In Israel, you can go for a beach holiday, medical tourism, pilgrimage to holy places or a race to historical sights. There are many reasons to opt for the Holy Land. And although the country is not included in the list of the most popular areas for investing in real estate, there is a regular customer here. It may be worthwhile to take a closer look at the local square meters. Indeed, despite the slowdown in price growth, the real estate market in Israel remains promising. And the first to pay attention to Tel Aviv.
Tel Aviv is not only the economic and cultural center of the country, but also a beautiful Mediterranean resort. Not bad for a city of about 500,000 people in less than one district of Moscow. And there are more than enough reasons to explore the local real estate market.
A tour of the history of the market
Until 2008, real estate prices in Tel Aviv, however, as in the whole country, stagnated. And in 2008, against the background of the global crisis, the Israeli Central Bank lowered interest rates on loans and … everything changed dramatically.
It became profitable to take loans, and bank deposits lost their former attractiveness. After all, interest rates on them also fell. As a result, developers began to actively take loans for construction, and investors – to buy apartments with a view to their subsequent lease. The market quickened, prices began to rise. From 2008 to 2017, the average cost of housing in the city increased by about 2.5 times.
Of course, Tel Aviv is heterogeneous, so prices and their changes in each region should be considered separately. Even in popular locations spread impressive. For example, there are areas where the average cost per square meter is about $ 20,000, and in others – about $ 8,000. And in areas on the coast, prices can go up to $ 50,000 -100,000 per sq.m. But one can say for sure that from an investment point of view, the most interesting in Tel Aviv are the coastal areas, the center (around the City) and northern Tel Aviv.
Foreigners in the market
Foreign buyers play a significant but not decisive role in the local real estate market. Their interest is focused on the segment of elite housing (from $ 2 million) and 2-3 room investment apartments ($ 300,000-800,000), which are subsequently leased. Most often, objects are chosen on the coast (from Jaffa and to the port of Tel Aviv) and in the northern areas of the city.
The largest groups of foreign buyers are the French, Russians and Americans. The strongest players are theFrench. Few of them are lagging behind the Russians. But, unlike the French, they often buy housing for their own use, and not as an investment. True, the Russians have already paid attention to the cities nearby Tel Aviv, where property prices are about two times lower. A few years ago, deals were made on objects exclusively within Tel Aviv.
A look into the future
Since 2008, the Israeli government has been struggling hard with rising house prices: raising taxes on the purchase of second and subsequent apartments, defrosting land for construction, making discounts on housing for young couples who do not yet have their own apartments … For a long time, no action could not even slow down the market. But at the end of 2016, government efforts began to pay off. In the past six months, prices have not increased, although they have not fallen, which indicates stagnation.
What will happen next is difficult to predict. It is obvious that the rise in prices by 10-15% per year, as it was before, will not happen. At least in the context of all government measures to cool the market. But the fall in prices is not expected, even if foreign buyers reduce their activity, which is already happening.
“In general, foreign buyers“ do not make the weather ”on the market. Sometimes there is a purchase of one or another expensive property by a foreigner, but this does not affect the market. For example, I failed a deal on a house for $ 3.5 million. I represented a Russian client, and as a result I was bought up by a native Israeli, who gave more. So, unlike Bulgaria, if foreigners in general and, in particular, the Russians leave the market, then there will be no collapse on it, ” said Boris Goren, an expert on the Israeli real estate market.
Rising prices – 100% over the past 10 years
Perhaps the most famous place in Tel Aviv with a difficult fate. The boulevard is one of the four first streets of Tel Aviv, which were laid in the dunes, on the sand. The route of the boulevard repeated the direction of the ravine, which was in this place. At the time of construction there were no technical possibilities to straighten it, therefore the boulevard turned out to be arcuate. Sand was poured into the center of the ravine, which created its silhouette. Houses were built around the edges of the ravine. And in the early 30s planar and rubber plants were planted here, which have since been an integral part of the image of Tel Aviv and the boulevard, which has become the most landscaped part of the city.
In the 60-70-80-ies, the boulevard and surrounding areas experienced a period of decline. The city developed to the north, and new districts were considered more prestigious. Well-off people left Rothschild and moved north, and the boulevard and surroundings were inhabited by people with low socioeconomic status.
The situation changed in 1995, when the Tel Aviv Mayor’s Office began the boulevard revival program, which included the renovation of buildings while preserving their original historical appearance. It is for this kind of today that Rothschild Boulevard is one of the most popular holiday destinations of citizens and tourists and a prestigious place of residence. The bulk of the houses on Rothschild are houses built in the 1930s of the last century, which are now being actively restored and rebuilt, which makes them popular for living. There are also a few high-rise skyscrapers.
Yes, the standard budget housing is not found. Only “luxury”. The average cost of an apartment on the boulevard exceeds $ 1.5 million. And in the most prestigious buildings, the cost per square meter starts at $ 23,000-25,000. That is, you will have to pay $ 2.5-5 million for an apartment. But if it’s about exclusive offers, then The cost is calculated in tens of millions of dollars. For example, in 2011, the Mayer Tower skyscraper sold the most expensive apartment in Israel at that time – for $ 55 million. It occupies 3 floors, and the total area is 2,200 sq.m.
