2016 Predictions for the Tel Aviv Real Estate Market

The real estate market has been relatively slow here in Tel Aviv, as it tends to be during the winter months, and yet I (along with many clients of mine and fellow realtors) can’t help but wonder – What is expected for 2016?

After the summaries of 2015, we are now left to wonder what can we expect of the real estate market for 2016.

2015 has been full of significant changes in the real estate industry, from political changes in the Ministries of Finance and Housing, through the promotion of government programs to cool the market down in favor for young couples and families, to heavy tax measures on investors.

And yet, professionals in the housing market don’t seem to be very positive and actually predict real estate prices to be on the rise. 2016 will show a difference in housing prices trends in various cities and regions in the country, where high demand areas in and around Central Israel will show a steady increase of up to 5% in prices.

In summary – expensive apartments and high rent, experts say.

Given we are Tel Aviv based, where does this leave our beloved city? Well, Israel’s economic and touristic hub, with a large growing expat population that is highly influenced by events going on in Europe, has shown the most significant rise in real estate prices since 2007 is still in high demand, and 2016 will be no different with a moderate increase of 3% – 5% in real estate prices.

Prices in Central Tel Aviv (from Ibn Gabirol to the sea – including Neve Tzedek and in and around Rothschild) are still around the 42,000 NIS p/m2 (€9,700 / $10,800 / £7,400 p/m2 – according to today’s exchange rate), where 80 m2 apartments are sold for an average 3.55M NIS, with exceptions, where the more features the apartment has, the higher the price will be.

Features such as roof terrace and parking influence the price greatly, and if the apartment resides in a quiet, one-way street within a five-minute walk to the beach – then be prepared to spend over 50,000 NIS p/m2.

And rentals? They too aren’t showing any signs of slowing down. With long construction processes and the rising number of foreign residents immigrating to Israel, Israel is lacking in housing units, causing more demand than supply, an issue Tel Aviv is well known for. Good 2BR apartments for rent in Central Tel Aviv are going for 7,500 NIS – 8,000 NIS p/month (€1,800 / $2,000 / £1,420 p/month according to today’s exchange rate) excluding monthly utilities, common charges and other expenses.

It’s still early to say, as the real estate market in Tel Aviv tilts a month before Pesach, which marks the beginning of the real estate high season, and yet it’s crazy to think that prices in central locations in Tel Aviv are equivalent to real estate prices in central locations in other big cities in Europe such as Paris and London, but the truth of the matter is that, Tel Aviv, is Israel’s economic, High-Tech and touristic hub, drawing many expats, ‘Olim’ and young professionals due to its International fame, lifestyle, University and Colleges and Start-Up scene.

But when I ask my clients, what is the true reason that brought them to Tel Aviv, the most common answer I get is because it’s probably the only city in the world where Jews truly feel safe.

In conclusion, we still have another month and a half before the market begins to change its colors, where June & July are considered peak months. Until then, there may well be those who will profit from this window of opportunity.