The Demand for Smaller Units in Japan’s Second Tier

With the trickle-down effect of investments into the second tier markets, we analyze why smaller units in this fast-paced market only last a few weeks, or sometimes just days.

nti japanese real estate property in higashi-ku fukuoka city
A building of small units in Higashi-ku, Fukuoka City, Japan. (Image credit: NTI)

Investment Highlights

  • Location: Japan’s second tier refers to Sapporo, Fukuoka, Nagoya and other metropolitan cities outside of Tokyo, located close to colleges, schools, hospitals and shopping.
  • Features: Popular investment units are one-bedroom units with a kitchen, living room and balcony priced at approximately $30K to $50K, with a yield of 6% to 10% net pre-tax. Considering the price and yield it’s no wonder units such as this are sold almost as soon as they hit the market.

Plus, we look closely at Fukuoka, a market which has been doing very well over the last 4 to 5 years. Prices have risen 20% to 30%, to the point where new deals rarely yield anything beyond 7% net pre-tax, particularly in central locations. Investors say, even though prices have gone a bit too high for comfort, it is still one of the best places to invest in Japan.

We walk you through the factors which contributed to the sale of a one-bedroom unit in Fukuoka city’s most populous district of Higashi-ku, meaning “east ward.” We discuss the location, features, building profile, tenant profile and other investment advantages to help you understand the appeal of smaller units in this fast-paced second tier market.

For the complete analysis read more here –

This post comes from NTI (Nippon Tradings International) – a proxy and buyers’ agency, representing investors purchasing real estate in Japan. You can find more of our posts tagged NTI and/or JapanProperties and can follow us on LinkedIn or Facebook

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan.