Best Tokyo Neighborhoods for Apartment Investment: 2026 Ward-by-Ward ROI Guide
Last Updated: February 2026
Tokyo apartment investment attracts foreign buyers seeking stable returns in the world’s most populous metropolitan area. With a 3.5% vacancy rate and rental prices climbing 6.7% year-over-year across the 23 wards, the Japanese capital delivers what few global cities can match: high occupancy rates, transparent legal frameworks, and no restrictions on foreign ownership.
This guide breaks down each ward’s rental yield potential, price per square meter, and growth trajectory. Whether you’re targeting high-yield properties in Adachi Ward at 5-6% returns or capital appreciation in the prestigious Central 5 Wards, you’ll find the data you need to make an informed decision.
Understanding Tokyo’s Investment Geography: The 23 Wards Explained
Tokyo’s 23 special wards (tokubetsu-ku) form the core urban area where most investment activity occurs. Each ward operates as its own municipality with distinct characteristics, demographics, and price points.
The wards divide into rough investment categories:
Central 5 Wards (C5W): Chiyoda, Chuo, Minato, Shibuya, and Shinjuku. These command the highest prices (¥1.2-3.0 million per square meter) but deliver the lowest yields (2.8-3.5%). Investors here prioritize capital preservation and appreciation over cash flow.
Mid-Tier Wards: Meguro, Setagaya, Toshima, Nakano, and Suginami offer a middle ground. Yields range from 3.5-4.5% with strong rental demand from young professionals.
High-Yield Outer Wards: Adachi, Katsushika, Edogawa, and Nerima in the northern and eastern regions. Entry prices start at ¥450,000-650,000 per square meter, pushing yields to 5-6%.
The Yamanote Line—the circular railway connecting major stations—serves as a dividing line. Properties inside this loop carry premium prices but lower yields. Properties outside offer better cash flow but require careful tenant selection.
High-Yield Wards: Best Areas for Tokyo Apartment Investment (5-6% Returns)
For investors prioritizing rental income over prestige, Tokyo’s northern and eastern wards deliver the strongest returns.
Adachi Ward
Adachi consistently tops yield rankings with gross returns of 5.2-6.0%. The ward’s lower land prices (¥450,000-650,000 per square meter) drive this performance, not depressed rents.
Key investment factors:
- Metro Chiyoda Line provides 30-minute access to central business districts
- Large immigrant population creates consistent rental demand
- Nishi-Arai and Kitasenju stations attract young families priced out of central areas
- Building age averages older, requiring due diligence on maintenance reserves
Katsushika Ward
Similar to Adachi, Katsushika offers 5.0-5.8% yields with entry prices around ¥400,000-550,000 per square meter. The Keisei Main Line connects to Narita Airport, making it popular with airline workers and frequent travelers.
Edogawa Ward
Eastern Tokyo’s waterfront ward delivers 4.8-5.5% yields. Kasai and Nishi-Kasai stations draw families seeking larger apartments near parks and schools. The Tozai Line provides direct access to Otemachi financial district.
Risk consideration: These wards face higher vacancy risk during economic downturns. Tenants in outer wards have less job security than those working for major corporations in central Tokyo. Budget for 1-2 months vacancy annually when calculating net yields.
Central 5 Wards: Premium Tokyo Apartment Investment with Capital Appreciation
The Central 5 Wards account for a disproportionate share of foreign investment in Tokyo real estate. According to Palace Auctions data, foreign buyers now represent 27% of transactions, with 20-40% concentration in these premium areas.
Minato Ward
Home to embassies, multinational headquarters, and Tokyo’s most expensive residential addresses. Areas like Azabu-Juban, Roppongi, and Shirokane command ¥2.0-3.0 million per square meter.
- Gross yields: 2.5-3.2%
- Tenant profile: Expat executives on housing allowances, diplomats, wealthy Japanese
- Liquidity: Highest resale volume in Tokyo
- Appreciation: 8-12% annualized over the past decade in premium buildings
Shibuya Ward
Tech companies, creative industries, and entertainment drive rental demand. Shibuya Station’s massive redevelopment (completion 2027) is lifting property values across the ward.
