In the Tel Aviv real estate market, the center still holds
Jaffa is still the place for investors, and peripheral neighborhoods like Kfar Shalem, Kiryat Shalom and Neve Sharett are heating up.
The big new trend TheMarker identified a year ago in the Tel Aviv real estate market was a shift to the south, and this year that trend is expected to continue. Over the past year, many new apartment buildings aimed at investors were built, mostly in the south Tel Aviv Florentin neighborhood, for young renters and others who have been priced out of rentals in central and northern areas of the city.
These more expensive neighborhoods — central Tel Aviv, known as Lev Ha’ir, as well as both the “new” and “old” north — have kept their value, with prices little unchanged from a year ago. Of course, prices rise together with proximity to the city’s beaches: Properties to the west of Dizengoff Street cost up to 20% more than similar ones to the east. One can also expect to pay more on the quiet, small streets in those neighborhoods and near Kikar Hamedina than on main streets.
No major changes are expected this coming year in prices in these areas, though a number of new and refurbished apartments are expected to come on the market as more apartment buildings are renovated and reinforced against earthquakes under National Master Plan 38.
While for now the old north and center seem to have approached price saturation, certain areas in the southwest part of the center are heating up, such as the one between Herzl Street and the Carmel Market, where prices of apartments on some side streets have risen 10%. Older and smaller apartments (50 square meters) in this area have been sold for between 1.8 million shekels ($518,000) and 2 million shekels, while new, 100-square-meter apartments in the area go for 3 million shekels to 3.5 million shekels. Only a few dozen meters away, in projects on streets such as Nahalat Binyamin and Balfour, the prices can reach 5 million shekels to 12 million shekels.
Luxury high-rises in the Park Tzameret neighborhood are a different story altogether. On average prices remained stable, after several years of steep increases. In some buildings, such as the W and NAM towers, prices rose in 2013, albeit more slowly than in previous years. In other buildings prices remained were stable, while the prestigious Yoo Tel Aviv even saw a slight decline in prices. Three additional big towers should be ready for occupancy later this year, a factor thought to be contributing to price stability in the neighborhood.
As in 2013, Tel Aviv’s eastern and southern neighborhoods, and Jaffa above all, remain the liveliest real estate markets in the city. Prices are reasonable for buyers who intend to live in their new acquisitions, alongside a huge potential for those looking to invest. Except for the Flea Market area, where for years the prices have resembled those of the fancier northern neighborhoods; almost all the rest of Jaffa’s neighborhoods have shown price rises of 10% to 15%. Here too, the nearer the sea, the higher the price — though prices also rise as you move north, closer to Tel Aviv.
Florentin offers the most new construction in Tel Aviv, with hundreds of new apartments expected to be occupied this year, out of some 2,000 to be finished in the next few years. Almost all the new apartments are small, but demand is fierce, though prices are somewhat stable because of the new offerings. If Finance Minister Yair Lapid’s plan to cancel VAT on the smallest, most inexpensive apartments applies to Tel Aviv too, then this could increase demand, tough it is not clear what would happen to prices.
The high-demand areas are moving farther east this year, into Neveh Sha’anan; while more young couples are moving into Kiryat Shalom, too, though this has yet to push prices up much.
Neighborhoods in the southeast, such as Kfar Shalem and Neve Eliezer, may see higher prices as the parks in the area continue to be developed. In some of these areas prices rose 10% last year.
The most interesting real estate development in the north of the city is in the Mashtela neighborhood, where over 700 apartments are under construction. Three projects in Neve Sharett will add 1,000 more. This large supply has kept keep prices in check, after years of big increases. Prices of secondhand apartments have been hit particularly hard in the area, as the bargaining power of sellers has been significantly eroded.
Another area with a lot of new building is also in the north, but to the west of the coastal highway — Azorei Hen, Ramat Aviv Hehadasha and Gush Hagadol. Prices are flat to slightly up, except for penthouses and other high floors with a view of the sea, where they continue to climb.
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