Published on and written by Cyril Jarnias
Tokyo remains, in 2026, the most closely watched real estate market in Japan. Purchase prices have broken record after record, rents continue to rise, and foreign investors are all asking the same thing: how much does an apartment rented out in the capital actually yield, once fees, taxes, and risk are taken into account?
The average gross rental yield of an apartment in Tokyo’s 23 wards is 3.5%.
To understand what an apartment in Tokyo actually yields in 2026, you need to look at three parameters simultaneously: the rent level, the purchase price per square meter, and the cost structure (condominium fees, taxes, management, vacancy). And above all, you must accept a central truth: Tokyo is more of a wealth appreciation market than a high cash-flow market.
How much does an apartment rent for in Tokyo in 2026?
The first question, even before talking about yield, is about rent. In 2025–2026, residential rents in the 23 wards have hit historic highs. The increase is not trivial: advertised rents in the 23 wards rose about 8% year-on-year in the third quarter of 2025, and specialized indices show a similar trend for 2026.
Average rent levels by type of housing
Data available for early 2026 shows the following average monthly rent levels in the 23 wards, for long-term leases:
| Type of housing | Typical size | Average monthly rent (23 wards) |
|---|---|---|
| Studio / 1R | 15–22 m² | 65,000 – 90,000 ¥ |
| 1K / 1DK | 20–30 m² | 80,000 – 110,000 ¥ (city average) |
| 1LDK | 35–45 m² | 120,000 – 160,000 ¥ (city average) |
| 2LDK | 50–60 m² | ≈ 270,000 ¥ |
| 3LDK | 70–80 m² | ≈ 350,000 ¥ |
These average ranges mask strong disparities between central and peripheral wards. Prestigious neighborhoods – Minato, Shibuya, Chiyoda, Chuo – push prices upward; outer wards – Adachi, Edogawa, Katsushika, Itabashi – offer much more affordable rents for both tenants and investors.
The striking gap between center and periphery
Data from 2025–2026 provides a relatively precise overview, especially for 1K units, a very representative format for rental investment (studio with separate kitchenette, 18 to 25 m²):
| Ward (1K ~25 m², unfurnished) | Average monthly rent |
|---|---|
| Minato (central / premium) | 130,000 – 180,000 ¥ |
| Shibuya (central / trendy) | 120,000 – 160,000 ¥ |
| Shinjuku (central / very dense) | 110,000 – 150,000 ¥ |
| Chiyoda (business) | 120,000 – 160,000 ¥ |
| Bunkyo (near center) | 100,000 – 130,000 ¥ |
| Meguro (affluent residential) | 100,000 – 135,000 ¥ |
| Setagaya (family-oriented, suburban) | 90,000 – 120,000 ¥ |
| Toshima (Ikebukuro) | 85,000 – 110,000 ¥ |
| Koto (bay area, suburban) | 85,000 – 110,000 ¥ |
| Nerima (outer residential) | 75,000 – 95,000 ¥ |
| Itabashi (outer affordable) | 72,000 – 90,000 ¥ |
| Adachi (outer budget) | 65,000 – 80,000 ¥ |
| Edogawa (outer budget) | 65,000 – 82,000 ¥ |
| Katsushika (outer budget) | 62,000 – 78,000 ¥ |
For the same 1K format, a tenant will easily pay more than double in Minato compared to Adachi. And for an investor, this difference comes with price levels per square meter that are also very contrasting, explaining the yield profile by area.
Placing Tokyo in relation to other major Japanese cities
National comparison data reminds us that Tokyo is the most expensive city in the country in both rent and purchase price.
| City (apt. 1R/1K) | Average monthly rent (approx.) | Monthly cost of living (approx.) |
|---|---|---|
| Tokyo (23 wards) | 95,000 – 111,000 ¥ | 170,000 – 280,000 ¥ |
| Osaka | 66,000 – 103,000 ¥ | 140,000 – 240,000 ¥ |
| Kyoto | 62,000 – 99,000 ¥ | 110,000 – 180,000 ¥ |
| Nagoya | ~56,000 ¥ | ~200,000 ¥ |
| Fukuoka | ~60,000 ¥ | ~180,000 ¥ |
| Sapporo | ~57,000 ¥ | ~207,000 ¥ |
Tokyo dominates in absolute rent levels, but the rent-to-salary ratio remains, according to several analyses, less extreme than in New York or London, especially because Japanese interest rates remain low and local wages adjust slowly. For an investor, this translates into solid rents, very strong demand, but a gross yield compressed by purchase prices that have soared since 2015.