Rising prices – by 150% over the past 10 years
The Neve Tzedek settlement appeared 22 years before the foundation of Tel Aviv. Therefore, the title of the city in the city has a deeper meaning here. It has its own special atmosphere. In the 20s of the last century many writers and other representatives of the creative intelligentsia lived in this area of Tel Aviv, which left its mark. But, like Rothschild Boulevard, he had to go through a period of decline. In the 1950s and 1960s, Neve Tzedek lost its former charm and turned into an unsightly region of southern Tel Aviv, built up by the shacks of the poor of the first waves of immigration of Jewish refugees from Arab countries. True, already in the 1960s, part of the shacks were demolished and it was here that the first Tel Aviv skyscraper appeared – Migdal Shalom.
In the early 80s, the gradual restoration of the Neve Tzedek began. The creative youth began to move here, which began to return the former, long-forgotten image to the district. Began to repair old houses. And the construction of the Susan Dalal Center for the Arts became an additional magnet for the creative intelligentsia.
“Now Neve Tzedek is called“ little Paris ”, it is considered one of the most popular areas of Tel Aviv. In addition to housing and cultural facilities, there are many cafes, restaurants, boutiques of luxury clothing and jewelry.
To live in Neve Tzedek is to be inside a big city, but to be surrounded by the pastoral atmosphere of small and cozy houses by the sea. This area is one of a kind, unlike anything else in Tel Aviv, and maybe in all of Israel, ” said Boris Goren.
Thanks to the restoration program, Nevez-Tzedek has become a popular and prestigious area attracting wealthy people. And proximity to the sea – 5 minutes on foot is an extra bonus, which adds to the attractiveness of the area among foreign investors.
A distinctive feature of Neve Tzedek is the building, which consists of colorful 2-3-storey houses with red tiled roofs, some of which are divided into apartments (3-4 apartments), and some are full-fledged single-family houses. What gives potential buyers a choice between an apartment and a house within the same district.
The average cost per square meter of local real estate today stood at $ 15,500. And wealthy investors, both local and foreign, literally hunt for real estate and land in the area. In recent years, housing, well-known businessmen, actors and artists have been buying here. For example, in 2015, Roman Abramovich bought a boutique hotel in Neve Tzedek for $ 25 million, which attracted additional attention to the area.
Kerem and Taiman
Rising prices – by 200-250% over the past 10 years
Another prestigious district of Tel Aviv, which not only survived the difficult times, but from the “area of the poor” turned into a symbol of prosperity. The Kerem and Taimanim district, which means “Yemenite vineyard”, was one of 11 districts created before the founding of Tel Aviv – at the very beginning of the 20th century.
Located between the streets of Alenbi from the north and the mosque Hassan Beck from the south. The border of the western part of it is the sea coast, and the east ends at the famous Carmel market. Among the first inhabitants of Kerem and Taimanim were many religious Jews. And since most of the inhabitants were very poor, many houses were built of plywood and other cheap materials. Not a hint of elitism.
In the 1950s and 1970s, it was considered a non-prestigious place on the outskirts of Tel Aviv. And this is not surprising. Like any area adjacent to the market, it served as a “base” for the homeless, beggars and other strange personalities. Therefore, it was not necessary to talk about interest in him from wealthy Israelis, and even more so from foreigners.
But gradually the district began to transform. In the 80s-90s and, especially, in the 2000s, Kerem and Taimanim changed a lot. It allowed to build houses up to 6 floors, and on the waterfront built several new apartment-hotels, such as Royal Beach and Herbert Samuel 10.
Today Kerem and Taimanim is considered to be one of the most prestigious areas of Tel Aviv, in which real estate investors from different countries of the world are interested in real estate. In just 10-15 years, he gained a new status. And in many respects this was due to the good location. In fact, Kerem and Taimanim is located in the very center of the city, that is, next to other busy and prestigious areas of Tel Aviv and, at the same time, near the sea.
“In 2012, in the Royal Beach complex, Israel’s most expensive penthouse was sold to an unknown Russian oligarch for $ 35 million. By the way, now this same penthouse, but with a new finish is sold for $ 150 million, ” added Boris Goren.
The area is characterized by low buildings from one to two-story houses with large courtyards and narrow winding streets. But in recent years it has been actively rebuilt and built up. This is especially true of the coastal zone. Instead of small houses, 4-6-storey houses grow “inside” the area and super-elite complexes on the first line from the sea.
“The area is very popular among the French and quite a few Russians bought apartments in new houses here. The embankment is generally unique: new multi-storey buildings with apartments overlooking the sea and the beach “across the street” make Kerem and Taimanim the only option for people who want to have a sea view. This is what sellers who charge higher prices enjoy, ” notes Boris Goren.
Average prices “inside” the area, without a view of the sea are $ 12,000-15,000 per sq.m. But in the houses “with a view” cost per square meter is $ 20,000-30,000. Although, it can reach $ 40,000-50,000.