- Gross yields: 2.8-3.5%
- Price per sqm: ¥1.5-2.5 million
- Target tenants: IT professionals, startup employees, media workers
Chiyoda Ward
Japan’s political center (Imperial Palace, Diet building, government ministries) and financial hub (Marunouchi, Otemachi). Ultra-low supply creates scarcity value.
- Gross yields: 2.8-3.5%
- Price per sqm: ¥1.8-2.8 million
- Occupancy: Near 100%—the strongest in Tokyo
Chuo Ward
Ginza shopping district and Nihonbashi financial area define this ward. Tsukiji’s former fish market site is under redevelopment into a mixed-use district.
- Gross yields: 3.0-3.6%
- Price per sqm: ¥1.4-2.2 million
- Growth driver: Harumi Flag Olympic Village redevelopment
Shinjuku Ward
The western rail hub handles 3.6 million daily passengers, creating unmatched tenant demand. Kabukicho’s entertainment district and Nishi-Shinjuku’s business towers coexist blocks apart.
- Gross yields: 3.2-3.8%
- Price per sqm: ¥1.2-1.8 million
- Tenant mix: Office workers, students (Waseda University nearby), entertainment workers
Mid-Tier Investment Wards: Balancing Yield and Location
For investors seeking better returns than the Central 5 without venturing to outer wards, these areas deliver 3.5-4.5% yields with strong fundamentals.
Setagaya Ward
The rental growth leader in 2025, with prices jumping 21.3% year-over-year according to E-Housing data. Residential neighborhoods like Shimokitazawa, Sangenjaya, and Futako-Tamagawa attract affluent young professionals and families.
- Gross yields: 3.8-4.3%
- Price per sqm: ¥800,000-1.2 million
- Growth trajectory: Strongest rental appreciation among all 23 wards
Meguro Ward
Consistently ranks among Tokyo’s most desirable residential areas. Nakameguro’s canal district and Jiyugaoka’s European-style shopping streets command premium rents from discerning tenants.
- Gross yields: 3.5-4.0%
- Price per sqm: ¥900,000-1.4 million
- Tenant quality: High-income professionals, few late payments or disputes
Toshima Ward
Ikebukuro Station (second busiest in Japan) anchors this northwest ward. Recent entertainment developments and improved street aesthetics are attracting younger demographics.
- Gross yields: 4.0-4.5%
- Price per sqm: ¥700,000-1.0 million
- Value play: Lower prices than Shibuya/Shinjuku with similar transport access
Emerging Investment Hotspots: Redevelopment Zones to Watch
Infrastructure projects reshape Tokyo’s investment landscape every decade. Current hotspots offer entry prices below their future potential.
Shinagawa
The Chuo Shinkansen (maglev) terminus will cut travel time to Nagoya to 40 minutes and Osaka to 67 minutes when completed in the 2030s. Takanawa Gateway Station (opened 2020) marks the first new Yamanote Line station in 49 years.
- Current yields: 3.8-4.3%
- Price trend: +12% over past two years
- Investment thesis: Buy before maglev completion capitalizes values
Koto Ward (Toyosu Area)
The former Tsukiji fish market relocated here in 2018. Toyosu now combines wholesale markets, tech offices (TeamLab Borderless museum), and waterfront living.
- Current yields: 4.0-4.5%
- Price per sqm: ¥700,000-950,000
- Tenant appeal: Young families, waterfront lifestyle seekers
Sumida Ward (Tokyo Skytree Area)
Tokyo’s tallest structure (634 meters) attracts 4 million annual visitors. Surrounding neighborhoods are gentrifying rapidly.