Purchase price and gross yield: the heart of the equation
The gross rental yield is calculated simply: annual rent divided by the purchase price, multiplied by 100. In Tokyo, this ratio averages around 3.5% for a standard apartment in the 23 wards, with a typical range of 3.0% to 4.2% depending on the neighborhood and type of property.
How much does an apartment cost in Tokyo in 2026?
2025–2026 data shows a cost per square meter in the 23 wards ranging between 1,050,000 and 1,400,000 ¥ for a standard condominium, translating to prices from 30 to over 200 million yen depending on size and location.
The yield tables by ward clearly illustrate the market reality, especially for small lots (studio / 1K), which are very popular with investors.
Studios and 1K: the asset class for yield
| Zone / Ward | Typical purchase price studio / 1K | Typical monthly rent | Estimated gross yield |
|---|---|---|---|
| Minato | 35 – 70 M¥ | 110,000 – 200,000 ¥ | 3.0 – 4.5% |
| Chiyoda | 35 – 65 M¥ | 110,000 – 180,000 ¥ | 3.0 – 4.0% |
| Chuo | 25 – 55 M¥ | 90,000 – 160,000 ¥ | 3.5 – 4.5% |
| Shibuya | 28 – 55 M¥ | 100,000 – 170,000 ¥ | 3.5 – 4.5% |
| Shinjuku | 20 – 40 M¥ | 80,000 – 140,000 ¥ | 4.0 – 5.5% |
| Bunkyo | 18 – 35 M¥ | 75,000 – 120,000 ¥ | 4.5 – 5.5% |
| Meguro | 22 – 40 M¥ | 85,000 – 140,000 ¥ | 4.0 – 5.0% |
| Shinagawa | 18 – 38 M¥ | 75,000 – 130,000 ¥ | 4.5 – 5.5% |
| Koto | 14 – 28 M¥ | 65,000 – 100,000 ¥ | 5.0 – 6.5% |
| Sumida | 13 – 25 M¥ | 60,000 – 95,000 ¥ | 5.0 – 6.5% |
| Kita | 12 – 22 M¥ | 58,000 – 90,000 ¥ | 5.5 – 7.0% |
| Toshima | 14 – 26 M¥ | 65,000 – 100,000 ¥ | 5.0 – 6.5% |
| Itabashi | 10 – 20 M¥ | 55,000 – 85,000 ¥ | 5.5 – 7.0% |
| Adachi | 8 – 16 M¥ | 50,000 – 75,000 ¥ | 6.0 – 8.0% |
| Edogawa | 9 – 17 M¥ | 52,000 – 78,000 ¥ | 6.0 – 7.5% |
| Nerima | 9 – 18 M¥ | 53,000 – 80,000 ¥ | 6.0 – 7.5% |
| Ota | 12 – 22 M¥ | 60,000 – 90,000 ¥ | 5.5 – 6.5% |
Three distinct profiles clearly emerge:
Ultra-central wards (Minato, Chiyoda, Chuo, Shibuya) offer modest gross yields of 3 to 4.5% but strong capital appreciation. The central residential belt (Shinjuku, Bunkyo, Meguro, Shinagawa) achieves 4.5 to 5% on small lots. Outer wards (Koto, Kita, Adachi, etc.) offer yields of 5.5 to 8% on studios, with higher vacancy and liquidity risk.
For a small investor, these figures explain why studios and 1K units lead in terms of yield: you combine a reasonable entry ticket with very deep rental demand (students, young professionals, singles, solo expats). 1LDK, 2LDK, and 3LDK units generally offer lower gross yields, even if the average rental period is longer.
Larger apartments: less yield, more stability
Family homes (2LDK–3LDK) generate, on average, lower gross yields but benefit from more stable tenants and lower turnover rates.
| Zone (2LDK–3LDK, 50–80 m²) | Typical purchase price | Typical gross yield |
|---|---|---|
| Minato / Shibuya / Chiyoda | 80 – 200 M¥ | 2.5 – 3.5% |
| Shinjuku / Bunkyo / Shinagawa | 45 – 90 M¥ | 3.0 – 4.0% |
| Koto / Sumida / Kita | 30 – 60 M¥ | 4.0 – 5.0% |
| Outer wards | 20 – 40 M¥ | 4.5 – 6.0% |
An average 3LDK in the 23 wards rents for around 350,000 ¥ per month, but its purchase price often exceeds 80–100 million yen in central areas. The gross yield will therefore rarely exceed 3% in prestigious wards, at best 4–5% in cheaper peripheral neighborhoods.
From gross to net: what really ends up in your pocket
Japanese listings and portals readily highlight the “surface yield” (hyōmen rimawari), i.e., the gross yield. However, this is not the figure that matters to the investor, but rather the net yield, after deducting all recurring fees, taxes, and vacancy.
