According to Tokyo Kantei, brand new apartments within walking distance of Roppongi Station had the lowest rental yields in greater Tokyo with an estimated gross return of 2.34%. Across greater Tokyo the average gross yield on a new apartment was 4.44%, and as high as 6.19% for 30 year old apartments.
Yields reflect risk and tend to be lower in areas with high rental and sales demand. They also tend to be higher for older buildings to reflect a variety of factors such as higher maintenance costs, lower rental demand and rents that decline at a slower rate than property values.
Yields are generally lower in luxury buildings compared to cheaply built investment-grade buildings. Apartments in the 14-year old Roppongi Hills complex have gross yields in the low 2% range, while The Westminster Roppongi building located just behind Roppongi Hills and built in the same year, has gross yields in the high 2% range. The Roppongi Tokyo, a 39-storey luxury residential tower built in 2011, has above-average gross yields of around 3.4%.
Brand new apartments near Azabu Juban station had an average gross yield of 3.33%, while the average gross yield on a 30 year old apartment was only slightly better at 3.92%. Azabu Juban is a prime neighborhood in the middle of Tokyo and yields are naturally lower as a result.
The lowest rental yields in greater Tokyo by station:
|NEW CONSTRUCTION||30 YR OLD APARTMENT|
|||Roppongi (Minato): 2.34%||Ushigome-Kagurazaka (Shinjuku): 3.69%|
|||Hamamatsucho (Minato): 2.93%||Hiroo (Shibuya): 3.73%|
|||Yotsuya (Shinjuku): 2.94%||Hanzomon (Chiyoda): 3.81%|
|||Hiyoshi (Yokohama): 2.94%||Azabu Juban (Minato): 3.92%|
|||Oiso (Kanagawa): 3.13%||Setagaya (Setagaya): 4.16%|
Source: Tokyo Kantei, October 31, 2017.