- Current yields: 4.2-4.8%
- Price per sqm: ¥550,000-750,000
- Growth driver: Tourist economy and spillover from expensive Taito Ward
Ward-by-Ward Rental Yield Comparison Table
| Ward | Gross Yield | Price/m² (¥) | Rental Growth | Investment Profile |
|---|---|---|---|---|
| Adachi | 5.2-6.0% | 450,000-650,000 | +4.2% | High yield, value focus |
| Katsushika | 5.0-5.8% | 400,000-550,000 | +3.8% | Budget entry point |
| Edogawa | 4.8-5.5% | 480,000-680,000 | +5.1% | Family-oriented |
| Nerima | 4.5-5.2% | 520,000-720,000 | +4.5% | Suburban residential |
| Sumida | 4.2-4.8% | 550,000-750,000 | +6.2% | Skytree redevelopment |
| Toshima | 4.0-4.5% | 700,000-1,000,000 | +5.8% | Ikebukuro hub |
| Koto | 4.0-4.5% | 700,000-950,000 | +7.3% | Toyosu waterfront |
| Setagaya | 3.8-4.3% | 800,000-1,200,000 | +21.3% | Highest growth |
| Shinagawa | 3.8-4.3% | 850,000-1,150,000 | +9.1% | Maglev speculation |
| Nakano | 3.8-4.2% | 720,000-950,000 | +5.4% | Central access |
| Meguro | 3.5-4.0% | 900,000-1,400,000 | +6.8% | Premium residential |
| Shinjuku | 3.2-3.8% | 1,200,000-1,800,000 | +5.9% | Commercial hub |
| Shibuya | 2.8-3.5% | 1,500,000-2,500,000 | +7.2% | Tech/creative |
| Chuo | 3.0-3.6% | 1,400,000-2,200,000 | +4.8% | Ginza prestige |
| Chiyoda | 2.8-3.5% | 1,800,000-2,800,000 | +3.2% | Government/finance |
| Minato | 2.5-3.2% | 2,000,000-3,000,000 | +5.5% | Ultra-premium |
Source: E-Housing Tokyo Rental Yield Analysis 2025, Bamboo Routes 2026 data
Property Age and ROI: Why Older Buildings Offer Better Returns
New construction in Tokyo commands a 15-25% premium over comparable resale units. This premium erodes within 5-7 years, making older properties more attractive for yield-focused investors.
SEKAI Property research indicates that renovated properties 20-30 years old deliver the optimal risk-reward balance:
- Higher yields: 1-2% greater than new construction due to lower acquisition costs
- Known maintenance history: Older buildings have established reserve funds and repair records
- Depreciation benefits: Wooden structures depreciate over 22 years, RC buildings over 47 years—older buildings offer accelerated tax benefits
- Lower competition: Many Japanese prefer new construction, reducing bidding wars on resale
Caution points for older buildings:
- Check the repair reserve fund balance (修繕積立金)—underfunded buildings face special assessments
- Review long-term repair plans (長期修繕計画) for upcoming major works
- Verify earthquake resistance certification, especially for pre-1981 buildings
- Inspect water and sewage pipes for age-related deterioration
Properties built after 1981 meet modern earthquake codes. Those built after 2000 incorporate even stricter standards following the 1995 Kobe earthquake.
Investment Costs and Taxes for Tokyo Properties
Total acquisition costs run 5-7% of purchase price. Understanding these expenses is critical for accurate yield calculations.
Acquisition Costs
| Cost Item | Amount |
|---|---|
| Agent Commission | 3% + ¥60,000 + 10% tax |
| Stamp Duty | ¥10,000 - ¥480,000 |
| Real Estate Acquisition Tax | 3% of assessed value |
| Registration Tax | 0.4-2% of assessed value |
| Legal Scrivener Fees | ¥50,000 - ¥150,000 |
| Consumption Tax | 10% on building (not land) if seller is business |
Annual Holding Costs
| Cost Item | Amount |
|---|---|
| Fixed Asset Tax | 1.4% of assessed value |
| City Planning Tax | Up to 0.3% additional |
| Management Fees | Average ¥25,000/month |
| Repair Reserve | ¥5,000 - ¥15,000/month |
| Property Management | 5% of rental income |
For non-resident investors, withholding tax adds complexity:
- Rental income: 20.42% withholding at source
- Sale proceeds: 10.21% withholding on gross sale price
These withholdings can be reduced through tax treaties (US, UK, Australia have favorable agreements) or by filing Japanese tax returns. Consult a cross-border tax specialist before purchasing. See our taxes and finance guide for detailed calculations.
How to Choose the Right Ward for Your Investment Goals
Your investment strategy should dictate your ward selection, not the other way around.
Goal: Maximum Cash Flow
Target wards: Adachi, Katsushika, Edogawa, Nerima
Entry budget: ¥15-30 million for a 1R/1K apartment Expected gross yield: 5-6% Net yield after expenses: 3.5-4.5%
Prioritize properties within 7 minutes walk of metro stations on lines connecting to central Tokyo. The Chiyoda, Hibiya, and Tozai lines offer the best commuter value in these areas.
