What you need to know about the Osaka residential market

Numerous investment opportunities are available in the city.

Similar to the Tokyo residential market, Savills revealed in a report that Osaka has continued to demonstrate its strong performance, driven by sound economic and demographic fundamentals, as well as key infrastructure developments and the upcoming Integrated Resort in Yumeshima.

With increasing net migration, growing rental demand, and a limited supply of for-sale properties, the Osaka residential market offers numerous investment opportunities.

Here’s more from Savills:

Osaka is a major and diverse economic hub in the Kansai region, and Osaka City accounts for nearly half of the prefecture’s GDP, highlighting the city’s economic significance. Rental prices in the city have steadily increased at a compound annual growth rate of 2.6% since 2019.

As of Q4/2024, the average rent reached JPY 2,864 per sq m, with the central 6 wards (C6W) experiencing even higher annual growth of 3.0%, reaching JPY3,055 in the same period. That said, compared to Tokyo’s 23 wards, where the average rents are 40% higher, Osaka presents significant opportunities for further rental growth.

Net migration into Osaka has been strong despite the pandemic, particularly among foreign nationals, young workers, and students. Between 2019 and 2024, Osaka’s 24 wards (24W) saw a population increase of 1.8%, or by around 50,000 people, with a vast majority of migrants belonging in the 20-29-year-old age band. The foreign national population contributed significantly to this growth, increasing by approximately 40,000 people over the same period.

Central wards have remained popular, particularly Chuo and Naniwa, which have seen significant population growth of 16.0% and 14.1%, respectively, between 2019 and 2024. Given these strong demographic indicators, the demand for rental markets is expected to remain strong, with a significant proportion of younger workers, students, and foreign nationals more likely to be renters.

Moreover, according to a survey conducted by MLIT, nearly 55% of overall Osaka residents lived in rental housing in 2023. With a high share of renters, the supply of rental units remains strong, accounting for nearly 70% of total new housing starts in 2024.

Meanwhile, prices in the Osaka condominium market have reached new highs, with average new condo prices hitting JPY1.2 million per sq m in 2024. This increase has been driven by strong demand, rising wages, and perhaps foreign investment fuelled by a weak yen.

Moreover supply-side constraints, including rising construction costs and limited land availability, have further pushed prices upwards. While historically low mortgage rates have made purchasing more accessible, rising costs are pricing out many potential buyers, leading to a greater demand on rental properties, particularly in central areas.

Meanwhile, Osaka’s luxury segment has also seen notable growth, with high-end developments such as GRAND GREEN OSAKA transforming the city’s premium real estate market. Upscale projects in areas like Dojima cater to wealthy domestic and international buyers, driving up prices, especially, in the high-end market.

In addition, as one of Japan’s major tourism hubs, Osaka welcomed 14.6 million inbound visitors in 2024, surpassing prepandemic levels. With the upcoming Expo 2025 and the Integrated Resort slated for completion in 2030, the city’s tourism appeal is expected to grow, likely driving further demand for accommodations for both residents and tourists.

Given the declining supply, especially, of budget hotels and the rising number of inbound visitors, some investors acquire residential properties for short-term private rental accommodations (minpaku), which may further bolster demand for residential units.

Overall, the Osaka residential market is in a positive state, with strong demand supporting sound and sustained rental growth. Indeed, strong demographic fundamentals and rising prices of for-sale condo units should sustain demand in the rental residential market, and the strong rental growth trend should continue.

Additionally, record inbound tourism and limited hotel supply may also further boost demand for residential units to be used as private accommodations, which may shift additional demand to the rental residential market, further improving rental growth prospects.