When the coronavirus became a global pandemic in March and much of the world retreated to the safety of their homes, thousands of expatriate Israelis – many of whom had been living overseas for decades and whose children were born abroad – returned home to Israel. Times of crisis accentuate the advantages of being surrounded by family in a friendly environment, as well as the disadvantages of living in a foreign country. Suddenly, the caring, supportive nature of Israeli society beckoned, as did Israel’s excellent, inexpensive health care system. The result was a flood of former Israelis who decided to come “home” to Israel either to ride out the storm or permanently. Many Diaspora Jews did the same. They preferred to be in the Jewish homeland, even under lockdown, rather than contend with the rising anti-Semitism in many parts of the world.
Surge in foreign investors
Israel has always been a safe haven for Jews around the world, and in the past decade, this strong connection has also translated into growing numbers of foreigners buying apartments in Israel. Some second homes in Israel are used regularly by their owners during vacations and family visits, while others are mostly viewed as a place of potential refuge that is also an attractive investment.
On a purely rational level, purchasing Israeli real estate is a wise choice. Israeli housing prices rose by over 120% in the last decade, with apartments in the most desirable areas, such as Tel Aviv and Jerusalem, becoming increasingly valuable. Construction of new housing has lagged far behind the needs of the growing population and prices have risen accordingly. Experts insist that local real estate investments will continue to increase in value over time and most properties can be sold at a considerable profit. Moreover, homeowners can easily rent their apartments and enjoy attractive returns on their investment.
Substantial upswing during Covid-19
Despite the current restrictions on international travel, Israeli real estate experts report that in the last few months there has seen a substantial upswing in foreigners looking to buy properties in Israel. One reason is that there is now a window of opportunity where prices are lower than they were pre-Covid – and most likely lower than they will be again soon. The Covid-19-induced economic slump has affected many people’s ability to pay rent and mortgages, and, as a result, fewer Israelis are buying real estate these days. Consequently, the prices of apartments in new projects as well as in older buildings are lower. Experts expect this trend to be temporary, as there is still a substantial housing shortage that will pull the prices back up.
Another important benefit for foreigners is the recent reduction in the purchase tax. In an effort to encourage investment, the new Finance Minister, Israel Katz, pushed through a significant cut in the purchase tax that applies to non-Israeli citizens buying property in Israel and to Israelis buying a second home. This translates into savings of tens of thousands of dollars on average-priced apartments, and much more on high-end properties.
The pandemic has also prompted local real estate brokers to devise ways to “see” properties for sale without having to physically visit them. Digital tours are now the norm, and drones are often dispatched to film the project and the neighborhood. Since the construction industry is considered ‘essential,’ work continues on all new projects regardless of Covid-related guidelines.
Anybody considering buying an apartment in Israel would be advised to take advantage of current market conditions and not to wait. After all, in good times as well as in bad, it is always a good idea to have a place to call home in the Jewish homeland.