Goal: Balanced Yield + Appreciation
Target wards: Setagaya, Toshima, Koto, Sumida, Shinagawa
Entry budget: ¥25-50 million Expected gross yield: 4-4.5% Net yield: 2.5-3.5%
These wards combine reasonable yields with infrastructure-driven appreciation potential. Setagaya’s 21.3% rental growth demonstrates how residential desirability can drive outsized returns.
Goal: Capital Preservation + Liquidity
Target wards: Minato, Shibuya, Chiyoda, Shinjuku
Entry budget: ¥50-150 million Expected gross yield: 2.8-3.5% Net yield: 1.5-2.5%
Premium wards offer the highest liquidity for exit. Properties in these areas sell faster and attract more buyers, including institutional investors who won’t consider outer wards.
For a comprehensive walkthrough of the purchase process, including financing options for foreign buyers, read our complete guide to buying property in Japan.
Comparing Tokyo to Other Japanese Markets
Tokyo isn’t the only option for Japan property investment. Osaka delivers higher yields (4-6% gross) with lower entry prices, though liquidity and tenant quality lag behind.
| Factor | Tokyo | Osaka |
|---|---|---|
| Average Gross Yield | 3.8% | 5.2% |
| Vacancy Rate | 3.5% | 4.8% |
| Price Stability | Highest | Moderate |
| Foreign Buyer Activity | 27% of transactions | ~15% of transactions |
| Resale Liquidity | Excellent | Good |
| Entry Price (1K apt) | ¥20-40 million | ¥10-25 million |
Tokyo suits investors prioritizing capital preservation and easy exit strategies. Osaka works better for those willing to accept slightly higher risk for better cash flow.
Frequently Asked Questions About Tokyo Property Investment
What is the average rental yield in Tokyo?
Tokyo’s average gross rental yield stands at 3.8% according to E-Housing’s 2025 analysis. However, this figure masks significant variation: Central 5 Wards average 2.8-3.5%, while outer wards like Adachi reach 5-6%. Net yields after management fees, taxes, and vacancies typically run 2.0-3.4%, with outer wards maintaining their advantage.
Which Tokyo ward has the highest ROI for property investment?
Adachi Ward delivers the highest consistent ROI at 5.2-6.0% gross yield. Katsushika and Edogawa follow closely at 5.0-5.8% and 4.8-5.5% respectively. For total return including appreciation, Setagaya Ward’s 21.3% rental growth in 2025 made it the top performer, though at lower yield levels.
Can foreigners buy investment property in Tokyo?
Japan places no restrictions on foreign property ownership. Non-residents and residents have identical purchasing rights. Starting April 2026, buyers must disclose nationality when registering ownership, but this doesn’t restrict purchases. The main barrier for overseas investors is financing—Japanese banks require permanent residency for mortgages, meaning non-resident buyers typically purchase with cash.
Is it better to invest inside or outside the Yamanote Line?
Properties inside the Yamanote Line (central Tokyo) offer lower yields but higher liquidity and appreciation potential. Properties outside deliver better cash flow but face higher vacancy risk during downturns. As REthink Tokyo notes, investments within the 23 wards are generally safest, with another quality gap between properties inside versus outside the Yamanote loop. Match your choice to your investment goals: appreciation seekers should stay inside, yield hunters can venture outside.
What are the total costs of buying an investment property in Tokyo?
Total acquisition costs run 5-7% of purchase price. This includes agent commission (3% + ¥60,000 + tax), real estate acquisition tax (3% of assessed value), registration tax (0.4-2%), stamp duty (¥10,000-480,000), and legal fees (¥50,000-150,000). Annual holding costs add approximately 1.7% of assessed value in property taxes plus management and repair reserve fees averaging ¥30,000-40,000 monthly.
Taking the Next Step
Tokyo apartment investment rewards patience and research. The ward you choose matters more than timing the market—select based on your return requirements and risk tolerance, not headlines about price movements.
Three action items to start your investment journey:
- Define your budget and yield target before viewing any properties
- Study 3-4 target wards using the yield data above
- Connect with a bilingual agent experienced in working with foreign investors
The market isn’t going anywhere. Take the time to understand it properly.