Kyoto, home to 17 UNESCO World Heritage Sites, enforces strict building regulations to preserve its historic cityscape, resulting in limited new construction and strong underlying land and rental values driven by scarcity. Inbound tourism has surpassed pre-pandemic levels, reigniting demand for traditional machiya-style vacation rentals and luxury hotels. While the city offers a rare combination of cultural uniqueness and high-yield potential, it also comes with distinct regulatory challenges—such as landscape preservation ordinances and short-term rental restrictions—making a solid understanding of local rules and a well-planned strategy essential for successful investment in this unique market.
Kyoto, home to 17 World Heritage Sites designated as the "Historic Monuments of Ancient Kyoto," stands as a center of traditional culture and enjoys strong international recognition. This global appeal supports consistent tourism demand. In particular, the rising number of international travelers seeking authentic cultural experiences has driven a rapid post-pandemic recovery in accommodation demand—creating investment opportunities in renovated traditional machiya-style lodgings. With year-round attractions such as cherry blossoms, autumn foliage, and snowy landscapes, Kyoto continues to draw steady visitor traffic, making investment properties increasingly likely to offer both high added value and solid returns.
In Kyoto City, strict landscape regulations and building restrictions are in place to preserve the city’s historic scenery. New developments are particularly difficult in historically significant areas such as Higashiyama and Gion.
As a result, the scarcity of existing machiya townhouses and low-rise buildings has increased, offering investors the potential for long-term asset preservation and appreciation. While landscape preservation policies limit the range of available properties, their value as irreplaceable assets is expected to grow over the medium to long term—making Kyoto’s market particularly attractive for investors who prioritize scarcity.
International luxury hotel chains such as Park Hyatt and Four Seasons continue to expand into Kyoto, reinforcing the city’s position as a favorable destination for foreign investment. These globally recognized brands validate the reliability and profitability of Kyoto’s real estate market, while also stimulating demand for related commercial facilities and residential properties—contributing to rising property values in surrounding areas.
Combined with strict landscape preservation policies that limit new supply, real estate in Kyoto holds value not only as an income-generating asset but also as a “cultural asset” in its own right. For foreign investors, it represents an ideal destination for pursuing long-term asset preservation and growth.
When searching for investment properties in Kyoto, it's important to start by using multilingual property search portals or agencies specializing in machiya-style homes to get a feel for the market—comparing price ranges, locations, and property types. From there, you can begin narrowing down and selecting properties that catch your interest.
From there, it is essential to work with a licensed real estate agent who can provide legally required disclosures in English. During property viewings, be sure to confirm key factors such as compliance with landscape preservation ordinances, whether short-term rentals are permitted under the zoning regulations, and the property's structural earthquake reinforcement history.
While property purchases in Japan are generally made in cash, comparing loan terms in advance—between local private banks and their partner financial institutions in Japan—can expand your financing options.
If you're considering machiya townhouses or simplified lodging facilities, be aware that renovation costs—such as those for fire safety compliance and preserving traditional design elements—can often exceed initial expectations. To minimize unexpected expenses and potential restrictions on operating days after purchase, it’s essential to obtain a preliminary cost estimate from a renovation company and confirm in advance with the local authorities whether a license for operating as a lodging facility (under the ryokan business law) can be granted.
As of 2024, the average price of pre-owned condominium units across Kyoto City is approximately ¥15.62 million, with an average yield of 6.36% (*1). Rental prices are highest in the city’s central three wards—Nakagyo, Higashiyama, and Shimogyo—with Nakagyo Ward in particular commanding the highest price levels in Kyoto.
For stable long-term operations, areas like Nakagyo and Sakyo Wards are ideal, supported by consistent demand from corporate housing and students. On the other hand, short-term rentals operating year-round under a simplified lodging license (kan’i shukusho) can offer higher yields, although they typically require significant upfront costs for renovations, fire safety installations, and neighborhood consultations. Meanwhile, properties registered under the Private Lodging Business Act (minpaku), which allows operation for up to 180 days per year, face lower facility requirements but generate roughly half the annual revenue. Ultimately, aligning the license type with the location is critical to achieving profitability.
The Kyoto Basin is underlain by alluvial soil deposits from the Kamo and Katsura Rivers, which can result in additional foundation reinforcement costs during reconstruction or large-scale renovations. As such, even properties with relatively low purchase prices may carry the risk of total investment exceeding initial expectations. When evaluating a property, it is essential to review both the ground condition report and construction cost estimates, and to assess the investment based on total return—including land acquisition, construction or renovation costs, and ongoing maintenance.
