Shizuoka City tops list for condo average gross yields in 2024 first half

On July 23rd, income-earning real estate focused property portal Kenbiya announced the results of its report on 2024 First Half High Yield Rankings for residential income properties in government-designated cities.  

What is a government-designated city?

In Japan, the term "designated city" (政令指定都市, seirei shitei toshi) refers to cities with a population of over 500,000 that have been officially designated by the Japanese Cabinet under Article 252, Section 19, of the Local Autonomy Law.

These cities, also known as designated cities (指定都市, shitei toshi) or government ordinance cities (政令市, seirei shi), hold significant administrative and governance responsibilities. 

Designated cities are empowered to carry out many functions typically managed by prefectural governments.

These include: 

• Public Education: Overseeing local schools and educational programs. 

• Social Welfare: Implementing social services and support programs. 

• Sanitation: Managing public health and cleanliness initiatives. 

• Business Licensing: Issuing licenses for various businesses and services. 

• Urban Planning: Coordinating city development and infrastructure projects. 

While city governments handle routine administrative tasks, prefectural governments maintain authority over major decisions.

For instance, designated city governments can license small pharmacies and clinics, but the licensing of larger pharmacies and hospitals is managed at the prefectural level. 

Designated cities must organize into wards (区, ku), like boroughs in other major cities like London or New York City.

Each ward has its own office responsible for: 

• Resident Registration: Managing local resident records. 

• Tax Collection: Handling municipal tax administration. 

• Business Licensing and Permits: Overseeing local business operations and construction permits. 

The powers and responsibilities of these ward offices are defined by municipal ordinances, ensuring that local governance is both effective and tailored to community needs. 

It’s important to note that Tokyo’s 23 special wards do not fall under the designated city system.  

As a prefecture, Tokyo’s wards function as independent cities.

This analysis, based on new property listings on the portal site from January to June 2024, highlights the top-performing cities in terms of average gross yields for the following categories:  

• Strata-title condominiums  

• Wood-frame whole buildings  

• Reinforced concrete whole buildings 

Rankings provided by Kenbiya, edited by Patience Realty. 

The top three yields per property categories clock in as follows: 

Japan Strata-Title Condominium Average Gross Yields 

• Shizuoka City: 18.09% (average price: ¥5.83 million) 

• Niigata City: 15.59% (average price: ¥5.77 million) 

• Kitakyushu City: 14.89% (average price: ¥4.02 million) 

Japan Wood-Frame Whole Building Average Gross Yields 

• Niigata City: 14.89% (average price: ¥42.88 million) 

• Shizuoka City: 11.28% (average price: ¥43.86 million) 

• Kitakyushu City: 11.10% (average price: ¥57.04 million) 

Reinforced Concrete Whole Building Average Gross Yields 

• Niigata City: 11.18% (average price: ¥144.05 million) 

• Kitakyushu City: 11.16% (average price: ¥175.69 million) 

• Okayama City: 10.17% (average price: ¥122.63 million) 

Shizuoka City regained the top spot for subdivided apartments for the first time in four periods since the first half of 2022.  

Meanwhile, Niigata City continued its dominance in whole apartment buildings for the 11th consecutive period since the first half of 2019 and maintained its lead in whole condominium buildings for the fourth consecutive period. 

Out of the 20 government-designated cities, the yield rate increased compared to the previous 6 months in: 

• 9 cities for strata-title condominiums 

• 10 cities for wood-frame whole buildings 

• 10 cities for reinforced concrete whole buildings 

Hamamatsu City and Kumamoto City experienced yield increases across all property categories, showcasing robust investment potential.  

In contrast, Sapporo City, Sendai City, and Osaka City saw a decline in yield rates. 

Sources: 

R.E. Port News (Japanese only) 

Kenbiya (Japanese only)