What Is the Optimal Building Age for Investment? Yield by Age Range in Tokyo's 23 Wards, and Considerations on Statutory Useful Life, Loan Period, Repairs, and Exit Strategy

When searching for income properties, you often hear that "newer buildings are more reliable but have lower yields," while "older buildings offer higher yields but are harder to finance." So, how much do yields actually differ by building age? And besides yields, what else changes with building age?

This article organizes these points by analyzing sales listing data of whole-building properties in Tokyo's 23 wards (Urbalytics) aggregated by building age range. It examines the relationship between statutory useful life and loan periods, repair risks by building age, and how to think about building age from the perspective of resale (exit) planning.

Key points of this article

• The median gross yield for 1,200 whole-building properties in Tokyo's 23 wards, aggregated by building age range, showed a tendency to increase with building age: 4.6% for buildings under 10 years old and 5.3% for 31–40 years old (September 2026 sales listing data, Urbalytics, aggregated October 2, 2026).
• However, above 41 years old, the median yield plateaus around 5.0–5.2%, with yield variability (interquartile range) widening from 1.2 percentage points for properties under 10 years to 3.1 points for those over 51 years.
• Many financial institutions use "statutory useful life minus building age" as a guideline for loan duration. For example, borrowing 100 million yen at 2% interest results in annual repayments of about 4.44 million yen over 30 years, and about 7.72 million yen over 15 years, meaning building age greatly affects cash flow.

Is there a “correct answer” for the ideal building age for investment?

In conclusion, there is no single optimal building age that applies to all investors. This is because building age simultaneously affects yield, loan period, repair costs, and ease of resale, and the ideal age depends on which factors an investor prioritizes.

Generally, newer properties have lower yields but are easier to finance with long-term loans and often require fewer repairs, while older properties typically offer higher yields but have shorter loan terms and greater uncertainty in repairs and exit strategy. We will confirm these points with data and related regulations below. A comprehensive checklist for selecting properties is summarized in How to Choose Investment Properties.

Yield distribution by building age range (Tokyo 23 wards, whole-building properties)

Among whole-building properties (BUILDING) registered in Urbalytics in Tokyo's 23 wards, 1,200 properties with sales listing or price changes in September 2026, priced between 50 million yen and 500 million yen with annual income and building age specified, were aggregated by building age range.

Building Age Range	Number of Properties	Gross Yield 25th Percentile	Gross Yield Median	Gross Yield 75th Percentile	Median Listing Price	Median Listing Price per ㎡ of Building
Within 10 years	417	4.10%	4.60%	5.26%	228 million yen	1.101 million yen
11–20 years	123	4.20%	4.78%	5.61%	168 million yen	895,000 yen
21–30 years	101	4.00%	4.76%	5.50%	180 million yen	794,000 yen
31–40 years	333	4.29%	5.28%	6.07%	180 million yen	700,000 yen
41–50 years	127	3.93%	5.02%	6.25%	158 million yen	732,000 yen
Over 51 years	99	3.80%	5.17%	6.94%	177 million yen	640,000 yen

Source: Urbalytics sales listing data (whole-building properties, Tokyo 23 wards = postal codes 100–179, properties listed or price changed between September 1–30, 2026, price range 50 million to 500 million yen). Aggregated October 2, 2026. Building age is 2026 minus construction year. Gross yield is annual income listed at time of sale ÷ sale price, not the contracted price. Duplicate listings with identical sale price, building area, and construction year were consolidated into one entry; gross yields below 0.5% or above 30% were excluded (total data points aggregated were 1,200). Since data does not separate by structure (wooden, steel frame, RC), totals include all structures.

There are three observations from this table:

• Up to 40 years old, older buildings tend to have higher yields. The median rises about 0.7 points from 4.60% (under 10 years) to 5.28% (31–40 years). Sale price per ㎡ decreases from 1.1 million yen to 700,000 yen, reflecting building value depreciation in the price.
• Above 41 years, yields plateau. The median yield remains around 5.02–5.17%, lower than the 31–40 year range. Older buildings in the 23 wards are often priced based more on land value than rental income, limiting yield growth.
• Older buildings have greater variability (“hit or miss”). The interquartile range is 1.16 points for under 10 years and expands to 3.14 points for over 51 years. High-yield older properties require individual investigation into reasons such as vacancy, repairs, or redevelopment feasibility.

Note that gross yield does not deduct operating expenses. Because repair costs tend to increase with building age, net yield differences between newer and older buildings are narrower than shown here.

Relationship Between Statutory Useful Life and Loan Period

Building age strongly influences investment decisions because many financial institutions use the remaining statutory useful life as a guideline for loan duration. The statutory useful life is the number of years used for tax depreciation and does not represent the physical building lifespan, but it is widely used as a loan assessment standard.

Structure (Residential)	Statutory Useful Life	Remaining Life at 10 Years Old	Remaining Life at 20 Years Old	Remaining Life at 30 Years Old
Wooden	22 years	12 years	2 years	Exceeded
Light Steel Frame (frame thickness over 3mm up to 4mm)	27 years	17 years	7 years	Exceeded
Heavy Steel Frame (frame thickness over 4mm)	34 years	24 years	14 years	4 years
Reinforced Concrete (RC) / Steel Reinforced Concrete (SRC)	47 years	37 years	27 years	17 years

Source: Ordinance on the Useful Lives of Depreciable Assets (residential buildings). For light steel frame with frame thickness 3mm or less, the statutory useful life is 19 years.

By financial institution type, general tendencies include (individual conditions vary by timing and borrower attributes):

• City banks and many regional banks: tend to set loan periods within the remaining statutory useful life, so older wooden buildings often have shorter loan durations.
• Some regional banks, credit associations, and credit unions: may use their own set "economic useful life," lending beyond the statutory useful life. Often, this requires that the property location and borrower’s address or workplace fall within the bank’s service area.
• Non-bank lenders: can accommodate properties exceeding statutory useful life or those not eligible for rebuilding, but usually charge higher interest rates and require larger down payments.

Differences in loan period directly affect annual repayment amounts. Assuming a 100 million yen loan at 2% interest with equal principal and interest payments, the annual repayments are approximately:

Loan Period	Annual Repayment
35 years	Approximately 3.98 million yen
30 years	Approximately 4.44 million yen
20 years	Approximately 6.07 million yen
15 years	Approximately 7.72 million yen
10 years	Approximately 11.04 million yen

For example, purchasing a property priced at 125 million yen with a 5% gross yield (annual full-occupancy rent 6.25 million yen) funded by a 100 million yen loan, there is a cash flow surplus after repayments if the loan period is 30 years, but if 15 years, the rental income mostly goes to repayments and expenses would cause negative cash flow. Even older properties with higher gross yields may yield less cash flow in hand if loan periods are short. Loan assessment basics are explained in Real Estate Investment Loan Basics, and how financial institutions evaluate properties in Bank Valuation, Cost Approach and Income Approach.