Authored by the expert who managed and guided the team behind the Israel Property Pack
Everything you need to know before buying real estate is included in our Israel Property Pack
Are you considering investing in Israel’s real estate market? What are the legal steps, tax implications, and cultural differences you need to understand before taking the plunge? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
How this content was created 🔎📝
1) Understand that much of Israel's land is leased by the Israel Land Authority, making purchases complex
Buying land in Israel is not as straightforward as in other countries.
In Israel, over 90% of the land is state-owned, managed by the Israel Land Authority (ILA). This means when you "buy" land, you're usually signing up for a long-term lease, like 49 or 98 years, rather than owning it outright. This system has been in place since 1960, thanks to the Basic Law: Israel Lands, which set up the ILA to manage these lands.
Because of this leasing system, property transactions in Israel can be less straightforward compared to countries where you might get a freehold title. The ILA's role is crucial here, as it oversees 93% of the land, making it a key player in any property deal.
For foreign nationals, the process can be even more complicated. The ILA generally does not lease land to non-Israelis, adding another layer of complexity if you're not an Israeli citizen. This restriction is something to keep in mind if you're considering a property purchase in Israel.
These factors combined make the process of purchasing land in Israel unique and sometimes challenging. It's not just about finding the right property; it's also about navigating the legal landscape that comes with it.
Understanding these nuances can help you make a more informed decision. Whether you're looking for a home or an investment, knowing the ins and outs of the Israeli property market is essential.
Sources: Remax Jerusalem, Wikipedia
2) Keep in mind that Israelis often prefer buying over renting, creating a strong market for selling residential properties
In Israel, buying a home is more popular than renting, which might surprise you given global trends.
With about 73% of households owning their homes, Israel boasts one of the highest homeownership rates worldwide. This is much higher compared to many other developed countries. The Israeli government sweetens the deal with incentives like tax benefits and subsidies for first-time buyers, making homeownership more affordable. In Israeli culture, owning a home is seen as a cornerstone of financial security and a key part of achieving the "Israeli Dream."
In cities like Tel Aviv and Jerusalem, rental properties are scarce, pushing many to consider buying instead. The real estate market here is fiercely competitive, with demand often outstripping supply. This dynamic drives up property prices, making buying a more attractive option for many Israelis.
Moreover, the Israeli government has been proactive in encouraging homeownership. They offer various incentives for first-time homebuyers, such as tax benefits and subsidies, which have made it more affordable for people to purchase their own homes. This has significantly contributed to the high homeownership rate.
In Israeli culture, owning a home is often seen as a form of financial security and a key part of achieving the "Israeli Dream." This cultural aspect further fuels the desire to buy rather than rent.
Sources: Israel's Real Estate Market in 2024 Forecast, The Resilient Real Estate Market of Israel: An Optimistic Analysis, Israel Residential Real Estate Market Analysis 2024
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Israel versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Consider properties in Tel Aviv and Jerusalem near urban renewal projects for potentially high returns
Urban renewal in Tel Aviv and Jerusalem is a hot trend for investors.
In Tel Aviv, the city is buzzing with 25 active urban renewal projects, making up 10% of all city projects. These efforts aim to add about 5,000-6,000 new homes each year, showing a strong push for urban growth.
Why are these projects so appealing? Well, property values in renewal areas keep climbing. Take Rothschild Boulevard in Tel Aviv, for example. Its mix of modern perks and historical charm has led to a steady rise in property values. The real estate market here is strong, with the average apartment price hitting ₪4.14 million ($1.2 million) in early 2024.
Rental demand is also booming in these revamped areas, thanks to young professionals and expats flocking in. This surge has boosted rental yields, making it a goldmine for investors. The government is backing these projects with incentives and budget support, speeding up building permits and infrastructure work.
Sources: Jerusalem Post, Semerenko Group, Jerusalem Post, Semerenko Group
4) Consider investing in off-plan properties in Israel, as locals often prefer new construction
In Israel, new construction projects are all the rage as the country faces a housing crunch.
With a housing shortage nearing 200,000 units by mid-2024, the demand for new homes has skyrocketed. Investors are snapping up these properties, with 51% of new homes sold to investors in the second quarter of 2024. This trend is fueled by a growing population and the allure of modern living spaces.
New constructions are not just about fresh paint and shiny appliances; they come with modern amenities and cutting-edge designs. In places like Tel Aviv-Jaffa, urban regeneration projects are transforming old buildings into sleek, new residences. The government is also pitching in with initiatives like "Pinui Ubinui," which aim to replace outdated structures and boost housing capacity.
Buying off-plan properties is a smart move for many, as these investments often appreciate significantly over time. Historically, properties purchased before construction have seen their values double or even triple. This makes them a hot commodity among Israeli homebuyers who are eager for modern living.
