On February 8th, Kenbiya, a Japanese property portal dedicated to investment real estate, announced their 2H of 2021 Yield Ranking of Residential Investment Properties for Government Ordinance Cities report.

The data was aggregated from advertised gross yield on properties listed on Kenbiya’s portal site in the designated cities by client real estate firms. 

The types of properties analyzed were stata title condos, wood frame whole building and reinforced concrete whole building investment properties.

According to Wikipedia, “A city designated by government ordinance (政令指定都市, seirei shitei toshi), also known as a designated city (指定都市, shitei toshi) or government ordinance city (政令市, seirei shi), is a Japanese city that has a population greater than 500,000 and has been designated as such by order of the Cabinet of Japan under Article 252, Section 19 of the Local Autonomy Law.”

In total, there are 20 designated government ordinance cities nationwide.  They are all regional cities outside of Tokyo Prefecture.  Tokyo Prefecture is legally treated separately from the Local Autonomy Law. 

For property investors, these government ordinance cities are usually where the higher yielding properties can be found.  Japanese investors often look to these cities for high yielding assets, as opposed to capital gain investments often found in central Tokyo.

2H of 2021 is referring to the time frame from July to December and 1H of 2021 is referring to January to June.

All reference to yield below means gross yields and not net yields.

Top Yielding Government Ordinance City Ranking

For strata title condos (区分マンション), the top three cities advertising the highest yields were:

1st - Niigata City (avg. 15.63% yield)  

2nd - Kita-Kyushu City (avg. 14.79% yield)

3rd - Hamamatsu City (avg. 14.11% yield)

For wood frame whole buildings (一棟アパート), the top three cities advertising the highest yields were:

1st - Niigata City (avg. 11.89% yield) 

2nd - Sakai City (avg. 11.07% yield) 

3rd - Okayama City (avg. 10.79% yield) 

For reinforced concrete whole buildings (一棟マンション), the top three cities advertised the highest yields were:

1st  - Okayama City (avg. 10.05% yield)

2nd - Kita-Kyushu City (avg. 9.42% yield) 

3rd - Niigata City (avg. 9.23% yield)

Of the 20 cities designated as government ordinance cities, yields on strata title condos rose from the 1H of 2021 in the following six cities according to Kenbiya data:

• Sagamihara City
• Osaka City
• Okayama City
• Hiroshima City
• Fukuoka City
• Kita-Kyushu City

For wood frame whole buildings, the yields rose from 1H of 2021 in the following five cities:

• Sagamihara City
• Shizuoka City
• Hamamatsu City
• Okayama City
• Hiroshima City

For reinforced concrete whole buildings, the yields rose from 1H of 2021 in the following six cities: 

• Sendai City
• Shizuoka City
• Kyoto City
• Sakai City
• Okayama City
• Hiroshima City

Average yields rose from the 1H of 2021 for all three property types in Okayama and Hiroshima cities; a statistic only these two cities out of twenty could demonstrate.

Further Reading

2H of 2021 Yield Ranking of Residential Investment Properties for Government Ordinance Cities (Japanese only; February, 2021)