You wouldn’t guess it from looking at the cranes at work erecting luxury residences along the Tel Aviv and Netanya beachfront or in central Jerusalem, but fewer foreigners are buying real estate in Israel than a decade ago. Demand peaked at 6,000 to 7,000 home sales to foreigners annually before the real estate bubble burst and the global economic crisis gripped the United States and Europe in 2007 and 2008. But in recent years foreigners have been snapping up properties at a rate of 4,000 to 5,000 units, with interest particularly among Jews from North America, Britain and France.
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That represents just 4% of the market, but with almost all of these homes selling for the multi-millions of dollars, foreigners play an outsized role in the building industry. Indeed, in the select areas of Israel where they like to buy and live — seaside penthouse apartments in Tel Aviv and private homes in Jerusalem’s German Colony and in Herzliya Pituah — they constitute nearly all the demand. Luxury neighborhoods are inhabited by Diaspora Jews, a few wealthy Israelis and a sprinkling of presidential candidates. But the fact is, many foreigners are buying in less expensive locations along the Mediterranean coast.
TheMarker surveys the latest market trends.
Tel Aviv: Center of the universe
With its Mediterranean views, beaches and night life, Israel’s commercial center tops the list for many overseas purchasers, offering both business and pleasure in the same city. Some purchase with an eye to perhaps making Tel Aviv their second home for now and their primary residence sometime in the future.
Tel Aviv has a wide variety of apartments, ranging from small one-bedroom units in old buildings near the beach that start at 1.8 million shekels ($520,000) and reach up to 2.5 million shekels, depending on the unit’s condition, its location, the view and whether it has parking and an elevator. Further up the beachfront one finds some of Israel’s most expensive homes, many of them in new projects such as David Promenade, 10 Herbert Samuel and Sea One.
This year Canadian Jewish billionaire Sylvan Adams purchased an apartment at the Ofer Brothers’ 10 Herbert Samuel project on the Tel Aviv waterfront that, according to real estate sources, cost 110 million to 120 million shekels. Those with a smaller budget can find 200-square-meter units covering half a floor with 30-square-meter balconies for 17 million to 20 million shekels.
“Most of the apartments are being sold to buyers who still live aborad because of business, but they have a strong connection to Israel and want to make aliyah in the coming years,” says Samuel Van Kote, who is an agent for luxury real estate agency Neot Shiran.
Residents have been living in the Faire Fund’s project at 96 Hayarkon for a year, but two apartments are still for sale. One is a four-room 294-square-meter (3,165 square foot) unit on the fourth floor with a huge 196-square-meter balcony going for 19.5 million shekels. One floor up is a three-room, 133-square-meter apartment with a 20-square-meter balcony available for 11 million shekels. The nine-floor project integrates a restored Bauhaus building with additional floors of residential space.
Jerusalem: Holier than thou
Although its cultural and entertainment offerings are improving, Jerusalem is in most respects everything that Tel Aviv is not. Its uniqueness is one that attracts many foreign buyers, says Eli Teperberg of Teperberg Real Estate in Jerusalem. “Foreign residents find it very important to feel that they are in Jerusalem and not as if they are living in a property that could be anywhere else in the world,” he explains. “A luxury private home with a location and view that are not special simply won’t attract much interest among foreign residents.”
He is currently handling the sale of a special property in the city with a price tag of $6 million, being sold by an Israeli living abroad. It’s a 300-square-meter luxury penthouse with five en suite bedrooms in the center of the city on Rabbi Akiva Street. Recently renovated, it extends over the top three floors of an 18-story building, it has an elevator and two large balconies, one with a hot tub.
“It’s a project that was built about 15 years ago and most of it is occupied by residents of the United States, Britain and France. There are also tenants in the tower from the foreign media,” Teperberg says. The building has an exercise room, a sauna, a guard in the lobby and three elevators including a Sabbath elevator.
The most expensive apartment sale in Jerusalem was a 40-million-shekel transaction completed in February to Leonid Nevzlin, a Russian entrepreneur who is a shareholder in the Haaretz group. It consists of two apartments at Jerusalem’s new Waldorf Astoria combined to create one 500-square-meter unit.
Y.H. Dimri Construction & Development hopes to break that record at its nearby Legacy project at David’s Village, which features 60 apartments in buildings of up to four stories. Ten units have been sold so far, nine of them, to buyers from abroad. According to Amir Cohen, Y.H. Dimri’s national sales manager, the average purchase price is 10 million shekels, but the project has a 540-square-meter unit with a balcony nearly as large and a view of Jaffa Gate and the walls of the Old City on the market for 80 million shekels.
Amir notes that one American buyer paid 17 million shekels for an apartment with an Old City view rather than 11 million for one without it. “On his visits to Israel three times a year, he will be able to see the walls of the Old City and the Tower of David. That was something he was not prepared to compromise on,” Cohen says.