Israelis have a strong preference for new builds, partly because they offer a lifestyle upgrade. The rapid sell-out of these projects is a testament to their popularity. If you're considering buying property in Israel, keep an eye on these trends and think about the potential for value appreciation.
Sources: Buy It In Israel, Works in Progress, Hold.co.il
5) Understand that Israel’s real estate market is highly localized, with significant price differences between neighborhoods in the same city
The Israeli real estate market is highly localized, with big price differences even within the same city.
Take Tel Aviv, for example, where the price per square meter for apartments is ILS 70,628, while just a short drive away in Herzliya, it's ILS 45,477. This shows how much prices can change even in nearby areas.
In 2023 and 2024, the average price of a four-room apartment in Tel Aviv was NIS 4.75 million, compared to NIS 3.8 million in Herzliya. Knowing these numbers is key if you're thinking about buying or investing in real estate here.
In Haifa, the average price of a four-room apartment jumped by NIS 232,000 from late 2023 to mid-2024. This kind of local market insight can really help you make smart decisions, whether you're buying a home or investing for the future.
Understanding these local dynamics can give you an edge, especially when prices can vary so much from one neighborhood to another.
Sources: Globes English, Properstar, The Judean
Get fresh and reliable information about the market in Israel
Don't base significant investment decisions on outdated data. Get updated and accurate information with our guide.
6) Invest in areas with planned infrastructure improvements to boost property value and maximize profits
Investing in areas with planned infrastructure improvements can significantly boost your property profits.
When a region gets new roads, railways, or tech hubs, it becomes more appealing to both residents and businesses. This increased appeal often leads to higher demand for properties, which naturally drives up property values. For instance, Beersheva turned into a global cybersecurity hub after major infrastructure upgrades, including new roads and high-tech centers. This transformation led to a surge in demand for both residential and commercial properties, causing property values to rise.
Haifa is another example where infrastructure changes have paid off. The city saw a 6.6% annual increase in property values thanks to new highways and rail lines. These improvements made Haifa a hot spot for investors looking to capitalize on rising property values.
Looking ahead, the Vision 2040 plan is set to bring over 1 million new residents to the Negev Desert by 2040. This ambitious plan includes extensive infrastructure projects, such as new roads and railways, especially around cities like Beersheva. These developments are expected to significantly increase demand for land in both residential and commercial sectors, offering a promising opportunity for property investors.
Investors should keep an eye on these government plans, as they can provide valuable insights into where property values might rise next. By focusing on areas with planned infrastructure improvements, you can position yourself to benefit from future property value increases.
In summary, investing in regions with upcoming infrastructure projects can be a strategic move. As these areas develop, they become more attractive, leading to increased property demand and higher values. This makes them ideal for investors looking to maximize their returns.
Sources: The 5 Best Strategic Locations in Israel to Invest in Land in 2025, The Resilient Real Estate Market of Israel, 2025 Housing Market Predictions
7) Understand that Israel's "Taba" (urban building plan) can greatly impact a property's future value and development potential
When buying property in Israel, understanding the "Taba" or urban building plan is essential.
These plans can dramatically affect a property's future value and development potential. For instance, in the Neve-Shamir neighborhood, a new Taba plan led to the creation of commercial areas, boosting property values by 20-30% over five years. This isn't just a one-off; a study by Aliza Realty showed that properties in areas with Taba plans saw an average value increase of 15-25% over three years.
But it's not just about property values. Taba plans often include infrastructure and amenities that can further enhance property appeal. Take the E1 area, for example. Even though the plan was frozen, they still built a police station and roads, hinting at potential future value increases.
Real estate experts are keen on Taba plans too. A whopping 80% of professionals believe these plans significantly impact property values and market trends. This insider knowledge can be a game-changer for potential buyers.
So, if you're eyeing a property, check if there's a Taba plan in place. It could mean more than just a home; it could be a smart investment. The ripple effects of these plans are evident, and understanding them can give you a leg up in the market.
Sources: Buyitinisrael, JCPA, Aliza Realty
8) Expect property prices in Israel to be quoted per square meter, so be ready to calculate values quickly
In Israel, property prices are typically quoted per square meter, which might be a bit different if you're used to seeing total property prices.
Imagine you're eyeing a place in Tel Aviv, where the price per square meter is around 53,669.03 Shekels. To figure out the full cost, you'll need to multiply this by the property's total square meters. It can feel like a mental workout, especially when comparing different sizes or cities.
Online property platforms in Israel also show prices per square meter. This can be handy for comparisons, but it means you need to be comfortable with the math. Educational resources and workshops often cover how to calculate total costs from these prices.
In Tel Aviv, the real estate market is buzzing, with high demand driving up prices. This city is a hotspot for both locals and international buyers, making it a competitive market.
Outside Tel Aviv, cities like Haifa and Be'er Sheva offer more affordable options. Here, prices per square meter are generally lower, providing a different pace and lifestyle.
