The Best Places for Airbnb Investment in Japan
Japan is one of the most beautiful countries in the world, and there is no surprise it attracts numerous tourists throughout the year. This, in turn, creates conditions that allow short-term vacation rentals to thrive in the area. However, not every entrepreneur that decides to enter the market in Japan becomes successful.
There are multiple factors that play a role here, one of the most important ones being the location of your potential business. Making such a choice is extremely difficult, as each city or area in Japan may have completely different market conditions. To make this choice easier, we have compiled some crucial metrics for the most popular places in the country, estimated the competition levels there, and analyzed the performance of other short-term rentals in these areas.
Discover more about the best places to own an Airbnb in Australia and Hawaii.
The most profitable Airbnb locations in Japan
Tokyo is perhaps the most popular tourist destination in the whole country, and it might also be the first place an aspiring entrepreneur would think of. Even though the demand here is not as seasonal as in other regions of Japan, the supply becomes a problem for new market entrants. At the time of writing, there are around 8,300 active rentals in Tokyo.
This overflow of offers results in reduced Average Daily Rates that are only $98 here. Even the Occupancy Rates of 53% that do not fluctuate significantly throughout the year can hardly compensate for these low prices, resulting in average monthly revenue of only around $900.
Airbnb Legal Issues and Statistics in Tokyo.
The first area on our list is Hakone-machi. It might not be the most obvious choice at first glance, but it is a developing town that manages to attract more and more tourists every year. The property here is not as expensive as in some other places we’re going to review today, so it might be considered a valuable investment.
The Average Daily Rate of local vacation rentals is $298 throughout the year. The demand here is extremely seasonal, as the Occupancy Rate fluctuates between 23% in June and 73% in August, averaging 38% annually. The estimated monthly Revenue of local hosts is $2,800, which is rather decent, considering the low cost of investment.
As for the competition, there currently are only 300 listings active in the area. The majority of listings are entire homes, though there are more than a hundred private rooms available as well. The area of Hakone-machi is not that large, but the competition is still rather mild, especially compared to some popular locations further on our list.
Hakuba is another small area populated by fewer than 10,000 residents. Yet, during some seasons, it is still visited by enough guests to support an aspiring Airbnb entrepreneur. The Average Daily Rate here is $414 with a significant fluctuation between $527 and $330 in December and July correspondingly. A similar trend is seen on the annual Occupancy Rate graph for local vacation rentals: it spikes at 48% in August and reaches its lowest point of 13% in April, averaging only 25% throughout the year.
The Revenue of local hosts is still rather attractive, as they averagely manage to earn $2,600 per month. The competition here is a bit harsher than in Hakone-machi but is still relatively mild compared to other regions. At the time of writing, there are around 540 active Airbnb listings in Hakuba, most of which are relatively densely packed in the center of its area.
Fujikawaguchiko is another area with a similar trend in metrics as the previous ones on our list. It is relatively small and attracts most of its visitors in summer, bringing local hosts the most decent payouts of the year. The Average Daily Rate here averages $249, while the Occupancy Rate is 35% throughout the year. The average monthly Revenues of local hosts are $2,400, however, the metric reaches its peak of $5,700 in August. It means the business here is extremely seasonal.
The good news for aspiring hosts who are considering Fujikawaguchiko as an investment option relates to the low levels of competition in this region. At the time of writing, there are only around 400 active short-term rentals here. An average Airbnb in Fujikawaguchiko can host between 8 and 9 guests at a time, clearly indicating the popularity of the region among large groups of travelers.
The market of short-term rentals in Kyoto is not as large as in Tokyo but is still huge compared to most other regions. At the time of writing, there are around 3,500 active offers, most of which are densely populating the city center. The Average Daily Rate here is $141, while the Occupancy Rate of an average Airbnb here is only 24%. This results in a monthly average Revenue of $807, which is significantly lower than in most other locations.
It is another quiet area, but in contrast to the previous places we have reviewed, it is located on the shore. The key financial metrics, however, are not significantly different. For instance, the Average Daily Rate of an Airbnb in Ito is only $243, expectedly to reach its annual peak of $265 in August. The same applies to the Occupancy Rates, as they average 37% throughout the year, but reach an impressive peak of 76% in August.