Herzliya: Same sea as Tel Aviv
The value of real estate in Israel is measured by its proximity to Tel Aviv and the sea. Because Herzliya Pituah provides both, it has become one of the most expensive markets in the country, says Uri Tal, whose Uri Tal Real Estate specializes in the seaside community. Indeed, he is handling the most expensive property now on the market in the seaside community north of Tel Aviv, which is going for 100 million shekels.
But the town offers homes at a wide range of prices, with those further from the seafront selling for as much as 40% less than their beachside peers, says Tal. Galei Tchelet Street, which has private homes that run right along the beachfront, is the most expensive address in town. In 2005, a house was purchased on the street for $21 million and sold for years later for nearly twice that.
So what can you get for 100 million shekels? Surprisingly enough, it is not a single family home on the sea, but is close to the marina and the Orchid Hotel. It features 750 square meters of floor space with six en suite bedrooms on a 1.75-dunam plot, making it big enough to build another house on. Less than a year old, the house was built to be sold and no one has lived in it yet, says Tal. Besides a huge living room, it has a gym, home theater and sauna; outside it has a large garden with a pool with room to host parties for up to 1,000 people. It may not be on the beach, but it is just a few minutes walk away.
For bargain hunters, Tal is offering another house on Kaplan Street for 50 million shekels. It is 750 square meters, has a pool and is just a few minutes from the beach.
Netanya: Focus on the center
Further up the coast from Herzilya PItuah, Netanya has been attracting mostly French and English speakers. As elsewhere, the closer to the sea, the more desirable and expensive. Nitza Boulevard is the street closest to the sea and thus a magnet for foreigners.
“Anglo-Saxon foreigners love Nitza Boulevard a lot because of the Young Israel synagogue and it’s still an area without a lot of new building,” says Anat Riesenberg, the general manager of the Anglo Saxon realty franchise in the city. “It’s not crowded, just a single line of buildings, with the beach below so every apartment has a sea view.”
The Sea Opera project on Nitza offers a 210-square-meter penthouse on the 26th and 27th floors with a 60-square-meter balcony for 9.5 million shekels. The building has a pool, of course, a gym and a guard on duty 24 hours a day.
The French like to live near the old center of town, Atzmaut Square because of its proximity to the cafes and restaurants — many of which are owned by French speakers, says Riesenberg.
A somewhat more affordable apartment project combined with a hotel is being built just south of the square. Only four of the 54 units are still available. These 160-square-meter units are going for 5.5 million to 6 million shekels each, says Yaki Briga of Zion Briga Real Estate, which is developing the project. The penthouse has already been sold to foreign buyers for 23 million shekels, he adds.
“We’re seeing a trend of more and more foreigners buying apartments to live in, whereas in the past they bought them for vacations,” he says. “If you’re on vacation you can get by with a small apartment but families making aliyah need bigger ones,” he says.
Bat Yam: Tel Aviv for less
This coastal city south of Tel Aviv can provide cheaper alternatives than its big neighbor. As elsewhere, the most desirable location is along the sea, which in Bat Yam is Ben-Gurion Street. The area is popular with French and Russians, says Ruth Ron of the city’s Anglo Saxon office.
A renovated 130-square-meter apartment on the street, originally with five rooms but now remodeled into three large rooms, on the 19th floor is being offered for a relatively steep 5.5 million shekels. But it has a unique design and planning features, she says, and every room has a view of the sea. A cheaper alternative in the same building is 107 square meters with four rooms on the fifth floor available for only 3.3 million shekels.
A new neighborhood, Gan Ha’ir, is being built on the south end of the city along the sea, with 24-story towers. This will be a more expensive area that will combine apartments with hotels, says Ron. Such buildings charge residents substantial monthly management fees for all the facilities, such as the guards, gym and other public areas. Ron is selling a five-room apartment of 135 square meters on the 21st floor for 3.15 million shekels.
Ashdod: More than a port
Ashdod is the southernmost coastal city in our survey. As a rule, it is off the map for foreign buyers, but because it is on the sea and two new neighborhoods are now under construction, it has drawn some, mostly French.
The Marina neighborhood is very small, comprising just two streets. On Ha’egoz Street near the sea the buildings are nine to 12 stories, while on Exodus Street, one street back from the sea, the buildings are a taller 25 stories.
East of the marina is the City neighborhood. It is not on the sea, but is still quite close and offers newly constructed 20-story towers, including some large apartments with four or five rooms as well as penthouses and lofts. A project by Y.H. Dimri is 70% sold, with the first occupants due to move in next April. The prices start at 1.78 million shekels for four rooms on a high floor, with the most expensive apartment priced at 5.5 million shekels covering 215 square meters over the 22nd and 23rd floors with a 55-square-meter balcony.