Israel’s luxury home market came on strong in 2013, with the most action it has seen in three years. But the tiny market for super-pricey real estate at 10 million shekels ($2.85 million) or more remained in a rut.
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Although there has been no shortage of homes on the market in the eight-digit category, the number of sales in this league remained little changed from 2012 and was down from the two previous years.
Classified as homes of at least 5 million shekels in value, Israel’s luxury homes make up just 0.5% of the housing market. In 2013 there were 587 properties sold in this category, compared with 480 in 2012, 550 in 2011 and a hefty 649 in 2010. In the 10-million-shekel-and-up segment, 112 sales were registered, exactly the same number as in 2012 but down from the 124 in 2011 and 131 in 2010.
Realtors dealing with super-luxury properties have trouble offering a clear explanation for the market’s poor showing. Some cite the dwindling presence of foreign residents in the market. Others say the super wealthy, particularly from abroad, see the market as something of a bubble and are reluctant to enter.
But everyone agrees that it’s a capricious, unpredictable segment, and all that’s needed to change the picture is one Tel Aviv luxury tower that wealthy foreigners find attractive.
Developers carried away
Israeli real estate operators admit that developers might have gotten carried away with prices at the high end following a number of spectacularly priced sales at the end of the last decade. These include penthouses that were bought for 110 million shekels each by Russian oligarchs Valery Kogan and Alexander Mashkevich in the Sea One tower on Tel Aviv’s beachside Herbert Samuel promenade.
Not long before, Kogan had bought seven homes in the seaside resort town of Caesarea to create a huge mansion. Money clearly wasn’t an issue.
There was also a duplex penthouse bought by Eyal Ofer for 115 million shekels in a tower built by Ofer Properties at 10 Herbert Samuel Blvd. in Tel Aviv. But this transaction was unusual because of the connection between buyer and developer.
In any case, at the end of 2012, the Dan group, through its Emed Real Estate arm, said it would be offering the penthouse in the 29-story tower being built at 17 Arlosoroff St. in Tel Aviv. The price: 200 million shekels. It’s hard to believe that people at the company thought it could fetch even half.
Several sales for penthouses in luxury towers like Rothschild 1, Beeri-Nehardea and Frishman 46 closed between 60 million and 80 million shekels, which seems to better reflect the price to which developers should aspire if they want to sell their properties.
It was in the “ordinary” luxury segment, where prices range from 5 million to 10 million shekels, where business actually picked up. The number of sales in this category climbed 29% from 368 in 2012 to 475 in 2013, with most of increase at the lower end of the range, or 5 million to 6 million shekels. There the number of properties sold jumped 46% to 242.
Assuming most of this market consists of Israelis rather than foreigners, the increase probably reflects the steep rise in housing prices, which convinced buyers who originally planned to buy for under 5 million shekels to give in and go higher. The willingness to buy homes at such steep prices can be seen as a no-confidence vote in the government’s ability to rein in prices.
The country’s top-priced sale in 2013 was 81.46 million shekels for a 612-square-meter apartment on the 17th floor of the David Promenade Residences being built by Henry Taic at 51 Hayarkon St. in Tel Aviv. The runner-up was a 560-square-meter, four-room apartment on the fourth floor of the six-floor Lenox Nachmani project going up at 45 Ahad Ha’am St. The buyer, according to media reports, was Amdocs founder Avi Naor, who paid 79.4 million shekels.
Coming in third was a nine-room villa with a swimming pool and tennis court at 59 Hasadot Rd. in Kfar Shmaryahu belonging to tycoon David Federman, who sold it for 55.1 million shekels. Next at 48.53 million shekels was a 752-square-meter, 10-room home on Alexander Yanai Street in Herzliya Pituah.
In fifth place was the 48.28 million shekels received by Melisron Chairwoman Leora Ofer for an unfinished 450-square-meter mini-penthouse. That apartment covers the entire 19th floor of the 20-story high-rise at 10 Herbert Samuel Blvd. in Tel Aviv. In sixth place was 44.7 million shekels for a 646-square-meter home on Haeshel Street in Herzliyah Pituah.
In seventh place was a 32nd-floor, 400-square-meter, five-room apartment in Tel Aviv’s Akirov Elrov Towers on Pinkas Boulevard, which went for 35.44 million shekels. This was followed by 34 million shekels paid for a seven-room house on Hanuriyot Street in Herzliya Pituah.
Highest prices in the holy city
Jerusalem rounded out the list of highest-priced homes sold in 2013 with three transactions in the same area. A 158-square-meter, six-room apartment at 27 King David St., next to the King David Hotel, was sold for 29.7 million shekels. Further down the street at No. 2, a 468-square-meter, nine-room apartment went for 27.26 million shekels, and around the corner on Agron Street a 408-square-meter, nine-room unit fetched 26.38 million shekels.
Elsewhere in the country, local records were broken thanks to the climb in property prices in the past three years. For example, the sale of a Ramat Hasharon house at 20.5 million shekels topped the Tel Aviv suburb’s previous record of 14.5 million shekels. Also, the 20 million shekels trading hands in the sale of a penthouse on Netanya's David Hamelech Street was well beyond what the seaside city had seen.
Other standouts included the 5.61 million shekels for a 238-square-meter apartment on the 19th floor of a 20-story tower on Abba Hushi Boulevard, attesting to the success of new high-rises near Tel Aviv University. There was also the 3.1 million shekels for a six-room house on Yanshuf Street in Be’er Sheva, a steep price by local standards. And don’t forget the 10.3 million shekels for a 560-square-meter home in Eilat’s Shahamon neighborhood.