Study: Tel Aviv property prices among highest in Mideast - Haaretz

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Thu., November 29, 2007 Kislev 19, 5768

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Last update - 09:42 29/11/2007

Study: Tel Aviv property prices among highest in Mideast

By Raz Smolsky, The Marker Correspondent

Tags: property, Tel Aviv, rent

The prices of apartments in central Tel Aviv are among the highest in the Middle East, says a study by Global Property Guide. It found that the average price per square meter in the city is $5,000. Dubai is second with an average cost of $4,000 per square meter, followed by Tunis, the capital of Tunisia, with at $2,500 per square meter.

Cairo, capital of Egypt, has the lowest apartment prices, at just $400 per square meter on average, but with highest yield from rents, about 11 percent. Tel Aviv ranks eighth in average yield, at 6 percent. Jordanian capital Amman came second on yields from rentals, at 10 percent.

The reason for the high yields in Tel Aviv is demand, and shortage of apartments that have led to soaring rents. Flat owners have raised the dollar rental prices to counter the dropping dollar-shekel exchange rate, and split apartments to push up yields.

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With the slowdown in the U.S. and European housing markets, investors can find bargains in the Middle East. Nevertheless, some investors shy away from the area because of the political and security situation.

In Marrakesh, Morrocco, for instance, yields of nearly 9 percent are available on 60-square-meter apartments, and in Cairo's Maadi neighborhood, investors can generally get double-digit earnings of up to 17 percent on a 250-square-meter apartment. In Europe, by contrast, earning from rentals is quite low as a result of the rising cost of apartments over the past decade. An apartment in Paris can yield about 4.5 percent, and in Spain, earnings of between 2-4 percent just barely cover the cost of an investment.

Investors that have come to the region will find the costs involved in purchasing or selling an apartment in the Middle East, such as registration, legal fees, brokerage fees and taxes, are low or mid-range.

The nation with the highest costs associated with buying an apartment and selling it ("the turnaround cost") is in Jordan, reaching 15 percent of the apartment's value. Israel is in fourth place, at 10 percent of the value of the property, similar to Lebanon (ranked sixth) and Tunisia (fifth). The lowest transaction costs are found in Dubai, at about 3 percent of the value of the property.

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