Tokyo is the best city for residential-property returns, broker Savills PLC said, because Prime Minister Shinzo Abe's policies are stimulating the economy and increasing investor confidence.

Tokyo, chosen to host the 2020 Olympics, has "extremely attractive" gross rental yields of 4.7 percent compared with about 0.8 percent for Japanese 10-year bonds, Savills said in a survey of 10 global cities published Friday.

New York ranked second with a margin of 3.6 percent between rental returns and the 10-year Treasury yield, while Paris was third with a margin of 2.7 percent over its government's bonds.

Japan's real estate market is showing signs of a rebound amid efforts by Abe to revive the world's third-largest economy. Housing starts rose for an 11th month in July, the longest streak since February 2004, according to the land ministry. The value of homes in the country's capital rose 1.2 percent in the first half of this year, data compiled by Savills show.

Tokyo "looks a surprise but convincing 'buy' for investors," offering a yield at 3.9 percent over government bond rates, Yolande Barnes, a director of residential research at Savills, said in a statement. New York's "residential real estate continues to appear a sound investment both for income and capital growth potential," she said..

The survey compared gross rental income and subtracted 10-year government bond rates to allow comparisons of performance against local risks. London ranked fourth, followed by Singapore, Sydney, Hong Kong, Shanghai and Moscow.