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Despite Japan's low interest rate environment and rising property prices, certain regions and property types still offer rental yields exceeding 5% for savvy investors.
Regional cities like Fukuoka and Sapporo lead the pack with yields between 6-10%, while specific property types such as wood-frame apartment buildings and multi-family units consistently deliver strong returns. As of September 2025, investors willing to look beyond Tokyo's central districts can still find profitable opportunities with solid rental demand.
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Properties yielding above 5% in Japan are primarily found in regional cities like Fukuoka (6-10% yields), Sapporo, and suburban Osaka, with wood-frame apartments and multi-family buildings offering the highest returns.
While Tokyo's central districts typically deliver 2.5-5.2% yields, secondary cities and specific neighborhoods maintain stronger rental returns due to lower acquisition costs and steady rental demand.
| City/Region | Average Yield Range | Minimum Investment (¥) |
|---|---|---|
| Fukuoka | 6-10% | 15-23 million |
| Sapporo | 5-8% | 15-20 million |
| Suburban Osaka | 4.5-7% | 20-30 million |
| Tokyo Central | 2.5-5.2% | 40-60 million |
| Secondary Cities | 4.5-8% | 10-25 million |
What types of properties in Japan are still generating more than 5% rental yields right now?
Wood-frame apartment buildings deliver the highest yields, averaging 7.3-8.0% nationally as of September 2025.
Multi-family reinforced concrete buildings consistently generate yields between 6.5-7.6%, making them attractive for investors seeking stable returns. Strata-titled condominiums outside Tokyo typically yield 6.0-6.6%, significantly higher than their central Tokyo counterparts.
Small studio apartments in regional cities often produce yields above 5%, particularly when purchased at lower price points. Older apartment buildings in secondary cities maintain strong rental demand while offering acquisition costs that support higher yield calculations.
Properties requiring minor renovations or those in emerging neighborhoods frequently deliver above-average returns. The key factor remains location combined with property type, as even premium properties in the right regional markets can exceed 5% yields.
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Which specific cities or regions consistently show yields above 5%?
Fukuoka stands out as the top performer, delivering yields between 6-10% across various property types and neighborhoods.
Sapporo consistently generates yields between 5-8%, driven by steady rental demand from students and young professionals. Suburban areas of Osaka, particularly non-central wards like Suminoe, Joto, and Nishinari, regularly produce yields between 4.5-7%.
Yokohama's outer districts and Kobe's suburban zones offer yields above 5% while maintaining reasonable vacancy rates. Kyoto's student-focused areas like Fushimi and Yamashina deliver strong returns due to consistent university enrollment.
Rural prefectures across Japan frequently show yields between 5-8%, though investors must carefully assess vacancy risks and management challenges. Cities like Kumamoto and Kanazawa benefit from local government initiatives that support rental demand.
These markets combine reasonable acquisition costs with stable rental income, creating the foundation for sustained yields above 5%.
How do average yields compare between Tokyo, Osaka, Fukuoka, and secondary cities?
| City/Region | Studio Apartments | 2LDK Family Units | Overall Average |
|---|---|---|---|
| Tokyo Central | 3.0-5.0% | 2.5-5.2% | 3.4% |
| Osaka | 4-6% | 4.5% | 4.5-7% |
| Fukuoka | 3.8-5% | 4.2-6.6% | 6-10% |
| Secondary Cities | 5-8% | 5.5-6.5% | 4.5-8% |
| Rural Areas | 5-8% | 5-7% | 5-8% |
What is the minimum purchase price for properties that still deliver above 5% yields?
Studio apartments in regional cities can start as low as ¥88,000 ($600 USD), though these extreme cases often come with significant risks and management challenges.
More practical minimum investments range from ¥15-23 million for apartments that consistently deliver above 5% yields in established markets like Fukuoka and Sapporo. Family-sized units typically require ¥20-30 million to achieve similar yield levels.
Multi-family buildings offering yields between 7-8% generally require investments of ¥80-185 million, representing a significant capital commitment but potentially stronger cash flow. Properties in this range often include multiple units, spreading risk across several rental streams.
The sweet spot for many foreign investors appears to be ¥20-40 million properties in secondary cities, where yields above 5% remain achievable with reasonable vacancy rates. These properties typically offer good financing options and manageable ongoing costs.
Acquisition costs and renovation needs must be factored into yield calculations, as properties requiring significant improvements may not deliver expected returns despite low purchase prices.
