Japan Tower Apartments: Rethinking Rental Yields Through Market Data

Market Insights

Introduction

Japanese tower apartments (タワーマンション) are widely regarded as premium residential assets.

They are often associated with strong locations, high liquidity, and long-term capital appreciation.

For this reason, tower apartments are traditionally viewed as less suitable for income-focused strategies, with rental yield playing a secondary role.

However, recent market data suggests a more nuanced reality.

Based on actual rental transactions, a number of tower apartments in Japan are now delivering unexpectedly high gross rental yields, in some cases exceeding 10%.

This article examines what the data reveals and how it challenges conventional assumptions.

Understanding the Metric: Gross Rental Yield

The analysis uses gross rental yield (表面利回り), calculated as:

Annual rental income ÷ original new-build purchase price

This approach highlights how properties perform relative to their entry price, rather than current market valuation.

The dataset includes:

• Rental listings from the past 12 months

• Original new-build sales prices

• Owner-occupied tower apartments with 20 floors or more

• Excludes investment-only developments

Japan Tower Apartment Rental Yield: Key Market Findings

Among the top 50 tower apartment buildings ranked by gross rental yield:

• Highest yield: 15.8% (Minato Ward, Tokyo)

• 10%+ yield: 8 buildings

• 9% range: 17 buildings

• 8% range: 27 buildings

These results indicate that, for certain properties, 8–10% gross yield is achievable, a figure rarely associated with tower apartments in traditional market narratives.

Regional Perspective: Osaka’s Strong Presence

A notable trend is the strong representation of Osaka-based properties.

High-performing buildings are concentrated in:

• Nishi Ward

• Kita Ward

• Fukushima Ward

• Naniwa Ward

Many are located in bay-area districts and long-term redevelopment zones, where infrastructure investment and urban renewal have steadily increased rental demand.

Building Age and Rental Performance

Another important insight concerns building age.

Contrary to common expectations:

• Most high-yield towers were completed between 2005 and 2006

• Nearly 60% are now 15–20 years old

• Even the newest high-performing properties are over 10 years old

This suggests that rental performance is driven more by entry timing than building age.

Capital Value vs. Income Performance

Tower apartments continue to offer advantages in terms of:

• Market transparency

• Liquidity

• Long-term desirability

However, rental efficiency follows a different logic.

High market value does not automatically translate into high rental yield.

Instead, performance depends on the relationship between historical acquisition cost and current rental levels.

For some long-term owners, holding and leasing may represent a rational alternative to selling.

Conclusion

Tower apartments in Japan are often evaluated through the lens of prestige and capital appreciation.

Recent data suggests a broader perspective is needed.

While not all towers deliver strong income returns, some significantly outperform expectations, particularly when assessed against historical purchase prices.

In an environment of rising new-build prices, understanding long-term rental dynamics has become increasingly important.

Sometimes, performance is shaped less by novelty and more by timing.

Data & Methodology

• Source: Realnet condominium data

• Scope: New-build prices and recent rental listings

• Period: Past 12 months

• Property type: Tower apartments (20+ floors), excluding investment-only buildings