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SUMMARY
Yes. Buy-to-let property in Japan is profitable now, but the strongest part of the market is a fairly narrow one: well-located urban apartments around roughly 4.5–5.5% gross yield, not ultra-prime Tokyo and not the highest-yield regional stock.
Japan’s national average gross residential yield is about 4.55%, but that headline hides a sharp split. Tokyo averages only 3.27%, while Osaka, Fukuoka, Yokohama and Sapporo sit much closer to 5%.
The most important divide is now inside cities, not just between them. Outer and eastern Tokyo can sometimes offer yields in the mid-4s or low-5s while keeping access to the same huge tenant market that supports much more expensive central districts.
Tokyo rents are rising, which genuinely improves the landlord case, but purchase prices have risen even faster in the most expensive areas. That is why a strong rental market can coexist with weak investment income.
Central Tokyo below a 3% gross yield is hard to justify as a pure cash-flow investment. It can still make sense for buyers prioritizing scarcity, liquidity and long-term capital preservation, but the rent is doing much less work.
Older apartments can be more interesting than new ones because today’s construction costs have pushed new-build prices so high. The catch is that building management, repair reserves, seismic standards and future major works matter almost as much as the apartment itself.
Regional Japan is where headline yield becomes most misleading. A 6–8% return can look excellent until weak population trends, long vacancies and a thin resale market remove several years of extra income.
Leverage is less forgiving than it used to be. Once ownership costs are deducted, a property starting around 3% gross has very little room left for investment-loan interest, while a 5% property has a far healthier margin.
Foreign buyers also need to separate property economics from currency speculation. A cheap yen can improve the entry price in home-currency terms, but a 10% exchange-rate move can outweigh several years of rental profit.
The clearest current strategy is therefore quite practical: major city, useful railway access, proven tenant depth, sensible building quality, and a purchase price low enough that the property still works without assuming rapid appreciation. Osaka, Fukuoka, Yokohama and selected Greater Tokyo districts fit that brief better than either prime central Tokyo or shrinking high-yield towns.
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Is buy-to-let property in Japan actually profitable now?
Buy-to-let property in Japan is still profitable today, although a realistic investor should expect roughly 2–4% net income from a good urban apartment rather than treating a 4–6% advertised yield as the real return.
The latest Global Property Guide dataset puts Japan’s average gross residential yield at 4.55%. The spread between cities is large: Tokyo averages only 3.27%, Osaka 4.78%, Fukuoka 4.77%, Yokohama 4.97% and Sapporo 5.03%.
Those are gross figures. Management, condominium fees, repair reserves, fixed-asset tax, insurance, tenant turnover, maintenance and vacancy all come out afterward. Global Property Guide estimates that Japanese net yields are commonly around 1.5 to 2 percentage points below gross yields.
That makes the entry yield crucial. A 5% gross property has room for costs and can still leave something close to 3–3.5%. A 3% property can easily end up near 1–2% before financing and personal taxation.
Japan still works for landlords, but there is much less room now for buying the wrong property.
| Market | Current average gross yield | Rough net range after 1.5–2 pts of costs | What we think |
|---|---|---|---|
| Tokyo | 3.27% | 1.3–1.8% | Thin for pure income |
| Osaka | 4.78% | 2.8–3.3% | Much more workable |
| Fukuoka | 4.77% | 2.8–3.3% | Attractive selectively |
| Yokohama | 4.97% | 3.0–3.5% | Strong income candidate |
| Sapporo | 5.03% | 3.0–3.5% | Higher yield, more location risk |
Are rents in Japan rising fast enough to make buy-to-let more attractive?
Tokyo rents are rising fast enough to improve buy-to-let returns today, but landlords are getting much less help from rents in some other Japanese cities.
Tokyo currently has the clearest rental momentum. Tokyo Kantei’s latest reading put condominium rents in the 23 wards at ¥5,157 per square metre, up 0.8% from the previous month and at another recent high. Greater Tokyo reached ¥4,209 per square metre, also a new 12-month high.
The pattern has been building for longer than one month. Earlier data showed double-digit annual increases for smaller and medium-sized Tokyo condominium units, including roughly 11% for units below 30 square metres and about 13% for 30–50 square metre properties.
Osaka looks less one-directional. Condominium rents there had risen for eight consecutive months, then the latest Tokyo Kantei release recorded a 1.1% monthly drop to ¥2,906 per square metre. One weak month does not erase the previous rise, but it is a good reminder not to apply Tokyo’s rental story to the whole country.