Similarly to the previous locations, the Revenues of hosts in Ito are rather moderate. They average $2,300 per month. The key benefit of Ito compared to the previously reviewed locations is its area. There are only 250 active Airbnbs here, but what’s even better is that they are scattered across the shore. This implies that you won’t have to deal with many competing hosts next door.
While all the reviewed regions were located on the mainland, Ishigaki is a separate island. It is currently not as popular among tourists, but local hosts still manage to get a portion of the hype in summer. The Average Daily Rate in Ishigaki is only $187, which is connected with the relatively low prices of real estate on the island. The Occupancy Rates average 42% throughout the year.
The average monthly revenue of hosts in Ishigaki is $2,000. In total, there are only around 400 active rentals on the island, making it a convenient place for launching a new business. Most of the properties on Ishigaki are entire homes that can accept between six and seven guests at a time.
Compared to other regions of Japan, Kutchan is rather unique. Even though it is not as popular among tourists, it is considered to be one of the most luxurious destinations. The latter fact explains the Average Daily Rate in the region, which is $543. The Occupancy Rate, however, only averages 13%, as Kutchan sees almost no demand from visitors in seasons other than summer.
The average monthly Revenue of an Airbnb entrepreneur in Kutchan is $1,800, while there are only 240 properties currently listed on the platform. Considering the high costs of real estate and low levels of demand, Kutchan might not be the most beneficial location for an investment right now, but it is definitely a place with huge potential.
Moving on from Kutchan, we get back to a more typical location in Japan in terms of its market conditions. Onna is a relatively small area with access to the shore, and it has most of its short-term vacation rental properties scattered around the area. The Average Daily Rate here is $238, while the Occupancy Rate averages 32% throughout the year.
Local hosts receive $1,800 worth of monthly revenue on average, which is lower than in most other places that we have already reviewed. Nevertheless, there currently are around 500 active Airbnbs that benefit from the relatively low real estate prices. Most of the properties in Onna are entire homes that are capable of accepting from eight to nine guests at a time.
Miyakojima is another place with something unique to it. Essentially, it is an island with market conditions that are not similar to most other regions. First of all, there are only 400 active vacation rentals here. Even though most of them are concentrated in the north-western part of the island, there is still enough room for more businesses to emerge. Secondly, local properties host fewer people than in most other places in Japan, as they usually are not capable of accepting more than five people at a time.
The financial results of entrepreneurs in Miyakojima are, unfortunately, not as impressive. The Average Daily Rate here is $172, while the Occupancy Rates average 35% throughout the year. Of course, the island gets most of its visitors in summer, allowing local hosts to receive around $2,500 worth of monthly revenue. But, as we can see from the average monthly revenue of $1,400, this seasonal peak does not fully compensate for the decline of demand in other seasons.
The next location on our list is Motobu. Similar to many other regions that we have already reviewed, it has a relatively small area and the financial performance of local enterprises is rather mediocre. The Average Daily Rate in Motobu is $179, while the Occupancy Rate averages 29%. The average monthly revenue brought by short-term vacation rentals in Motobu is $1,300.
At the time of writing, there are fewer than 300 active Motobu properties listed on Airbnb. In general, Even though the annual financial results of these properties are not as decent, they make up for a great choice of seasonal hosting. Entrepreneurs that only operate during the summer seasons are almost guaranteed to remain profitable.
In Takayama, the situation with Airbnbs is almost the same as in Motobu. The Average Daily Rate in Takayama is $184, which is a bit higher than in the last place we looked into. The Occupancy Rates skyrocket from only 17% in October to 58% in August, averaging 24% throughout the year.
A similar trend is seen with the Revenues, as they jump from $740 in April to $2,500 in August, averaging $1,100 throughout the year. The competition in Takayama is hardly noticeable, as there are around 240 active properties scattered around the area. Most properties are entire homes that can accept up to seven guests at a time.
Naha is the last location on our list, and the market conditions here are almost the same as in Kyoto, but on a smaller scale. There are only 700 active rentals in Naha, but the area is also rather small, resulting in intense competition. The ADR here is only $80, while the Occupancy Rates average 32% throughout the year. The average monthly Revenue of an entrepreneur in Naha is only $628 per property.