How do yields differ between residential apartments, detached houses, and commercial spaces?
Residential apartments consistently deliver the highest yields, with wood-frame buildings averaging 7.3-8.0% and reinforced concrete structures yielding 6.5-7.6%.
Strata-titled apartment units typically produce yields between 6.0-6.6% outside Tokyo, making them attractive for investors seeking manageable properties. Studio apartments in regional markets often exceed 5% yields due to strong rental demand from students and single professionals.
Detached houses generally offer lower yields unless located in secondary markets with specific demographic advantages. Single-family rentals require more intensive management but can provide stable long-term tenancies in family-oriented neighborhoods.
Commercial spaces can achieve yields of 6-7% in smaller cities, though they require specialized knowledge and often involve longer vacancy periods between tenants. Office and retail properties depend heavily on local economic conditions and foot traffic patterns.
Mixed-use properties combining residential and commercial elements sometimes offer the best risk-adjusted returns, diversifying income sources while maintaining manageable complexity levels.
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What are the current average rent levels in areas with yields above 5%?
Fukuoka studio apartments rent for ¥50,000-¥70,000 per month, while family-sized 2LDK units command ¥100,000-¥150,000 monthly.
Osaka suburban properties typically rent studios at ¥60,000-¥80,000 per month, with larger family apartments reaching up to ¥200,000 for well-located 2LDK units. These rental levels support yields above 5% when combined with reasonable acquisition costs.
Rural prefectures offer the most affordable rents, with studios ranging from ¥30,000-¥50,000 monthly and family units between ¥60,000-¥100,000. While absolute rental income remains lower, the significantly reduced purchase prices often result in higher percentage yields.
Sapporo maintains competitive rental rates with studios averaging ¥50,000-¥65,000 and larger units commanding ¥90,000-¥140,000 monthly. The city's stable employment market supports consistent rental demand across different property types.
These rental levels reflect local market conditions and must be evaluated against vacancy rates and management costs to determine actual net yields.
How high are the vacancy rates in those locations, and how do they affect net yields?
Rural areas face the highest vacancy challenges, with rates potentially reaching 15-20%, which directly reduces net yields despite higher gross rental returns.
Fukuoka, Sapporo, and Osaka maintain manageable vacancy rates below 7-10%, keeping net yields more predictable for investors. These cities benefit from steady population inflows and diverse employment opportunities that support rental demand.
Secondary cities with university populations often experience seasonal vacancy fluctuations but maintain annual averages around 8-12%. Student housing markets require careful management but can deliver consistent returns when properly positioned.
Tokyo's central districts maintain the lowest vacancy rates at 3-5%, though higher purchase prices typically result in lower overall yields. The trade-off between vacancy risk and yield potential requires careful analysis based on individual investment goals.
Effective property management becomes crucial in higher-vacancy markets, as quick tenant turnover and competitive rental rates can significantly impact annual returns. Investors should budget for 1-2 months of vacancy annually in secondary markets.
What are the average management fees, maintenance costs, and property taxes in those markets?
Management fees typically range from 3-5% of rental income for apartments, with building-wide management potentially adding additional costs for multi-unit properties.
Annual maintenance costs average ¥50,000-¥100,000 for standard apartments, though older buildings or those requiring frequent repairs may exceed these estimates. Multi-family buildings face higher absolute maintenance costs but benefit from economies of scale across multiple units.
Property taxes range from 0.5-1.7% of assessed value annually, with local municipalities setting specific rates based on property type and location. Rural properties often benefit from lower tax assessments, improving net yield calculations.
Additional costs including building insurance, periodic renovations, and administrative fees can add another 1-2% annually to total ownership expenses. These costs remain relatively consistent across different yield markets, making higher-yielding properties more attractive on a net basis.
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We did some research and made this infographic to help you quickly compare rental yields of the major cities in Japan versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How much financing leverage is typically available for foreign investors in those cities, and how does it impact returns?
Foreign investors can typically access 60-80% loan-to-value financing for properties in major cities like Tokyo and Osaka, though strict qualification requirements apply.
Regional cities often require higher equity contributions, with loan-to-value ratios potentially limited to 50-70% depending on the lender and property type. However, the higher yields available in these markets can still produce attractive levered returns despite reduced borrowing capacity.
Banks in Tokyo and Osaka offer more favorable mortgage terms and longer repayment periods, while regional lenders may impose stricter conditions but provide access to higher-yielding properties. Interest rates typically range from 1.5-4% depending on borrower qualifications and property characteristics.
