As everyone knows, Israel is a small country with a flourishing economy and a booming population. These facts, combined with a housing shortage and a scarcity of available land, have resulted in soaring real estate prices. Experts agree that in the long-term Israeli property prices will continue to rise as developers struggle to keep up with demand, especially in the most desirable areas.
While it is still possible to find moderately-priced homes in outlying regions, buyers on a budget will have a hard time purchasing a decent apartment in high-demand locations such as Jerusalem and Tel Aviv. Renting is often an even more challenging option: the meager supply of rental apartments means that they are generally snapped up in minutes by millennials willing to pay exorbitant amounts of money for tiny, dismal flats in Tel Aviv and other popular cities. On the flip side, home owners who rent their properties enjoy substantial passive income and a high rate of return on their investment – a fact that is helping to fire the trend of investing in local real estate.
During the last decade, the real estate markets of Israel’s two main cities – Jerusalem and Tel Aviv – experienced a tidal wave of sales to foreign nationals. Jews from the United States, Europe and elsewhere have been buying a considerable share of the apartments for sale, especially in up-market residential projects. Few of these foreign buyers move to Israel permanently. Rather, they visit frequently and use the apartments as convenient pied-à-terres for themselves and their extended families. Others buy apartments in Israel as a profitable investment.
Why Tel Aviv?
Tel Aviv is the number one choice for foreigners as well as Israelis. The city offers a hard-to-resist mix of chic urbanity, fine gastronomy, outstanding culture and, of course, beautiful beaches. Moreover, Tel Aviv is the heart of the Start-Up Nation, brimming with an exciting cutting-edge vibe. Tel Aviv is both very Israeli and very international, and the city prides itself in its welcoming, pluralistic atmosphere.
If you haven’t visited Tel Aviv in the past ten years, you probably won’t recognize it. The city has undergone a major transformation. Once-shabby neighborhoods have been renovated and are now attractive and fashionable; and exclusive residential projects are everywhere.
One of the most exciting projects currently under construction in Tel Aviv is Gindi TLV, which is generating a lot of buzz and is expected to establish new standards for luxury living. Located in one of the most coveted central locations, at the corner of HaHashmonaim and Carlebach Streets, Gindi TLV is unique in that it offers community living in a quintessential Tel Aviv atmosphere.
The project, which will be completed in 2023, comprises four 48-story residential skyscrapers and eleven 14-story residential buildings featuring innovative architecture and the highest building standards. Every tower provides 24/7 security and underground parking, and each building has a magnificent lobby, a residents' club, a state-of-the-art children's club and a gym. There is also an exclusive rooftop swimming pool and lounge with magnificent views. Three-, four- and five-bedroom apartments are still available, including fabulous duplexes and penthouses.
It can be daunting to buy real estate in a foreign country, but the process is quite straightforward in Israel. If you purchase an apartment that is part of a project, the developers will be more than happy to help you with the whole process.
Israeli properties are listed according to the total number of rooms, meaning that a three-room apartment has two bedrooms and a living room. By law, all new apartments must have a “safe room” (“Mamad”), with thick walls and special windows and doors.
In addition to the actual sales price, there are several other fees that potential buyers should take into account:
Lawyer fees: On average – 1% of the purchase price plus VAT. There are plenty of experienced real estate lawyers who will know what to do, including checking the property’s legal and registration status.
Broker’s commission: If you buy from a real estate broker, you will normally have to pay 2% of the purchase price plus VAT.
Purchase tax: This is usually the largest extra cost, especially for foreigners or investors. It is calculated on a progressive scale and depends on a number of factors. For a second home, the purchase tax is 8-10%; much less for a first home. New immigrants (Olim hadashim) are exempt from paying a purchase tax.
Currency conversion and other bank fees: Take into account approximately 1% of the purchase price. For new apartments bought directly from the developers, you may have to add interest rates based on the Building Index and a lawyer’s fee for registering the property.
Other costs once the apartment is ready: As in other countries, you will have to pay monthly municipal taxes. The amount depends on the city in question and the size of the apartment. Residential buildings also collect monthly maintenance fees that cover the cost of caring for the public spaces and communal facilities.
Mortgages: Israeli banks usually finance up to 60% for foreign buyers. While mortgages are relatively easy to obtain, bear in mind that they won’t cover the extra purchasing fees.
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