Experience in the Japanese market shows that, in practice, the net yield is typically 1.5 to 2.5 points below the gross yield, or about 55–70% of the gross yield. In other words:
– a property at 3% gross in central Tokyo often yields 1.7 to 2.1% net;
– a property at 5% gross in a regional city runs around 2.8 to 3.5% net;
– a property at 7% gross in the suburbs or an older building will be closer to 3.9 to 4.9% net, at the cost of increased risk (vacancy, maintenance).
Main cost items
For a condominium rented long-term in Tokyo, the following items eat into the yield:
Main expense items to expect for a landlord in Japan: condominium fees, management fees, taxes, insurance, rental vacancy, and routine maintenance.
Average 27,000 ¥ per month (324,000 ¥ per year), absorbing 13–14% of a rent of 200,000 ¥, and 25–30% of a 1K rent of 90,000 ¥.
4 to 6% of the monthly rent, i.e., 8,000 to 12,000 ¥ per month for a rent of 200,000 ¥.
Approximately 0.25 to 0.45% of market value per year, i.e., 250,000 to 450,000 ¥ for a property worth 100 M¥.
Between 20,000 and 60,000 ¥ per year depending on coverage (fire, earthquake, etc.).
Plan a reserve of 5 to 8% of gross rents for 1 to 2 months of vacancy every few years (occupancy rate > 96% in Tokyo).
1 to 2% of the annual rent for repairs, minor work, and replacements (air conditioning, appliances).
Aggregating these items, local investment guides recommend applying a simple rule: net yield ≈ gross yield × 0.55–0.70. This is a rough estimate that fits well with 2025–2026 data for Tokyo.
Scenario: a 1K in Shinjuku and a 1K in Adachi
To measure what an apartment actually yields, we can compare two stylized cases, based on observed price and rent ranges:
1. Standard 1K in Shinjuku (central ward, strong demand)
– Purchase price: 30 M¥ (within the 20–40 M¥ range for a 1K in Shinjuku)
– Monthly rent: 120,000 ¥ (mid-range of 80,000–140,000 ¥)
– Gross annual rent: 1,440,000 ¥
– Gross yield: 1,440,000 ÷ 30,000,000 = 4.8%
By applying the 0.55–0.70 rule to get to net.
– Estimated net yield: between 2.6% and 3.4%
In a median scenario at 0.6:
– Net yield ≈ 4.8% × 0.6 = 2.9%
This level may seem modest, but it is accompanied by very low vacancy (hyper-central neighborhood) and good resale liquidity.
2. 1K in Adachi (outer ward, riskier but more profitable)
– Purchase price: 12 M¥ (within the 8–16 M¥ range)
– Monthly rent: 65,000 ¥ (mid-range of 50,000–75,000 ¥)
– Gross annual rent: 780,000 ¥
– Gross yield: 780,000 ÷ 12,000,000 = 6.5%
Applying the same rule:
– Estimated net yield: between 3.6% and 4.5%
Even with a bit more vacancy and some maintenance work, this outer profile remains above the typical net yield of a central 1K, at the cost of higher resale risk and a somewhat less robust tenant base.
Tokyo vs. the rest of Japan: yield vs. appreciation
Nationally, 2025 studies put Japan’s average gross rental yield around 4.3–4.5%, while Tokyo hovers around only 3.3–3.6%. Some regional cities, such as Fukuoka or Sapporo, show gross yields of nearly 5% on residential, potentially reaching 6–8% on multi-unit wooden structures.
In other words, Tokyo is not where you get the highest gross yield, far from it. But it is where you find:
– the best resale liquidity,
– the lowest vacancy,
– and above all, the strongest price momentum over the past ten years.
Prices of new condominiums in Tokyo have increased by about 30% over 12 months in the 2025-2026 period.
For an investor, this means that rental yield is only part of the equation. Tokyo rewards patience with:
– a relatively safe stream of rent, even if modest in percentage,
– a non-trivial potential for capital appreciation, still considered “moderate but solid” for the coming years.
How rising rates and prices are reshuffling the deck
A key element of the 2026 context is the gradual rise in interest rates and bond yields in Japan. The 10-year government bond yield reached 2.7% in spring 2026, a level not seen in decades. At the same time, cap rates for prime real estate – both office and residential – remain, for now, around 3–3.5%.
Historically, investors demanded a yield premium of 170 to 200 basis points over government bonds for a Grade A office in Tokyo. In 2026, this premium has compressed sharply, with some residential or office segments trading at yields close to Japanese government bonds (JGBs).