For a landlord buying today, Tokyo rent growth is a genuine advantage. The harder question is whether those higher rents have kept up with what buyers now have to pay for the apartment.
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Have Tokyo apartment prices risen too far ahead of rents?
Tokyo apartment prices have risen so quickly that stronger rents have failed to protect buy-to-let yields in the most expensive parts of the city.
The gap is easiest to see in new condominiums. According to the Real Estate Economic Institute, the average price of a new condominium across Greater Tokyo reached ¥91.82 million in 2025, up 17.4% in one year. Inside Tokyo’s 23 wards, the average jumped 21.8% to ¥136.13 million.
Supply has also become unusually tight. Only about 22,000 new condominiums were released across Greater Tokyo in 2025, the lowest annual total since comparable records began in 1973. Expensive land, construction costs and limited new supply are helping prices stay high.
Rents have moved up too, but the current yield data show which side has moved further. Central Tokyo studios produce roughly 3.25% gross, one-bedroom apartments 2.81%, two-bedroom units 2.43% and three-bedroom units 2.58%.
At those yields, an investor is paying 30 to 40 years of annual gross rent for the apartment. There is not much room left for ordinary landlord expenses.
| Central Tokyo property | Current gross yield | Price equal to roughly this many years of gross rent | Income profile |
|---|---|---|---|
| Studio | 3.25% | 31 years | Low |
| 1 bedroom | 2.81% | 36 years | Very low |
| 2 bedrooms | 2.43% | 41 years | Very low |
| 3 bedrooms | 2.58% | 39 years | Very low |
Is central Tokyo still worth buying when rental yields are below 3%?
Central Tokyo can still be worth buying today, but below a 3% gross yield we would view the property mainly as a long-term wealth and scarcity play rather than a strong buy-to-let income investment.
Current numbers make the trade-off obvious. A central two-bedroom apartment yielding 2.43% gross could fall below 1% net once the full 1.5–2 percentage points of typical ownership costs are allowed for. Even a studio at 3.25% gives the landlord limited income after expenses.
Buyers still have good reasons to accept that. Tokyo concentrates jobs, universities, corporate headquarters, wealthy households and international investment capital on a scale no other Japanese city matches. The preliminary national census counted 14.25 million people in Tokyo and almost 37 million across Tokyo, Kanagawa, Saitama and Chiba, roughly 30% of Japan’s entire population.
Liquidity is another advantage. Institutional investors have consistently directed a disproportionate share of Japanese residential investment into Tokyo because selling a good apartment there is generally easier than selling a high-yield unit in a shrinking regional market.
Paying 2.5–3% for an exceptional location can make sense. We just would not buy it expecting strong rental cash flow.
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Does buying outside central Tokyo give landlords a better return?
Buying outside central Tokyo currently gives landlords a much better chance of reaching a 4–5% gross yield without leaving Japan’s deepest tenant market.
The differences within Tokyo are surprisingly large. Global Property Guide currently estimates a 4.60% gross yield for studios in the eastern 23 wards, 4.27% for one-bedroom units and 5.46% for two-bedroom apartments. Northern Tokyo studios are around 4.86%.
Compare that with 2.43% for a central two-bedroom property. The eastern unit can produce more than twice as much rent relative to its purchase price while remaining inside the same city.
Rail access makes this strategy possible. A neighbourhood several kilometres outside Tokyo’s premium core can still give tenants fast access to Shinjuku, Shibuya, Marunouchi or other employment centres. Properties close to useful stations therefore retain a much wider tenant pool than their distance from central Tokyo might suggest.
This is one of the more interesting parts of Japanese buy-to-let right now. We would look for districts where the apartment price has fallen sharply relative to Minato, Chiyoda or Shibuya while commuting convenience, shops and tenant demand remain strong.
Paying less for almost the same daily usefulness is where the numbers start working again.
Are Osaka and Fukuoka better buy-to-let markets than Tokyo now?
Osaka and Fukuoka currently beat Tokyo on rental yield, although we would still choose the individual neighbourhood and property before choosing either city simply because its average looks better.
The current difference is substantial. Tokyo averages 3.27% gross, while Osaka and Fukuoka are both close to 4.8%.
