All roads lead to Tokyo
Japanese capital named top city in residential real estate stakes, writes Peta Tomlinson
And the winner is: Tokyo. Just days after being announced as host of the 2020 Olympic Games, the Japanese capital won gold again - this time in the property stakes.
Tokyo was named as the top world city for investors seeking above-gilts income from residential property, wresting the crown from New York. In the report, prepared by Savills, double-digit growth is forecast for Tokyo by 2016.
Reporting on residential rental growth in the leading cities, Savills, which has been tipping New York for some time, describes Tokyo as the "surprise finding" of its latest analysis.
"Tokyo now also looks like a 'buy' for investors seeking income. Rental yields in Tokyo look extremely attractive in relation to the extremely low returns available on government bonds in Japan, and the city tops the Savills world cities investment ranking, ahead of New York. Paris and London are ranked third and fourth respectively," the report says.
The methodology compares residential property yields with the return on 10-year government bond yields, or gilts. This measures the extent to which real estate income is performing against the local risk environment.
Savills' findings reveal that some cities in the "New World", such as Moscow and Mumbai, look overvalued, while some "Old World" cities look good value.