Several factors explain why investors continue to position themselves nonetheless:
– massive capital inflows to the Japanese market, seen as a “safe haven” in Asia;
– solid rental fundamentals (very low vacancy, rent growth above inflation in some segments);
– expectations of slightly higher medium-term inflation, supporting rent increases.
Increase in prices of new apartments in Tokyo’s 23 wards and Osaka over the twelve months ending March 2026
This price surge has completely reversed the buy vs. rent arbitrage for households. Recent calculations show that, in 2026, renting costs on average 40% less than repaying a mortgage for the same home in the 23 wards. This situation fuels rental demand and pushes rents upward, while further compressing the gross yield for new buyers.
Where to look for yield in Tokyo in 2026?
From the perspective of an investor whose primary goal is cash flow, certain areas of Tokyo are clearly more attractive than others.
Studios and small 1K: the best yield/demand ratio
All analyses converge: studios, 1R, 1K, and small 1LDK are the category that offers, in Tokyo, the best gross yields, especially in neighborhoods:
– with a high concentration of students (Bunkyo, Shinjuku around Waseda/Takadanobaba),
– featuring major transport hubs (Ikebukuro in Toshima, Shinagawa),
– or in well-connected outer wards (Adachi near Kita-Senju, Katsushika, Edogawa, Itabashi).
Studios and one-bedroom units typically achieve 3.5–4.2% gross yield in most neighborhoods, while two-bedroom units are around 3.2–3.8%, and three-bedroom units often fall between 2.8 and 3.5%.
Net, on a well-structured investment, this means:
The net yield for a studio or 1K in central areas is approximately 2 to 3%.
The “sweet spot” wards: Koto, Sumida, Kita, Itabashi
Among the 23 wards, some still combine, in 2026, a reasonable price level, robust rental demand, and a respectable gross yield:
– Koto: strong infrastructure (Toyosu, Shinonome), multiple transport lines, gross yields of 5–6.5% for studios / 1K;
– Sumida: good access, still affordable rents, yields comparable to Koto;
– Kita: improved transport, “value play” position, yields potentially reaching 7% on small lots;
– Itabashi: low prices, good train connections to the center, but longer commute; yields 5.5–7% gross.
These areas sit at the intersection sought by cash-flow-oriented investors: yields above 4–5%, contained vacancy due to proximity to major lines, and reasonable resale liquidity.
High yield, high risk: Adachi, Katsushika, Edogawa, Nerima
Outer wards like Adachi, Katsushika, Edogawa, and Nerima regularly show gross yields of 6 to 8% on studios and 1K units. Rents there remain anchored by rail links to the center, while purchase prices stay significantly lower than in the central belt.
These areas are cited as high-yield zones in several studies, but the following warnings consistently appear.
– more frequent vacancy, especially in older buildings or those far from the station;
– more fragile tenant purchasing power;
– more difficult resale in case of a market downturn or population decline.
For a beginner foreign investor, the most commonly recommended approach is not to immediately chase 7–8% gross, but to focus on a 1R / 1K or small 1LDK in a belt ward (Koto, Toshima, Bunkyo, Shinagawa, Meguro) at 5–6% gross when possible, or around 3.5–4% gross in a highly liquid central ward.
What yield profile to expect in 2026?
Aggregating all 2025–2026 data, we can outline realistic orders of magnitude for an apartment in Tokyo, depending on the area and property type.
Typical gross and net yield profiles
| Property profile (Tokyo 23 wards) | Typical gross yield | Typical net yield (approx.) |
|---|---|---|
| Studio / 1K in prestige ward (Minato, Shibuya, Chiyoda) | 3.0 – 4.0% | 1.7 – 2.5% |
| Studio / 1K in central residential belt (Shinjuku, Bunkyo, Meguro, Shinagawa) | 4.0 – 5.5% | 2.2 – 3.5% |
| Studio / 1K in mid-ring / average ward (Koto, Sumida, Kita, Toshima, Itabashi) | 5.0 – 6.5% | 2.8 – 4.3% |
| Studio / 1K in high-yield outer ward (Adachi, Katsushika, Edogawa, Nerima) | 6.0 – 8.0% | 3.3 – 4.8% |
| 2LDK–3LDK in prime center | 2.5 – 3.5% | 1.5 – 2.2% |
| 2LDK–3LDK in belt / outer | 3.5 – 5.5% | 2.0 – 3.5% |
These figures assume management through an agency (4–6% fees), condominium fees within the Tokyo average, vacancy limited to a few weeks every two or three years, and neutral taxation (no leverage or extreme optimization).
