Last Updated: February 2026
Investing in a Tokyo 1K apartment investment yield strategy offers one of the most accessible entry points into Japanese real estate. With purchase prices starting at ¥5 million ($35,000) in outer wards and gross yields reaching 5-8%, these compact units attract both first-time investors and seasoned portfolio builders seeking stable rental income.
Tokyo’s 23-ward vacancy rate sits at just 3.5%, and ultra-compact apartments show occupancy rates of 99.9% in some buildings. For foreign investors looking to build passive income in one of Asia’s most stable property markets, 1K apartments represent a low-barrier opportunity worth serious consideration.
This guide breaks down everything you need to know about Tokyo 1K apartment investment yield expectations, ward-by-ward comparisons, net return calculations, and the practical steps to purchase your first investment property in Japan.
What Is a 1K Apartment and Why Invest in One
A 1K apartment is Japan’s smallest standard residential unit type. The “1” refers to one room, and “K” stands for kitchen. These apartments typically measure 16-25 square meters and consist of a single main room with a small kitchenette separated by a counter or half-wall.
The layout differs from a 1R (one-room) apartment, which has no separation between living and kitchen areas, and a 1DK, which includes a dining-kitchen space large enough for a small table.
Here’s why 1K apartments make compelling investments:
- Lower entry price — Purchase from ¥5-10 million in outer wards compared to ¥15-30 million for larger units
- Higher rent per square meter — Small units command premium pricing efficiency
- Strong tenant demand — Tokyo’s single-person households continue growing
- Lower vacancy risk — Ultra-compact units fill almost immediately
- Simpler management — Single tenants, standardized fixtures, predictable maintenance
The 10 million yen price point is popular among investors seeking high-yield income properties, particularly older 1K units from the 1980s that originally sold for 20-25 million yen during the bubble era.
Tokyo 1K Apartment Investment Yields by Ward
Tokyo’s rental yields vary dramatically depending on location. Central wards offer prestige and potential capital appreciation but deliver lower cash flow. Outer wards provide higher current income but may face longer-term demographic challenges.
Here’s a breakdown of Tokyo 1K apartment investment yield expectations across different ward categories:
Central Tokyo Wards (Lower Yield, Higher Prices)
| Ward | Avg. 1K Rent | Est. Purchase Price | Gross Yield |
|---|---|---|---|
| Minato | ¥130,000-170,000 | ¥30,000,000+ | 3.5-4.0% |
| Chiyoda | ¥130,000 | ¥28,000,000+ | 3.5-4.0% |
| Shibuya | ¥108,200 | ¥25,000,000+ | 3.8-4.2% |
| Shinjuku | ¥100,000 | ¥22,000,000+ | 4.0-4.5% |
Central wards attract foreign professionals, corporate housing demand, and offer the strongest resale liquidity. However, the high purchase prices compress yields significantly.
Middle-Ring Wards (Balanced Yield and Stability)
| Ward | Avg. 1K Rent | Est. Purchase Price | Gross Yield |
|---|---|---|---|
| Setagaya | ¥95,000 | ¥18,000,000 | 4.5-5.0% |
| Nakano | ¥88,000 | ¥15,000,000 | 4.8-5.2% |
| Suginami | ¥85,000 | ¥14,000,000 | 4.8-5.2% |
| Meguro | ¥98,000 | ¥18,000,000 | 4.5-5.0% |
Setagaya Ward recorded the highest rent growth in Tokyo at 21.3% year-over-year, signaling strong underlying demand even in middle-ring locations.
Outer Tokyo Wards (Higher Yield, Lower Prices)
| Ward | Avg. 1K Rent | Est. Purchase Price | Gross Yield |
|---|---|---|---|
| Adachi | ¥50,000-65,000 | ¥6,000,000-10,000,000 | 5.2-8.3% |
| Katsushika | ¥62,400 | ¥8,000,000-12,000,000 | 5.5-6.5% |
| Edogawa | ¥57,700 | ¥7,000,000-11,000,000 | 5.0-6.0% |
| Itabashi | ¥68,000 | ¥9,000,000-14,000,000 | 4.8-5.5% |
A gross yield of 4.5% or higher is considered “good” in Tokyo. Achieving this typically requires older buildings from the 1980s-1990s or properties in outer commuter wards where purchase prices remain suppressed.
