Sales of Luxury Homes in Israel Returning to Peak Levels

Map of top-end Israeli real estate: Most expensive homes sold in Tel Aviv, Jerusalem, Netanya and Herzliya last year.

Illustration

The claim that Israel’s rich are buying more and more apartments and houses, while young couples find it very difficult to buy their first home, has received quite a bit of support from the analysis of the sales of homes in 2015.

Looking at the luxury segment of the housing market, those homes sold for over 5 million shekels ($1.25 million) last year shows this sector reflected almost perfectly the behavior of real-estate investors: Sales were well above average in the first half of 2015 and the number of sales reached its peak on June 22-23, just before the new real-estate purchase tax brackets took effect. After that, the number of sales fell in the second half of the year.

In general, 2015 saw a return to luxury real estate: 826 units were sold at prices of over 5 million shekels. The only year in which more residences were sold at such prices was 2013, when 855 were sold.

Most of the luxury homes sold last year were located in Tel Aviv, Jerusalem, Netanya and Herzliya.

The most expensive home sold last year, according to data from the Israel Tax Authority, went for 87 million shekels and was located, appropriately, at 30 Rothschild Boulevard in Tel Aviv. The highest priced residence sold in Jerusalem was a 270-square-meter rooftop apartment in the Waldorf Astoria Hotel that sold for 24 million shekels. A single-family home in Herzliya Pituah went for 39 million shekels.

In Netanya, the most expensive home sold last year was a penthouse unit in the Ir Yamim neighborhood, which went for 22 million shekels; and in Ra’anana a house on Henkin Street was sold for 15 million shekels. The most expensive sale in Haifa was a unit on Abba Hushi Boulevard that sold for 6.1 million shekels.

Despite the large number of luxury homes sold in 2015, none of the deals had a price tag beyond things seen in Israel in the past. The total number of such sales rose by 19% last year, from 694 in 2014.

The high-end luxury market may attract a good bit of attention, but it is still a tiny segment of the entire Israeli housing market: About a thousand times more housing units were sold in total, 826,000, last year – so 99.999% of Israeli homes sold in 2015 cost under 5 million shekels.

The reason for the pattern of luxury home purchases, along with those of real-estate investors, was the establishment of a new government in March and the entry of Finance Minister Moshe Kahlon. Rumors began to circulate almost immediately of a decision to increase the purchase tax on real-estate for investors. And on June 24 it happened, purchase taxes were raised to 8% of the sales price for up to 4.89 million shekels, and 10% for any amount greater than that – without allowing for lower purchase tax brackets on units purchased for investment. In contrast, regular home buyers benefit from a progressive rise in purchase tax until they reach the top end of the market.

The higher taxes had a clear and direct influence on the market: In June, 165 luxury units were sold, 105 of which were in Tel Aviv. On June 22 and 23 alone, the two last days before the jump in tax, 150 luxury homes were sold all over Israel.

It is very likely that the luxury home buyers and home real-estate investors are two groups that overlap, possibly quite a lot. It can be assumed that most of those who bought the expensive homes last year own other properties too, and simply hurried last year’s purchases up to save on their taxes.

Seven luxury units sold in Haifa last year

The hands-down champion of the luxury real-estate market is Tel Aviv, with 479 such homes sold last year – 59% of all such deals in the country costing over 5 million shekels. On average over the entire year, Tel Aviv sales of such units were between 45% to 66% of all such sales in Israel, except for December, when 93% of all such sales in the entire country (23 properties) were sold in Tel Aviv alone.

As for the real top end of the market, 17 properties in Tel Aviv went for 20 million shekels or more, and two sales were for over 50 million shekels.

The problem with these data is that they rely on figures from the Tax Authority, which are not always accurate. For example, the sale of a penthouse apartment on Rothschild Boulevard to Talmon Marco, the founder and CEO of Viber, does not appear directly in the tax data because he bought two apartments and joined them together, and these are listed in the data as two separate sales.