Central vs. peripheral: a question of strategy, not just percentage
It’s tempting to answer the question “how much does an apartment in Tokyo yield in 2026” with a simple yield figure. But in reality, the answer depends on the trade-off accepted between:
– current yield (rental cash flow),
– rental security (vacancy, resilient rent level),
– capital appreciation potential,
– resale liquidity.
Gross yields in central Tokyo neighborhoods drop to between 3 and 3.5% on small lots.
In the periphery, a studio can show 6–7% gross, or even more in an older building; but the probability of going several months without a tenant, or having to lower the rent to fill it, is higher. And resale can be slow, especially if local demographics deteriorate.
And for a foreign investor: what’s left after taxes?
On top of the Japanese cost structure, non-residents face the crucial issue of taxation. A non-resident owner who rents out an apartment in Tokyo is, in principle, subject to a withholding tax of 20.42% on gross rents (20% national tax + 0.42% reconstruction surcharge), when the tenant is a company or when a manager collects the rents on their behalf.
This withholding is applied before deducting expenses. It can be adjusted via an annual tax return to reclaim part of the tax based on actual expenses (condominium fees, loan interest, renovations, property tax, management fees, depreciation). As long as the return is not filed, the monthly cash flow is reduced by one-fifth.
Two important nuances:
The 20.42% withholding does not apply if the tenant is an individual occupying the home as their personal residence; the owner then receives the full rent and must declare the tax. Tax residents of Japan, including foreigners with a residence permit, are also exempt from this withholding and declare their rental income in their overall tax return, with progressive rates that can exceed 40% for the highest incomes.
In practice, for a small non-resident investor, the combined effect of expenses and taxation often results in a final net yield on the order of 5–15% of net income, after partially recovering the withholding via the return. Relative to the purchase price, this brings the net after-tax yield into a range of 2 to 3% for an average apartment in Tokyo, sometimes slightly higher in the outer wards.
How should Tokyo evolve after 2026?
Projections for 2026–2030 describe a market in a phase of polarization rather than a sharp slowdown. On one hand, central wards and major regional metropolises continue to attract capital, with rents and prices still rising, but at a more moderate pace than the 2024–2025 surge. On the other, aging suburbs and rural areas without economic drivers see their vacant housing stock increase, weighing on values and rents.
For Tokyo, several elements support continued rent increases:
Structural elements that support demand and limit supply in the capital
Condo construction starts in the 23 wards remain below the historical average, with an anticipated drop in supply in 2026.
Residential vacancy hovers between 3 and 5%, with occupancy rates close to 97%.
Tokyo attracts workers and students from across the country, supporting rental demand, especially for small homes.
Despite the rise, rates remain very low in real terms compared to many Western economies.
Projections from several firms indicate that rents in the five central wards (C5W) should grow by 5 to over 6% per year in the coming years, while the rest of the 23 wards would see a more moderate but positive progression.
In prime areas, gross yields are expected to compress slightly because purchase prices are rising faster than rents. In mid-ring and outer wards, rent increases may improve yields for properties purchased before 2024-2025, but new buyers will face higher acquisition prices.
In summary: how much does an apartment in Tokyo yield in 2026?
If we try to give concrete orders of magnitude, we can summarize what typically yields an apartment rented long-term in the 23 wards as follows:
– Small apartment (studio / 1K / 1LDK) in a prestigious central ward Gross yield: 3–4% Net yield before tax: 1.7–2.5% Profile: low vacancy, high liquidity, good capital appreciation prospects, modest rental income.
– Small apartment in a central residential belt ward (Shinjuku, Bunkyo, Meguro, Shinagawa, Toshima, Koto) Gross yield: 4–6% depending on micro-location Net yield before tax: 2.5–3.8% Profile: balanced compromise between yield, rental demand, and liquidity.
– Small apartment in a high-yield peripheral ward (Adachi, Katsushika, Edogawa, Nerima, Itabashi) Gross yield: 6–8% Net yield before tax: 3.5–5% Profile: good potential cash flow, but higher vacancy risk, more uncertain resale, dependence on transport.
The gross yield for a family apartment in the 23 wards ranges between 2.5 and 4.5% depending on the area.
For an investor looking beyond just the year 2026, the question is therefore not only: “how much does my apartment yield this year?” but rather: what combination of immediate yield and capital appreciation am I willing to accept? In Tokyo, pure rental yield is moderate, sometimes low; on the other hand, the combination of rising rents, low vacancy, and still positive price prospects makes the Japanese capital primarily a wealth market, where financial discipline and meticulous location selection make the difference between a simply “decent” investment and an asset capable of weathering the next decade well.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