Purchase Prices: What Does a Tokyo 1K Cost
Understanding the price landscape helps you calibrate yield expectations against your budget. Here’s what to expect across different market segments:
Entry-Level 1K Investments (¥5-10 Million)
Properties at this price point are typically:
- Located in outer wards like Adachi, Katsushika, or Edogawa
- Built in the 1980s during Japan’s bubble era
- 16-22 square meters in size
- Requiring some renovation for optimal rent
At ¥6 million with ¥50,000 monthly rent, gross yield reaches 10%. However, expect additional renovation costs and understand that buildings this age may have higher management fees or upcoming major repairs.
Mid-Range 1K Investments (¥10-20 Million)
This segment offers:
- Better locations in middle-ring wards
- Buildings from the 1990s-2000s with modern amenities
- 20-25 square meters with updated interiors
- More reliable building management
At ¥15 million with ¥75,000 monthly rent, gross yield calculates to 6%. This price range balances yield with property quality and long-term stability.
Premium 1K Investments (¥20-35 Million)
Higher-end 1K units feature:
- Central ward locations in Shibuya, Shinjuku, or Minato
- Modern buildings (2010s or newer) with quality finishes
- 22-28 square meters with efficient layouts
- Strong resale value and consistent corporate tenant demand
At ¥25 million with ¥100,000 monthly rent, gross yield drops to 4.8%. Investors here prioritize capital preservation and potential appreciation over current cash flow.
Calculating Net Yields: The True Return on Investment
Gross yield is only the starting point. Net yield accounts for all expenses and provides the actual cash return on your investment. Understanding this distinction separates realistic investors from disappointed ones.
Gross Yield vs. Net Yield Formula
Gross Yield:
Annual Rent ÷ Purchase Price × 100 = Gross Yield %Net Yield:
(Annual Rent - Annual Expenses) ÷ (Purchase Price + Acquisition Costs) × 100 = Net Yield %Realistic Net Yield Calculation Example
Let’s calculate the actual return on a typical outer-ward 1K investment:
Purchase Details:
- Property Price: ¥8,000,000
- Acquisition Costs (10%): ¥800,000
- Total Investment: ¥8,800,000
Monthly Income:
- Rent: ¥58,000
Monthly Expenses:
- Building Management Fee: ¥12,000
- Repair Reserve Fund: ¥8,000
- Property Management (5%): ¥2,900
- Total Monthly Expenses: ¥22,900
Annual Calculation:
- Annual Rent: ¥696,000
- Annual Expenses: ¥274,800
- Net Operating Income: ¥421,200
Yields:
- Gross Yield: 8.7%
- Net Yield: 4.8%
This example shows why net yields in Tokyo typically fall between 2.0% and 3.4% for average properties, though well-selected outer ward investments can achieve 3.5-5% net after all costs.
Ongoing Cost Breakdown
Every 1K investor should budget for these recurring expenses:
| Cost Category | Typical Range | Notes |
|---|---|---|
| Building Management Fee | ¥10,000-20,000/month | Covers common area maintenance, elevator, security |
| Repair Reserve Fund | ¥8,000-15,000/month | Mandatory fund for building-wide repairs |
| Property Management | 5% of rent | For non-resident owners using management services |
| Fixed Asset Tax | ~1.4% of assessed value/year | Paid to local government |
| City Planning Tax | ~0.3% of assessed value/year | Additional municipal tax |
| Income Tax | 20.42% withholding | For non-resident rental income |
The average combined management fee and repair reserve in Tokyo reaches ¥28,748 for a 60 square meter unit. 1K apartments are smaller, so expect ¥15,000-25,000 combined.