The record for prices in Tel Aviv is still quite a bit higher: Prices on the Tel Aviv coastline have reached 100-110 million shekels in the past in purchases made by Russian oligarchs. The most expensive purchase in Tel Aviv ever was that of a single-family home on Moshe Shamir Street in the North Tel Baruch neighborhood in the north of the city by Gil Shwed, the billionaire (in dollars) founder and CEO of Check Point Software, who bought the house for 130 million shekels in July 2014.

On an annual basis, Jerusalem luxury home sales came in second, well after Tel Aviv with a total of 102 such deals of over 5 million shekels in 2015. Ten of these were for over 15 million shekels, and three were for over 20 million.

The next two cities in the luxury-home ranking last year were actually a bit further out than the traditionally highest priced area in Israel, the Tel Aviv-Givatayim-Ramat Hasharon triangle: Netanya and Herzliya.

Netanya has seen massive construction of luxury apartment towers, particularly in the Ir Yamim project and the southwestern sector of the city as well as along the seaside promenade, which has brought with it a new high in sales of over 5 million shekels last year: 63. As a point of comparison, only 14 such deals were struck in all of 2014, with a high price of 12.7 million shekels; in 2013, which was the record year for such sales in Israel, there were 19 such deals, with the highest price going for a penthouse apartment for 20 million shekels in the King David project.

Last year, a penthouse went for 22 million shekels in the Ir Yamim neighborhood in Netanya, a 231-square-meter apartment on the 22nd floor at the corner of Ehud Manor and Natan Yonatan streets.

Herzliya saw the same number of luxury deals as Netanya in 2015, 63. But as opposed to its neighbor to the north, in Herzliya most of the sales were of villas, and not apartments, in the exclusive western neighborhood of Herzliya Pituah. Herzliya saw a number of deals at over 10 million shekels, for example, two single-family homes sold for over 30 million shekels, two more at between 20-30 million, and 11 villas went for 10-20 million shekels. The most expensive was a villa in Herzllya Pituah with nine rooms and 476 square meters, which sold for just over 39 million shekels.

There were rather few such sales in Haifa last year: Only seven homes were sold for 5 million shekels or more. Most were single-family homes in the Denia neighborhood on the top of Mount Carmel overlooking the sea in the southwestern part of the city, and in two new exclusive projects in the city. The most expensive, at 6.1 million shekels, was in the Savyonei Hacarmel neighborhood, a six-room apartment on the 18th floor with 223 square meters of floor space.

Ramat Hasharon saw 22 such sales last year, and though prices are expensive there, it is still a small city and most buildings are low-rise – and usually few deals are made in the town. The most expensive sale was for a six-room villa at 8.8 million shekels, with another one going for 8.7 million.

Ten such sales were conducted in Givatayim, another pricy city just east of Tel Aviv. The most expensive sale was a 12th-floor penthouse apartment in a new building on Reines Street: 170 square meters, with two parking spots, for 7.23 million shekels.

Ra’anana saw a relatively active luxury market too last year, with 17 sales of over 5 million shekels. The most expensive deal was for a six-room house of 470 square meters on Henkin Street for 15 million shekels.

Five such deals were signed in Hod Hasharon last year, all for single-family homes. The priciest was 7.9 million shekels for a 368-square-meter home. Nearby Kfar Sava, which is not usually known for its luxury homes and such high prices, saw a villa on Hama’apilim Street sold for 5.1 million shekels.

The luxury home sector in towns south of Tel Aviv is much more sparse, with a not a single such sale in Holon, Nes Tziona or Bat Yam last year. There were no such sales in Be’er Sheva either, with only four purchases in the Negev city costing more than 3 million shekels last year, the highest price being 3.78 million for a private home of 300 square meters.

Two such deals were made in Rishon Letzion: A semi-detached home in the Nahalat Yehuda neighborhood for 5.5 million shekels was the most expensive in the city last year. The house was only three years old, with six rooms on 377 square meters. Ashdod saw one such sale at 8.1 million shekels for a six-room apartment on the 20th floor with 505 square meters on Herzl Boulevard.