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Israel’s real estate market has, in recent years, been one of the most lucrative investments opportunities. With property prices rising 22.35% in 2009, one would be forgiven for thinking the boom is behind us, but there are many factors in place that will see apartment prices continue to rise in Israel for the foreseeable future. Investing in an apartment in Israel is actually one of the safest bets in the
property investment sector at the moment.
Looking at recent performance, 2014 continued to be a strong year for Israel real estate. Some regions, such as Haifa, saw property prices rise by 25.2% when compared to their 2013 price. The Gush Dan area as a whole rose by 15.2%, Tel Aviv alone by 12.7% and the Southern District by 10.7%. Indeed, there were few places an investor could go wrong in 2014 with Israel real estate – as house prices rose by 5.25% on average across the country.
The figures show that apartment prices are continuing to rise. But for how long? Crucially, Israel is not a property fuelled simply by foreign investment. Apartments are not sitting empty. Israel is seeing a population surge of just fewer than 2% per year, and there simply aren’t enough apartments to go around. This will cause apartment rents to rise, and the demand for new apartments will continue unfettered until there is enough property for the masses.
Much depends on Israel’s economy as a whole, and in 2015 the economy looks to be going strong. Unemployment is low (~6.5%) and lowering, inflation is low and steady, and Fitch Ratings upgraded Israel’s credit outlook to positive in 2013. Both imports and exports are rising, and Israel is capitalizing on its highly-skilled and educated workforce.
Israel’s new middle-class is growing quickly thanks to technology company successes and partnerships with foreign tech company heavyweights. This new class is clamoring for mid-end and high-end apartments, and at the beginning of 2015 real estate developers are struggling to keep up with demand. This makes for a very promising environment to invest in an apartment, and the stats point to apartment prices continuing to rise for at least the next few years. With ongoing demand for property from locals and foreign investment alike, any future market correction is likely to be minimal and slow.
All signs point to a continuing healthy real estate market.
All statistics are taken from Israel’s Central Bureau of Statistics.