Understanding the local market dynamics can give you an edge. Networking with local real estate agents can provide insights into upcoming areas and potential investment opportunities.
Sources: Aparthotel, Semerenko Group, Global Property Guide
We have made this infographic to give you a quick and clear snapshot of the property market in Israel. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Hire a local Israeli real estate lawyer to navigate the complexities of property law
When buying property in Israel, having a local real estate lawyer is absolutely essential.
In recent years, especially around 2023 and 2024, many foreign buyers found themselves in legal trouble because they didn't understand the complexities of Israeli property law. These issues often arose from confusion over land ownership types and zoning regulations, which are quite different from what you might be used to elsewhere. Without local expertise, you might find yourself tangled in disputes that could have been easily avoided.
During this period, a significant number of property transactions in Israel faced legal challenges. Problems ranged from registration issues to disputes over lease rights and property titles. Many deals were delayed or even fell through due to unregistered property titles or incomplete registration processes. This underscores the importance of having someone who knows the local legal landscape inside out.
Israeli property law is not just complex; it changes frequently. Key laws like the Land Law, 1969, and the Movable Property Law, 1971, govern property transactions. The Basic Law: Israel Lands (1960) adds another layer by stating that state-owned lands cannot be sold or given away. This ever-evolving legal environment makes it crucial to have a local expert who can navigate these changes and ensure compliance with the latest regulations.
Imagine trying to handle all this without someone who knows the ropes. A local lawyer can help you avoid pitfalls and ensure that your transaction goes smoothly. They can guide you through the maze of regulations and make sure everything is in order, from registration to finalizing the deal. Without this guidance, you might face delays or even lose the property you wanted.
So, if you're thinking about buying property in Israel, don't underestimate the importance of a local real estate lawyer. They are your best bet for a hassle-free experience, ensuring that you understand every step of the process and avoid common mistakes. Having a knowledgeable ally on your side can make all the difference.
Sources: Real Estate 2024 - Israel, Case Studies – Israeli Real Estate, Israeli land and property laws
10) Be aware of specific regulations affecting Airbnb-style short-term rentals, as they can impact profitability
In Israel, short-term rental properties like Airbnb are facing tighter regulations that could affect your investment returns.
In bustling cities like Tel Aviv, the government is stepping in with new rules. They're trying to limit short-term rentals to boost long-term housing options and make living more affordable. This means if you're eyeing a property here, you might need to rethink your rental strategy.
Local authorities are also getting involved. The Tel Aviv Municipality is considering a rule to cap short-term rentals at 90 days per year for each property. This move is designed to balance the scales between Airbnb hosts and the traditional hotel industry, which has been feeling the pinch.
Tax issues are another hurdle. Many Airbnb hosts in Tel Aviv have been caught in the tax net, with authorities cracking down on tax evasion. They're not just sitting back; undercover operations are in play to catch those not playing by the rules, leading to hefty fines.
For potential investors, this means doing your homework is crucial. Understanding these regulations can help you navigate the market and avoid unexpected financial penalties. It's not just about buying a property; it's about knowing how to make it work for you within the legal framework.
So, if you're considering a property in Israel, especially in high-demand areas, keep these regulations in mind. They could significantly influence your rental income and overall investment strategy.
Sources: Short Term Rentalz, Buy It In Israel, Enso Connect
11) Learn about Israel’s “Pinui-Binui” and “Tama 38” programs for redevelopment and increased property density opportunities
Understanding the "Pinui-Binui" and "Tama 38" programs can give you a significant advantage in the real estate market.
These programs have become a major part of Israel's housing production, accounting for 37% of the annual output as of 2023, compared to just 2% in 2010. This shows a massive growth in their impact on urban development. In bustling areas like Tel Aviv, over half of new constructions are achieved through these initiatives. If you're eyeing investment or development in these regions, grasping how these programs work is crucial.
They allow for the densification and demolition of existing housing, which is a key factor in meeting the demand for more housing in crowded urban areas. Moreover, these programs often lead to significant increases in property values. Homeowners in areas where TAMA 38 and Pinui Binui have been implemented have seen substantial property value appreciation.
This is particularly true in neighborhoods like Tel Aviv and Jerusalem, where the transformation of older buildings into modern, safer homes has boosted property values. The programs not only enhance safety but also increase the appeal of properties to potential buyers. In Tel Aviv, for instance, the demand for upgraded apartments is soaring, making it a hot spot for savvy investors.
In Jerusalem, the landscape is changing rapidly, with many older buildings being replaced by sleek, modern structures. This shift is not just about aesthetics; it's about meeting the growing housing needs of a bustling population. The programs are a win-win, offering developers a chance to profit while providing residents with safer, more desirable living spaces.
Sources: Urbanomics Blog, Buyitinisrael, Semerenko Group
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.