Osaka also gives investors much cheaper entry points. Current city-level data put studio yields around 4.47%, one-bedroom units around 4.51%, two bedrooms around 4.77% and larger apartments close to or above 5%. Some districts vary wildly: a two-bedroom property in Joto can exceed 6%, while expensive units in Kita can sit below 2%.
Fukuoka has a particularly interesting demographic position. The city has continued attracting younger people within a country that is shrinking overall, helped by universities, employment, a compact centre and unusually convenient transport connections. Fukuoka also appears on the eligible-location list for Tokyo Star Bank’s non-resident investment-property loans, alongside Tokyo, Yokohama, Osaka, Nagoya, Kyoto and Kobe. That does not prove a property is safe, but it does show where a lender sees a sufficiently established investment market.
Recent rental data also tell us to keep the cities separate. Tokyo rents are currently setting new recent highs, while Osaka’s latest condominium-rent reading fell 1.1% after nine months without a decline. Japan’s rental recovery is becoming increasingly city-specific.
| Market | Current average gross yield | Current rental backdrop | Our read |
|---|---|---|---|
| Tokyo | 3.27% | Strong, recent highs | Best liquidity, weak income |
| Osaka | 4.78% | Recently softened after long rise | Better yield, more supply sensitivity |
| Fukuoka | 4.77% | Supported by population concentration | One of the better combinations |
| Yokohama | 4.97% | Large Greater Tokyo tenant base | Often overlooked |
| Sapporo | 5.03% | Higher headline yield | Requires tighter location selection |
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Are 6–8% rental yields in regional Japan actually a bargain?
A 6–8% rental yield in regional Japan is often compensation for weak future demand, so we would need a very strong local reason before chasing those returns.
Japan’s latest census makes the risk unusually clear. The population has fallen to about 123.05 million, down roughly 3.1 million in five years. Population declined in 1,558 of the country’s 1,719 municipalities, or 90.6%.
The housing stock is moving in the opposite direction. The latest full Housing and Land Survey counted about 65 million dwellings and 9 million vacant homes. Japan’s vacancy rate reached a record 13.8%.
Those figures do not tell us that a Tokyo or Fukuoka apartment has a 13.8% chance of sitting empty. They show how much unwanted property already exists in parts of Japan where households are disappearing.
High-yield regional apartments can produce acceptable rent for several years while their resale market gradually gets thinner. One long vacancy can wipe out much of the extra yield, and selling an ageing apartment in a declining municipality can become difficult even when the unit remains perfectly usable.
We care much more about where the next tenant and the next buyer will come from than whether the spreadsheet starts at 7%.
| Property profile | Headline yield | Tenant risk | Resale risk | Our view |
|---|---|---|---|---|
| Prime Tokyo | 2–3% | Very low | Low | Expensive but liquid |
| Greater Tokyo station area | 4–5.5% | Low | Low to moderate | Best overall balance |
| Osaka/Fukuoka good district | 4–5.5% | Low to moderate | Moderate | Attractive selectively |
| Strong regional centre | 5–7% | Moderate | Moderate | Property-specific |
| Shrinking regional town | 6–8%+ | High | High | Usually too risky |
Are older or small apartments the best buy-to-let properties in Japan?
Older urban apartments often give better buy-to-let returns than brand-new units in Japan, while small units are useful only when their purchase price still makes sense relative to the rent.
New construction has become expensive. Greater Tokyo new-condominium prices rose 17.4% in a year, and Tokyo’s 23 wards rose more than 20%. A 15- or 25-year-old apartment can give a landlord access to the same station, neighbourhood and tenant pool for much less money.
Building quality still needs serious checking. Japan changed its seismic standards in 1981, and newer properties generally have an easier time with financing and resale. Condominium buyers also need to inspect the building’s repair reserve, planned major works and management history. A cheap apartment becomes far less attractive when the owners’ association is underfunded.
Small units deserve the same price discipline. Singles form a huge rental market in Tokyo and other large cities, which explains the popularity of studios and one-bedroom apartments among landlords. Yet smaller does not automatically produce the highest yield. Current eastern Tokyo data show two-bedroom apartments around 5.46%, above both studios and one-bedroom units in the same broad area.
We would compare several sizes and building ages around the same station. The best opportunity often appears where tenants value a property more highly than investors bidding to own it.
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Can a mortgage still improve buy-to-let returns in Japan?
A mortgage can still improve Japanese buy-to-let returns today, but leverage becomes dangerous when the property starts below roughly a 4% gross yield.