In 2025, the official land price for residential areas around Karasuma Oike in Kyoto’s Nakagyo Ward is approximately ¥153,600 per square meter, while commercial land prices in core areas reach about ¥805,000 per square meter. These prices reflect ongoing steady growth in Kyoto’s land market, supported by the area’s concentration of offices, commercial facilities, and cultural amenities. Recent data from the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) highlight a continuation of this upward trend in land values for central Kyoto, including Karasuma Oike
With dual access via the JR Nara Line and Keihan Main Line, Fushimi Ward is an area where natural and historical assets—such as the Uji River and traditional sake breweries—are still preserved. Compared to central Kyoto, land and pre-owned property prices are 20–30% lower, offering greater potential for future development. As of the latest data (*3), Fushimi’s official land price is ¥165,000 per square meter, reflecting this discount. In one-room apartment investments, yields in the 7% range are achievable, supported by stable demand from nearby universities and corporate housing for manufacturing workers. Ongoing redevelopment plans also suggest potential for capital gains.
Home to iconic landmarks such as Gion, Kiyomizu-dera, and Yasaka Shrine, Higashiyama Ward boasts the highest average room rates and occupancy levels in Kyoto for machiya-style short-term rentals. Strict landscape preservation regulations limit new supply, helping to support property values. While obtaining a simplified lodging license requires significant investment in fire safety upgrades and noise mitigation, the area is well suited for high-value, culturally immersive accommodation businesses.
With access to the Shinkansen and airport limousine buses, the Kyoto Station area serves as a major gateway for both tourism and business, driving strong demand. Ongoing redevelopment—including the relocation of Kyoto City University of Arts and the expansion of the JR station complex—is contributing to rising land prices through mixed-use developments that combine hotels, offices, and residences. Guesthouses and furnished short-term rental apartments face relatively low barriers to obtaining permits, making the area well suited for cash flow–oriented investments.
Average monthly rents in Higashiyama, Nakagyo, and Shimogyo Wards stand at ¥113,500, ¥103,600, and ¥96,800 respectively, placing the city’s central three wards at the top of the rental market (*4). Reported average yields are 6.54% for individual condominium units and 7.75% for entire apartment buildings (*5). Some estimates suggest that operating a property as a short-term rental year-round (365 days) can theoretically raise yields to as high as 11.1% (*6). Because yield potential varies significantly depending on property type and licensing structure, aligning your investment strategy with the right asset is essential.
Within a two-hour drive from central Kyoto, a variety of resort destinations can be found—such as Kyotango (coastal areas and hot springs), Nantan (satoyama landscapes and thatched-roof villages), and Keihoku in Ukyo Ward (forests and mountain streams). Land and traditional kominka homes in these areas can often be acquired for 30–50% of the prices seen in the city center. While property taxes tend to be low, maintenance costs—including repairs and snow removal—are generally higher. A growing trend is to outsource key management, cleaning, and booking operations to a full-service real estate company, enabling hybrid use of the property for both personal stays and rental income.
Given Kyoto’s unique landscape ordinances, short-term rental regulations, and machiya preservation policies, the ideal real estate agency should meet the following criteria.
Partnering early with a firm that combines specialized expertise and international capabilities is the most effective way to achieve high-yield, compliance-focused investment in Kyoto.
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From brokerage to management and valuation, they offer a wide range of real estate services.
Backed by Nomura Securities' network and insights, they enables investment-focused proposals that take into account both current returns and long-term growth potential.
Major metropolitan areas across Japan
(Tokyo 23 wards, Nagoya, Osaka, Kyoto, Kobe, Sapporo, Fukuoka, etc.)
The first and only partner in Japan (*1) of Forbes Global Properties, an international luxury platform that only allows membership to top real estate companies from each country.
They selectively introduce penthouses, resorts, and condominiums priced over USD 2 million.
Tokyo’s prime districts, top resort areas like Hakuba, Furano, and Niseko.
Real Estate Japan is one of the largest portal sites in Japan with property listings for foreigners (*2), where you can research desired real estate properties by preferred area, requirements, and features.
With diverse affordable housing options available, you can easily find a home that matches your needs.
Nationwide
(*1) Source: TonTon Forbes Global Properties (https://tonton-inc.com/news/notice/3865)
(*2) Source: realestatejapan (https://realestate.co.jp/en), as of May 29, 2025