiroshima's rental market, typically preferring central 1R/1K apartments for convenience and lifestyle. While this demographic ensures steady demand for smaller units, they often have higher turnover rates, increasing vacancy periods and tenant acquisition costs. However, their willingness to pay premium rents for location helps maintain yields.
Families constitute the primary tenant base for suburban properties and larger apartments. They favor mid-size or larger homes in suburban areas for space, quality schools, and value. Family tenants typically sign longer leases and maintain properties well, contributing to stable yields in suburban markets like Asaminami and Aki Wards.
Corporate tenants and expatriate workers seek high-end city center units and are willing to pay premium rents for modern amenities and convenient locations. This demographic offers lower turnover rates and reliable payment history, making them highly desirable despite representing a smaller market segment.
The growing short-term rental market attracts tourists and business travelers to central areas near historical sites and conference facilities. This demographic supports higher daily rates during peak seasons but requires active management and marketing to maintain consistent occupancy.
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What are current vacancy rates and how do they affect net returns?
Vacancy rates in Hiroshima vary significantly by property type and location, directly impacting net investment returns through lost rental income.
New properties in city center locations (Naka and Minami Wards) maintain near-full occupancy rates, typically below 5% vacancy annually. These properties benefit from strong demand from young professionals and corporate tenants who prioritize modern amenities and convenient locations.
Older suburban properties face higher vacancy challenges, with rates potentially reaching 15-25% annually in some areas. Modern tenants increasingly demand contemporary features, energy efficiency, and updated interiors, making older stock less competitive in the rental market.
District-specific patterns show central Hiroshima maintaining minimal vacancy rates due to concentrated employment and transportation hubs. Conversely, areas like Asaminami Ward experience higher vacancy risk despite offering superior yields, reflecting the trade-off between returns and tenant demand stability.
Vacancy rates directly reduce net yields by the percentage of time properties remain unoccupied. A property with 6% gross yield but 15% annual vacancy delivers only approximately 5.1% effective yield before considering other costs. Investors should factor realistic vacancy assumptions into their return calculations based on property age, location, and target tenant demographics.
What are the smartest investment choices for good yields and lower risk?
Optimal investment strategies in Hiroshima balance yield potential with risk management through careful property selection and location targeting.
Modern apartments or condos in central neighborhoods represent the safest investment choice for risk-averse investors. These properties attract reliable tenants, meet current market demands for amenities, and maintain low vacancy risk. While yields may be lower at 4.5-5.5%, the stability and liquidity of these investments provide security.
Well-located suburban houses in designated redevelopment zones offer higher yields with moderate risk levels. These properties benefit from infrastructure improvements and population growth while providing diversified tenant options including families and young professionals. Target areas experiencing government-backed development projects for optimal risk-adjusted returns.
Student and young professional-focused apartments near universities or transport hubs provide steady demand despite regular turnover. The key success factor is proximity to educational institutions and major train stations, ensuring consistent rental demand even during economic fluctuations.
Short-term rental investments near tourist sites can deliver superior returns but require management expertise and regulatory compliance knowledge. This strategy suits hands-on investors willing to actively manage properties and navigate changing tourism patterns and local regulations.
1. Focus on properties built after 2010 for lower maintenance costs2. Prioritize locations within 10 minutes of major train stations3. Target areas with planned infrastructure development4. Diversify across property types to reduce concentration risk5. Maintain cash reserves equal to 6-12 months of expensesHow do current yields compare with historical trends and future forecasts?
Hiroshima's rental yield trends reflect broader Japanese real estate market dynamics while maintaining superior returns compared to major metropolitan areas.
Compared to one year ago, existing condominium prices in Hiroshima increased 9% year-over-year through 2024-2025, while new build prices surged 42.5%. This price appreciation has compressed yields slightly from previous levels, but Hiroshima maintains competitive returns relative to other Japanese cities.
Five years ago, Hiroshima experienced more moderate growth with less redevelopment-driven price appreciation. The current market reflects accelerated investment in infrastructure and urban renewal projects, attracting both domestic and international investor attention.
Forecast models predict central and luxury property prices will experience 20-30% cumulative growth from 2025-2035, driven by continued urban development and tourism growth. Yields are expected to remain stable at current levels, with possible slight tightening in city center locations due to increased property values.
Long-term outlook suggests Hiroshima will maintain yield premiums over Tokyo and Osaka while benefiting from Japan's broader economic recovery and infrastructure investments. However, investors should expect modest yield compression as the market matures and attracts more institutional investment.
The rental market fundamentals remain strong due to Hiroshima's role as a regional hub, growing tourism sector, and ongoing urban regeneration projects that continue to attract new residents and businesses to the area.
How do Hiroshima's yields compare with other major Japanese cities?
Hiroshima stands out among major Japanese cities for offering the highest rental yields while maintaining strong market fundamentals and growth potential.
| City | Average Rental Yield (2025) | Market Characteristics |
|---|---|---|
| Tokyo | ~3.44% | Highest prices, lowest yields, maximum liquidity |
| Osaka | ~3.5-4.2% | Major urban center, moderate growth potential |
| Fukuoka | ~4.5-5% | Strong economic growth, tech sector development |
| Sapporo | ~4.2-5% | Regional center, seasonal tourism influence |
| Hiroshima | 4.5% (center), 5-8% (suburbs) | Best value-for-money, highest yields among major cities |
Hiroshima's competitive advantage stems from relatively affordable property prices combined with strong rental demand from diverse tenant demographics. The city benefits from its historical significance, growing tourism sector, and role as a regional business hub without the premium pricing of Tokyo or Osaka.
Unlike Tokyo's saturated market or Osaka's industrial focus, Hiroshima offers balanced growth across residential, commercial, and tourism sectors. This diversification supports stable rental demand while maintaining attractive entry prices for investors.
The yield premium over other major cities reflects Hiroshima's emerging status as an investment destination rather than market inefficiency. As infrastructure development continues and international recognition grows, Hiroshima is positioned to maintain superior returns while potentially benefiting from capital appreciation similar to other major Japanese cities.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Hiroshima presents exceptional opportunities for real estate investors seeking superior yields in the Japanese market. With returns ranging from 4.5% to 8% across different property types and locations, the city offers compelling alternatives to lower-yielding markets like Tokyo and Osaka.
Success in Hiroshima real estate investment requires careful consideration of location, property type, and tenant demographics. Central properties provide stability and lower risk, while suburban investments offer higher yields for those willing to accept moderate additional risk. Proper due diligence on acquisition costs, ongoing expenses, and realistic vacancy assumptions is essential for accurate return projections.
Sources
- BambooRoutes - Hiroshima Property Market Analysis
- Japan Property - Hiroshima Investment Guide
- BambooRoutes - Hiroshima Real Estate Trends
- BambooRoutes - Hiroshima Price Forecasts
- Wagaya Japan - Hiroshima Rental Listings
- Find All Rentals - Hiroshima Properties
- BambooRoutes - Japan Average House Prices
- RealEstate.co.jp - Japan Property Purchase Costs
- Nippon.com - Japan Real Estate Data
- KPMG - Taxation in Japan 2024