Japan’s financing environment has changed fast. The Bank of Japan currently targets the overnight rate at around 1%, compared with almost zero only a few years ago. Governor Kazuo Ueda has also said the Bank expects to keep raising rates if economic and inflation conditions develop as expected, and a recent Reuters poll found most economists expecting another increase at the upcoming policy meeting.
Landlords borrow above the central-bank rate, so the effect on investment cash flow is stronger than the 1% headline suggests.
Take a property producing 3% gross. After a typical 1.5 percentage points of ownership costs, roughly 1.5% remains before financing. Even fairly cheap investment debt can consume all of that income.
At 5% gross, the property has much more room. A 3–3.5% net property return can support some financing without immediately turning the investment cash-flow negative.
Foreign buyers face an additional constraint because Japanese investment mortgages are far easier to obtain for residents with local income and credit history. Tokyo Star Bank does lend to some non-residents, but its dedicated programme currently targets qualifying residents of Taiwan and Hong Kong and sets substantial income or net-asset requirements. The eligible properties are also concentrated in major urban markets.
A mortgage still helps when the underlying apartment already works. Cheap leverage can no longer be assumed when trying to make a low-yield property work.
| Starting gross yield | Approx. yield after 1.5 pts of costs | Room for financing | Our view with leverage |
|---|---|---|---|
| 2.5% | 1.0% | Almost none | Poor |
| 3.0% | 1.5% | Very little | Weak |
| 4.0% | 2.5% | Limited | Deal-dependent |
| 5.0% | 3.5% | Meaningful | Much healthier |
| 6.0% | 4.5% | Stronger | Check why yield is so high |
How much do taxes and buying costs eat into Japanese rental returns?
Japanese taxes and transaction costs take a meaningful bite out of buy-to-let returns, which makes short holding periods especially unattractive.
A buyer can face brokerage fees, registration tax, real-estate acquisition tax, stamp duty, judicial-scrivener fees and other closing expenses. During ownership, landlords also pay fixed-asset tax and potentially city-planning tax, alongside the property’s normal running costs.
Rental income from Japanese property is taxable in Japan. For non-resident owners, the National Tax Agency treats Japanese rent as Japanese-source income, and certain payments to a non-resident landlord can face 20.42% withholding at source. The final tax position can differ once allowable expenses, depreciation and the investor’s filing position are included, so the withholding number should never be mistaken for the final investment yield.
Selling quickly is also expensive from a tax perspective. Japan taxes short-term real-estate gains much more heavily than gains on property held beyond the five-year threshold used for capital-gains classification.
That pushes us toward a simple rule: Japanese buy-to-let should usually be underwritten as a long-term holding. A property that only looks attractive after assuming a quick resale at a higher price starts with too little margin.
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Does the yen make Japanese buy-to-let more attractive to foreign investors?
The yen can make Japanese property look cheap to overseas buyers today, but currency moves can easily become larger than several years of rental profit.
A foreign investor earning 3% net in yen can see that return transformed by a 10% move in the exchange rate. Yen appreciation would boost returns measured in dollars, euros or another home currency; another large depreciation would work against the investor.
Foreign demand has already responded to Japan’s relative pricing. International capital has taken a large share of Japanese real-estate investment lately, and institutional investment in the country has reached unusually high levels. The cheap-yen argument is already influencing asset prices, particularly in Tokyo.
Currency also interacts with the property itself. A weak yen can encourage foreign buyers, which supports purchase prices without raising local tenants’ ability to pay rent at the same speed. That helps explain why prime Tokyo can become more expensive while rental yields remain low.
The property should make sense in yen first. Currency appreciation can improve the return later, but we would not rely on it to rescue a 2% rental yield.
Can Japanese landlords still make money from property-price appreciation?
Japanese landlords can still make money from appreciation in the strongest urban markets, but assuming another huge Tokyo price jump would be a poor way to justify today’s low yields.
The recent rise has been exceptional. Greater Tokyo new-condominium prices climbed 17.4% in a year, while the Tokyo 23-ward average rose 21.8%. Limited supply, expensive construction, foreign demand and strong interest in central locations have all contributed.
Current resale indicators show that prices remain elevated. Tokyo Kantei’s recent asking-price data for a standard 70-square-metre resale condominium in the 23 wards were around ¥127 million.
We can still see reasons for desirable Tokyo apartments to appreciate over a long holding period. Japan’s population is concentrating heavily in the capital, new supply is scarce and replacement costs have risen.
