Osaka is one of the biggest and most popular cities in Japan.
As one of the commercial centers, attracting people from not only Japan but all over the world, you can do great property deals, if you do your research thoroughly.
The demand is in decline in Tokyo, at the same time as the market is heating up in Osaka. In this article, I explain the essentials you need to know when buying property in Osaka.
Property market outlook in Osaka
Osaka is the second largest city in Japan and a popular destination for foreigners and investors for many reasons. It’s been ranked as the third safest city in the world by the Economist’s Safe Cities Index.
Known for its fusion of traditional and westernized architecture, busy nightlife and easy access to modern day luxuries makes it a popular choice.
This is why property prices are higher compared to most of the other Japanese cities, except Tokyo. The past couple of years, the asking prices for second-hand apartments have been static or dropped during periods of time.
If you compare Osaka with Nagoya, Yokohama, and Tokyo, the market in Osaka has performed the worst.
For example, second-hand apartments in the size of around 70 square meters have not even increased in value, but seen price drops.
Compared to Tokyo, where the number of sold condominiums is increasing, Osaka has seen a decline in sold condominiums.
On the other hand:
The land sales are on the rise in the city, but again, not as high as in Tokyo.
There’s also a surplus of houses, just like in other Japanese cities. As Japan is expected to lose 1/3 of its population in the next 50 years, you’ll be able to find more abundant property.
Osaka’s population has declined compared to 50 years ago
The population of Osaka was more than 3 million in 1965, but today, it’s around 2.5 million.
This affects the housing market badly in the country. If you compare Japanese cities, you’ll find that Osaka is among the worst hit cities due to the declining population.
If you go to Osaka, you’ll probably notice a notable construction of residential properties, though, there’s almost a two digit decrease in the number of new condominiums.
So how are the prices compared to other cities in Japan?
Overall, Osaka is expensive compared to other cities, like Nagoya and Yokohama, but properties are generally cheaper compared to Tokyo.
Osaka is a great city that offers the same lifestyle and luxuries as Tokyo does. Buying a property here instead of Tokyo can save you a lot of money.
Bear in mind though:
There are also other options, where you can buy property for lesser price, like in Nagoya.
Where should I buy property in Osaka?
When it’s true that the property market is not doing great in Osaka, you can still make good money out of your investment, if you know where to buy property in the city.
Osaka was once an industrial city that turned into a financial center. But now it is evolving into a popular tourist hub spot.
With ambitious future plans by local government that include casinos, luxury hotels, mega shopping centers, and convention centers to attract more foreign tourists, you can expect a growth in property prices in the next few years.
Osaka and its wards
Osaka is divided into 24 administrative wards, but not every ward is popular among foreigners. The two most popular areas in Central Osaka are Kita and Minami.
Let’s have a look at these places and some other areas that are popular.
Kita is the main business district in Osaka and a relatively new commercial center. Property prices are usually higher here, compared to other areas.
The commercial complex is called Umeda and has the most of the skyscrapers in the city.
Many foreigners live in this area as it’s the commercial hub and main business district. The area is also known for its vibrant nightlife, bars, clubs, and high-end restaurants.
You can also travel to other parts of Japan easily as Umeda station is also in this area. This station is ranked as the busiest train station in Western Japan.
The average rent is higher than other parts of the city. Rents averages at around $1200 a month for a 2 bedroom apartment, giving you the opportunity to earn great money on rental incomes.
Minami is situated right in the city center. You can also find many foreigners living in this area as it’s known for its shopping malls, restaurants and thriving nightlife.
Before the commercial center was shifted to Kita, Minami was the city’s main commercial hub. It’s also a large area that consists of two wards, Naniwa and Chuo.
You’ll also have easy access to transportation through the Namba train station which is located in Minami.
The residential areas around Namba station are the most expensive in the city as Namba is known as the entertainment and shopping mecca.
Prices are slightly lower compared to Kita, but still fairly high.
The rents here are also high, but slightly lower than Kita. You can expect to earn $1000 on average, for 2 bedroom apartments.
The area around Tennoji station is known as Tennoji.
You can find a large number of foreigners living in this area as well, mainly due to the easy access to transportation.
It’s important to buy property close to transportation, universities, parks , something I’ve mentioned in my article about Bangkok as well.
The area has developed in the last few years, so most of the apartments and homes here are relatively new compared to other areas.
You can also find restaurants, shopping malls, clubs, and other modern day luxuries in abundance here.
Japan’s tallest building, Abeno Harukas along with Osaka’s only zoo is also situated in the same area.
The rents here are slightly lower and around $750 for 2 bedroom apartments.
But buying property here makes sense as the area is still underdeveloped and can become the entertainment hub of the city, after completion of ongoing projects.
Kyobashi is also situated in the center of Osaka, around the Kyobashi station.
It’s a major commercial center, situated right beside Udema, which is the main business center.
You can find many major attractions in this area, other than shopping malls, restaurants and other luxuries.
For example, Osaka Castle Park, Sakuranomiya Park, and Tenmangu Shrine are located in the same area.
This is a family-friendly district, mostly popular among foreigners with kids.
The average rent here is lower than most of the above mentioned areas, averaging at $900 for 2 bedroom apartment.
Situated in the outskirts of Osaka (20 minutes away from city center), the newly developed Suita City is also packed with all the modern day luxuries.
It’s also a popular tourist destination. You can find scenic hiking trails, forests, and many well-maintained gardens in this area.
There are many new residential projects in this area. Making an investment in Suita City can be a good choice as it’s attracting a lot of locals and foreigners who are looking for a more peaceful and greener place to live, more far away from the city.
Summary of property prices in Osaka
The most expensive wards in Osaka are Fukushima, Kita, Chuo, Hishi, Naniwa and Miyakojima.
The cheapest wards for property prices and rent are Hirano, Suminoe, Tsurumi, and Higashi Sumiyoshi.
Real estate agents
Buying property in Osaka on your own is not an easy task.
Osaka is big with hundreds of neighborhoods. You often have to do extensive research before buying a property.
On top of that, the language barrier and unique Japanese rules and regulations make it more difficult.
The best course of action is to work with a well-known local real estate agent. Some of them are:
a. Century 21 Global
b. Real Estate Japan
c. All Japan Real Estate
How high are the rental yields?
Rental yields are higher than other cities, except for Tokyo. But the year-on-year increase here is low.
Population in Japan started to shrink few years ago. The annual population growth rate of Japan is -0.1%, so the year-on-year rental yields are not high. Add the surplus of housing on top of that.
But it also depends on the property you buy.
If you own a modern new apartment in the busy commercial area, you can have higher rental yields compared to traditional family houses.
Apartment occupancy rate
The apartment occupancy rate is high in Osaka and on the rise, compared to Yokohama, Sapporo, Sendai, Fukuoka, and Nagoya.
The apartment occupancy rate in Osaka is only second to Tokyo, where it’s more than 97%, as of the moment I’m writing this article.
Compared to other cities, the increase in rents in Osaka is average. It’s less than Yokohama if you compare year-on-year increase, but more than Tokyo.
Simply put, the rental yields in Japan have increased by an average of around 3-4% a year, but in Osaka rental yields increased by not even 1% a year.
Osaka is one of the commercial centers in Japan, property prices are expensive, second after Tokyo.
Even if the rental yields are low and the property market has performed badly, you can still find good deals in the central commercial areas.
Rentals ranges up to USD 1200/month which is not bad for a 2 bedroom apartment.
One of the main issues is the declining population in Japan and the oversupply of housing. But bigger cities always attract people thanks to urbanization, you just need to do your research thoroghly.