The combination of lower leverage but higher yields in secondary cities often produces similar or superior cash-on-cash returns compared to highly leveraged but lower-yielding Tokyo investments. Each market requires individual analysis based on available financing terms and property performance.
Foreign investors should establish banking relationships early and consider using local mortgage brokers who understand regional lending requirements and can optimize financing structures for specific property types.
How stable have yields above 5% been over the past 3 to 5 years in those areas?
Fukuoka, Sapporo, and suburban Osaka have maintained relatively stable yields above 5% throughout the past 3-5 years, benefiting from steady rental demand and modest property appreciation.
Tokyo's yields have compressed gradually each year due to rising purchase prices outpacing rental growth, making it increasingly difficult to achieve 5% returns in central districts. However, satellite wards and older buildings continue to offer opportunities for yield-focused investors.
Secondary cities have experienced stable or slightly rising yields as rental markets remain strong while property prices appreciate more slowly than major metropolitan areas. This trend has created increasingly attractive opportunities for investors willing to expand beyond traditional markets.
Rural areas show more volatility in yield performance, with some regions benefiting from local development initiatives while others face declining populations and rental demand. Careful market selection remains crucial for sustained performance in these markets.
The stability of higher yields in regional markets reflects their lower correlation with international investment flows and greater dependence on local economic fundamentals rather than speculative activity.
What are the projected population or economic growth trends for the cities still offering yields above 5%?
Fukuoka benefits from strong population and job growth driven by its thriving university sector and expanding technology industry, supporting continued rental demand.
Sapporo maintains stable demographics with modest growth from internal migration and economic diversification beyond traditional industries. The city's appeal to young professionals and students provides a solid foundation for rental markets.
Osaka's suburban areas experience mixed trends, with some districts growing due to improved transportation links while others face aging populations. Overall metropolitan area growth remains positive, supporting rental demand in well-connected locations.
Secondary cities like Kumamoto and Kanazawa show modest growth supported by local government initiatives and regional economic development programs. These efforts help maintain population stability and create employment opportunities that support rental markets.
Tokyo's population remains stable but is aging, with slower growth rates than previously experienced. However, the metropolitan area's economic dominance continues to attract workers, maintaining rental demand in satellite locations where yields above 5% remain achievable.
Which neighborhoods or districts inside those cities are considered the most attractive for sustaining yields above 5%?
1. **Fukuoka's Prime Districts:** - Hakata offers excellent transportation connections and strong rental demand from business travelers and young professionals - Chuo provides central location benefits with universities and commercial districts nearby - Minami attracts students and entry-level workers with affordable housing options - These areas maintain occupancy rates above 90% consistently - Access to subway lines and major employers supports long-term rental stability2. **Osaka's High-Yield Wards:** - Suminoe benefits from port-related employment and industrial development - Joto provides affordable housing with good transportation connections to central Osaka - Nishinari offers the highest yields but requires careful property selection due to varied neighborhood quality - These non-central wards maintain lower acquisition costs while preserving rental demand - Ongoing urban development projects continue to improve these areas' investment appeal3. **Sapporo's Stable Performers:** - Chuo Ward combines central location with reasonable property prices - Toyohira attracts families and professionals with good schools and shopping - University-adjacent areas provide consistent student rental demand - Winter sports and tourism industry support year-round economic activity - Government employment provides employment stability across these districts4. **Strategic Secondary Locations:** - Kyoto's Fushimi and Yamashina areas benefit from student populations and tourism overflow - Yokohama's suburban zones offer Tokyo accessibility with lower costs - Kobe's residential districts provide family-oriented rental markets with port economy employment - These areas balance yield potential with manageable investment risks - Transportation improvements continue to enhance these locations' attractivenessIt's something we develop in our Japan property pack.
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.
Japan's rental yield landscape continues to reward investors who look beyond Tokyo's premium districts and embrace regional opportunities.
As of September 2025, properties delivering above 5% yields remain accessible to foreign investors willing to research secondary markets and understand local rental dynamics.
Sources
- Global Property Guide - Japan Rental Yields
- BambooRoutes - Average Rent Japan
- Patience Realty - Japan Investment Properties April 2025
- Patience Realty - Japan Income Properties Q2 2025
- Global Property Guide - Japan Price History
- Sunnyside FG - Japan Real Estate 2025
- Wagaya Japan - Investment Guide
- Hay Insights - Japan Real Estate 2025