The recent pace is where we become much less confident. Buying at a 2.5% yield and assuming another 15–20% annual price increase requires several favourable conditions to continue at once. A 4.5% property that already works with flat prices gives the investor far more room for error.
We would treat future appreciation as useful upside. The rent should carry most of the investment case.
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So, is buy-to-let property in Japan profitable now?
Yes, buy-to-let property in Japan is profitable now, and the strongest opportunities currently sit around 4.5–5.5% gross yields in large urban markets rather than in ultra-prime Tokyo or high-yield shrinking towns.
The latest numbers give us a useful dividing line. Japan averages 4.55% gross, yet Tokyo averages only 3.27%. Osaka and Fukuoka are close to 4.8%, Yokohama is around 5% and selected outer Tokyo districts can also reach the mid-4s or low-5s.
Meanwhile, Tokyo rents continue to hit recent highs. That gives urban landlords something Japan lacked for years: real rental growth. Purchase prices have risen so much in central Tokyo, though, that much of this improvement has already been absorbed by lower entry yields.
Financing has also become less forgiving. The Bank of Japan’s policy rate is currently around 1%, further tightening remains possible, and leveraged investors can no longer assume that ultra-cheap debt will make a 2.5–3% property profitable.
Our preferred range today is fairly narrow. A well-located apartment around a useful station in Greater Tokyo, Osaka, Fukuoka or Yokohama with roughly a 4.5–5.5% gross yield gives the clearest balance between income, tenant demand and resale potential. An investor buying with debt should push toward the higher end of that range.
Central Tokyo below 3% can still work for a cash-rich buyer who values scarcity, liquidity and long-term capital preservation more than monthly income. We would be much more demanding with regional properties advertising 6–8%, because Japan’s latest census shows population falling in more than 90% of municipalities and the country already has 9 million vacant homes.
Japanese buy-to-let still makes money these days. The attractive part of the market has simply moved into a narrower band: strong cities, good railway access, sensible building quality and a purchase price low enough to leave real income after costs.
OUR METHODOLOGY
We treated Japanese buy-to-let profitability as a multi-dimensional investment question rather than a headline-yield exercise. The analysis separates income, rental momentum, entry prices, tenant demand, demographics, financing, ownership costs, building quality and resale liquidity, then brings those pieces together at the end.
We used the latest meaningful release available for each part of the question rather than forcing every dataset into the same reporting period. Rental data, condominium prices, census figures, monetary policy and tax rules are published on different cycles, so the aim was to compare the freshest useful evidence for each one.
Gross rental yield is the common starting point, but we do not treat it as profit. Management, condominium fees, repair reserves, fixed-asset tax, insurance, vacancy, maintenance and tenant turnover sit between advertised rent and the investor’s actual return, while financing and personal taxation can reduce it further.
We also avoided giving the same underlying evidence several votes. Price, rent and yield overlap; population, migration, housing stock and vacancy overlap too. Each was used where it explained the investment dynamic most clearly rather than being counted as a separate confirmation of the same point.
The most weight went to the factors that directly affect whether a landlord can earn and preserve returns: rent relative to purchase price, tenant depth, financing conditions, recurring ownership friction and resale liquidity. Currency moves, foreign demand and national demographic change were used as context and stress tests rather than substitutes for property-level economics.
City averages were not enough for the Tokyo sections, so we also used sub-city yield evidence where available. That is important because central Tokyo, eastern wards and northern wards can produce very different income profiles even though they share the same metropolitan tenant base.
Key sources include Global Property Guide’s Japan rental-yield dataset, Tokyo Kantei’s July 2026 condominium-rent release, Tokyo Kantei’s 70 m² resale condominium price series, the Real Estate Economic Institute’s 2025 new-condominium market report, the Statistics Bureau of Japan’s preliminary 2025 Population Census, the 2023 Housing and Land Survey, the 2025 internal migration results, and Fukuoka City’s 2025 statistical yearbook.
For financing and ownership friction, we relied on Bank of Japan monetary-policy decisions, Japan Housing Finance Agency rental-housing financing rates, Tokyo Star Bank’s non-resident real-estate investment loan terms, the National Tax Agency’s guidance on non-resident real-estate income, its guidance on taxation when land or buildings are sold, MLIT guidance on taxes when acquiring real estate, Tokyo Metropolitan Government guidance on fixed-asset and city-planning taxes, and MLIT material on seismic standards and older buildings.
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