Best Tokyo Wards for 1K Investment in 2025
Choosing the right ward depends on your investment goals. Here’s a breakdown of the best options for different strategies:
Best for Yield: Adachi Ward
- Gross yields of 5.2-8.3% achievable
- Entry prices from ¥5-10 million
- Strong public transport connectivity
- Growing young professional population
- Ongoing urban renewal projects
Adachi offers the highest current income potential among Tokyo’s 23 wards. Properties near stations on the Hibiya or Tsukuba Express lines command stable rent while maintaining accessible purchase prices.
Best for Growth: Setagaya Ward
- Rent growth of 21.3% year-over-year
- Strong family and professional demographic
- Quality infrastructure and amenities
- Higher price point but appreciation potential
- Lower vacancy risk
Setagaya combines reasonable yields (4.5-5.0%) with Tokyo’s strongest rent growth, making it attractive for investors prioritizing total return over current income.
Best for Stability: Nakano Ward
- Balanced 4.8-5.2% gross yields
- Central location between Shinjuku and Kichijoji
- Large student and young professional population
- Consistent demand across economic cycles
- Moderate price point around ¥15 million
Nakano offers middle-ground positioning with decent yields, good transport links, and stable tenant demand driven by its entertainment district and university proximity.
Best for Foreign Tenant Demand: Minato Ward
- International tenant pool (embassies, foreign firms)
- Premium rents supporting lower yield (3.5-4.0%)
- Strongest resale liquidity
- Corporate housing contracts available
- English-speaking management options
For investors who prioritize ease of management and access to English-speaking services, Minato Ward’s foreign-friendly infrastructure compensates for lower yields.
Tenant Demand and Vacancy Rates for 1K Units
Tokyo’s 1K segment benefits from structural demand drivers that support consistent occupancy:
Single-Person Household Growth
Tokyo’s single-person households continue expanding as:
- Young professionals relocate for work
- Marriage rates decline and average age rises
- Corporate transfers require temporary housing
- International students and workers enter Japan
This demographic shift sustains demand for compact, efficient housing in central and accessible locations.
Vacancy Rate Reality
Tokyo’s 23-ward vacancy rate stands at 3.5%, among the lowest in developed markets. Ultra-compact apartments show occupancy rates of 99.9%, with vacancies filling before the next one becomes available.
However, not all properties share these favorable statistics:
- Older buildings with outdated facilities face higher vacancy
- Properties far from stations struggle to attract tenants
- Units priced above market rates remain empty
- Poor building management deters quality tenants
Rent Growth Trends
Tokyo rental prices grew 6.5-6.7% year-over-year according to recent market data. This growth reflects:
- Continued urbanization and job concentration
- Inflation flowing through to housing costs
- Limited new supply in popular locations
- Post-pandemic return to office driving demand
For investors, rising rents help offset the gap between gross and net yields by increasing income against relatively fixed costs.
Hidden Costs: Management Fees and Repair Reserves
Japanese condominium ownership includes mandatory fees that directly impact your investment returns. Understanding these costs before purchase prevents unpleasant surprises.
Management Fees (Kanri-hi)
Management fees cover:
- Common area cleaning and maintenance
- Elevator and mechanical system upkeep
- Security and concierge services
- Building insurance
- Administrative costs
Typical range for 1K units: ¥10,000-20,000 monthly
Fees vary based on building age, amenities, and location. Luxury buildings with 24-hour concierge can charge ¥30,000 or more monthly.
Repair Reserve Fund (Shuzen Tsumitate-kin)
Japanese law requires condominium buildings to maintain repair reserves for:
- Major exterior work (typically every 12-15 years)
- Waterproofing and roofing repairs
- Elevator replacement
- Pipe and infrastructure upgrades
Typical range for 1K units: ¥8,000-15,000 monthly
Critical due diligence: Request the building’s long-term repair plan and current reserve balance. Buildings with underfunded reserves may face special assessments requiring one-time payments of ¥500,000 or more.
Warning Signs in Fee Structures
Be cautious of:
- Very low fees (may indicate deferred maintenance)
- Recent large fee increases (may signal financial problems)
- High percentage of investor-owned units (may have governance issues)
- Missing or incomplete repair plans (poorly managed building)
Tax Implications for Foreign Investors
Taxation significantly impacts net returns. Here’s what foreign investors need to understand:
Non-Resident Rental Income Tax
Non-residents face 20.42% withholding tax on rental income when the tenant is a company. This includes:
- 20% national income tax
- 0.42% special reconstruction tax (through 2037)
When the tenant is an individual renting for personal residence, no withholding is required. However, you must still file annual returns and pay applicable taxes.
Required: Tax Representative in Japan
Non-resident property owners must appoint a tax representative residing in Japan. This person (often a tax accountant or relative) receives tax notices and handles filing requirements on your behalf.
Tax filing period: February 16 to March 15 of the following year.
Property-Related Taxes
| Tax | Rate | Payment |
|---|---|---|
| Fixed Asset Tax | 1.4% of assessed value | Quarterly |
| City Planning Tax | 0.3% of assessed value | Quarterly |
| Real Estate Acquisition Tax | 3% land / 4% building | One-time at purchase |
| Stamp Duty | Varies by price | At contract signing |
Assessed values for tax purposes typically run 50-70% of market value, so effective rates are lower than the stated percentages suggest.
For detailed guidance on rental income taxation, see our Japan Rental Income Tax Guide.
Step-by-Step Process to Buy a 1K Investment Property
Purchasing a Tokyo 1K apartment follows a structured process. Here’s your roadmap:
Step 1: Define Your Investment Criteria
Before contacting agents:
- Set budget (including 8-12% transaction costs)
- Decide cash vs. financing (financing difficult without permanent residency)
- Choose target yield vs. growth strategy
- Identify preferred wards based on your goals
Step 2: Engage an English-Speaking Agent
Work with agents experienced in:
- Investment property transactions
- Foreign buyer requirements
- Outer ward inventory (if targeting high yield)
- Building due diligence and negotiation
Budget ¥50,000-100,000 for agent fees on smaller transactions, or standard 3% + ¥60,000 + tax on larger deals.
Step 3: Property Search and Shortlisting
Your agent will:
- Provide listings matching your criteria
- Share building management documents
- Arrange viewings or virtual tours
- Report on comparable transactions and rent levels
Step 4: Make an Offer
Submit your offer including:
- Purchase price
- Deposit amount (typically 5-10%)
- Proposed closing timeline
- Any conditions (inspection, financing)
Step 5: Receive Important Matters Disclosure
The Juyō Jikō Setsumeisho (Important Matters Disclosure) details:
- Property specifications and boundaries
- Building management status
- Known defects or issues
- Zoning and legal restrictions
- Transaction conditions
This document requires explanation by a licensed real estate agent. Review carefully before proceeding.
Step 6: Sign Contract and Pay Deposit
After accepting the disclosure:
- Sign the purchase contract
- Pay earnest money (typically 5-10%)
- Agree on closing date
Step 7: Arrange Payment
For foreign buyers:
- International wire transfers over ¥30 million require Bank of Japan notification
- Allow 3-5 business days for transfers to clear
- Ensure funds are in yen to avoid last-minute conversion delays
Step 8: Close and Register Ownership
At closing:
- Pay remaining balance
- Receive keys and documentation
- Complete ownership registration at Legal Affairs Bureau
- Pay acquisition taxes
Step 9: Set Up Property Management
For non-resident investors:
- Contract with a property management company
- Typically 5% of rental income for full service
- Includes tenant placement, rent collection, maintenance coordination
- Appoint tax representative for annual filings
For a complete walkthrough of the buying process, see our Complete Guide to Buying Property in Japan.
Risks and Considerations for 1K Apartment Investors
Every investment carries risk. Here’s what to watch for with Tokyo 1K apartments:
Building Age and Earthquake Safety
Properties built before 1981 may not meet current earthquake resistance standards. Buildings from 1981 onward follow the New Earthquake-Resistant Standards, which have proven effective in subsequent earthquakes.
For older buildings:
- Request earthquake resistance assessment results
- Factor potential retrofitting costs into your analysis
- Consider insurance availability and cost
Tenant Eviction Difficulty
Japan’s tenant protection laws make eviction extremely difficult under standard two-year rental agreements. Tenants can:
- Refuse rent increases above certain thresholds
- Remain in the property beyond the lease term
- Challenge eviction in court for most reasons
This stability cuts both ways: reliable occupancy but limited flexibility for property owners.
Depreciation and Building Value
Japanese buildings depreciate rapidly for tax purposes:
- Wooden structures: 22-year depreciation
- Reinforced concrete: 47-year depreciation
While depreciation provides tax benefits, be aware that:
- Older buildings may have limited remaining depreciable value
- Land retains value but building component declines
- Capital improvements can extend useful life
Long-Term Demographic Concerns
Japan’s aging population and declining birth rate pose structural challenges:
- Tokyo continues attracting domestic migration (net positive)
- Outer wards may face demand pressure in 20-30 years
- Building obsolescence is a real consideration for 1980s properties
Currency Risk
For foreign investors:
- Rental income in yen may fluctuate against home currency
- Property values may gain or lose in dollar/euro terms independent of yen prices
- Consider currency hedging for larger portfolios
Frequently Asked Questions
What is the average rental yield for a 1K apartment in Tokyo?
Tokyo’s average gross rental yield for 1K apartments is approximately 3.8-4.5% across all wards. However, outer wards like Adachi and Katsushika offer yields of 5.2-6.0% or higher for older properties. Net yields after all expenses typically fall between 2.0-3.4% for average properties, with well-selected investments achieving 3.5-5% net.
Can foreigners buy investment property in Tokyo?
Yes, foreigners can purchase investment property in Japan with no restrictions based on nationality, residency status, or visa type. You have the same ownership rights as Japanese citizens. However, note that property ownership does not grant visa or residency rights in Japan—these remain separate processes.
How much does a 1K apartment cost in Tokyo for investment purposes?
1K apartments in outer Tokyo wards (Adachi, Katsushika, Edogawa) can be purchased for ¥5-10 million ($35,000-$70,000). Middle-ring wards range ¥12-20 million, while central wards (Minato, Shibuya) start at ¥20-35 million. The ¥10 million price point is particularly popular among yield-focused investors targeting older 1980s units.
What are the ongoing costs of owning a 1K investment apartment?
Ongoing costs include building management fees (¥10,000-20,000/month), repair reserve fund contributions (¥8,000-15,000/month), property management services for non-residents (5% of rent), fixed asset tax (1.4% of assessed value annually), and city planning tax (0.3% annually). Non-residents also face 20.42% withholding tax on rental income received from corporate tenants.
Which Tokyo wards have the highest rental yields for 1K apartments?
The highest yields are found in outer wards: Adachi (5.2-8.3%), Katsushika (5.5-6.5%), and Edogawa (5.0-6.0%). These areas offer lower purchase prices while maintaining reasonable rent levels due to good public transport connectivity. However, investors should balance yield against factors like tenant quality, building condition, and long-term demographic trends.
Start Your Tokyo 1K Investment Journey
Tokyo’s 1K apartment market offers genuine opportunity for foreign investors seeking accessible entry into Japanese real estate. With purchase prices starting under ¥10 million and gross yields exceeding 5% in outer wards, these compact investment units provide a practical path to building passive income in Asia’s most stable property market.
Success requires realistic expectations about net returns, careful due diligence on building quality and management, and proper setup of property management and tax compliance systems. But for investors willing to do the work, Tokyo 1K apartments deliver on their promise of steady, tenant-demand-driven returns.
Ready to explore further? Check out our Tokyo Real Estate Investment Guide for neighborhood-specific insights, or learn about property taxes and financing to complete your investment planning.