Authored by the expert who managed and guided the team behind the Israel Property Pack
Yes, the analysis of Jerusalem's property market is included in our pack
What will happen in Jerusalem’s real estate market? Will prices go up or down? Is Jerusalem still a hotspot for foreign investors? How is Israel’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with real estate agents, developers, and clients who buy properties in Jerusalem, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Property values in Talpiot will rise due to major urban renewal projects
The Talpiot neighborhood in Jerusalem is on the brink of a property value boom due to major urban renewal projects.
Picture this: Talpiot is transforming from an industrial zone into a vibrant, multipurpose hub. Thanks to the Jerusalem Development Authority's master plan, the area is getting a facelift with significant investments in infrastructure and public transportation. This means more pedestrian-friendly spaces and easy access to light rail, making it a breeze to get around.
Looking at nearby areas like Kiryat HaYovel, which saw property prices soar in 2023 and 2024 after similar projects, it's clear that Talpiot is on a similar path. The new master plan includes around 8,500 new housing units, which is expected to push property values up as more people look to move in.
Public transportation is getting a major boost with three new light rail lines set to crisscross the area. This will not only make commuting easier but also attract more residents and businesses, further driving up property values. Plus, with new educational institutions and community services popping up, Talpiot is becoming a more attractive place to live and work.
Insider tip: The development is not just about housing. The plan includes tens of thousands of square meters for commerce and employment, turning Talpiot into a bustling district. This mix of residential and commercial spaces is a recipe for a thriving community.
So, if you're considering buying property in Jerusalem, keep an eye on Talpiot. With all these changes, it's poised to become one of the city's most sought-after neighborhoods.
Sources: Jerusalem Development Authority, Globes, Buy It In Israel
2) Rents in peripheral areas will level out as new housing developments increase options
Jerusalem is buzzing with construction activity, with 7,482 permits issued in 2023 and plans for even more next year.
In the last three years, the city has approved around 20,000 new residential units, with a significant chunk completed just this year. This boom is a game-changer for renters, offering more choices and potentially easing rental prices.
With so many new homes being built, the rental market is starting to cool off a bit. Vacancy rates have climbed to 5.9% at the start of 2024, a noticeable jump from the low of 2.5% in early 2022.
These new developments are popping up all over, especially in areas that were once considered peripheral. This means more options for those looking to rent, and it could stabilize rents as more housing becomes available.
Insiders say that this construction boom is not just about numbers; it's about changing the landscape of the city. New neighborhoods are emerging, offering modern amenities and attracting a diverse crowd.
As these projects continue, the hope is that rents in peripheral neighborhoods will stabilize, giving renters more breathing room and choices.
Sources: Jerusalem Post, Harvard JCHS, Globes
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) Rental yields in Jerusalem will rise as rental demand exceeds supply
Rental yields in Jerusalem are on the rise as demand for rental properties outstrips supply.
Jerusalem's property prices have been climbing steadily, with a 2.8% monthly increase in 2022. This surge often pushes rental prices up as landlords aim to keep their returns healthy. The city's unique charm and historical significance make it a magnet for both locals and international buyers, further fueling the market.
The city's population is growing, with a significant portion under 17 and between 18 and 64, creating a strong need for housing. This demand is compounded by the limited land available for new builds, especially in East Jerusalem. Here, strict zoning laws and government restrictions make new housing developments a challenge.
International buyers, particularly from the Jewish diaspora, are also keeping the market hot. Their interest, along with the influx of students and expatriates, adds pressure to the rental market. This is evident in the steady rise in residential rents, with a 0.7% increase in June 2024 and 0.4% in July 2024.
Jerusalem's rental market is a complex tapestry of local and international influences. The city's allure, combined with its limited housing supply, creates a perfect storm for rising rental yields. For potential investors, understanding these dynamics is key to navigating the market successfully.
Sources: Capitil, OCHA, Globes
4) Demand for modern, tech-enabled apartments in Jerusalem will grow as more young professionals move in
Jerusalem is buzzing with tech startups and major companies, making it a magnet for young professionals.
Over the past five years, there's been a fourfold increase in startup funding, drawing big players like Apple, Google, and Amazon to the city. This influx of tech giants is attracting a wave of tech-savvy individuals who crave urban living with all the modern perks.
These young professionals are on the lookout for tech-enabled apartments that offer smart home features, a trend that's catching on in real estate markets everywhere. Jerusalem is no exception, as the demand for these modern living spaces continues to rise.
The Israeli government is also playing a big role by boosting infrastructure and public transportation, making the city even more appealing. This support is sparking new residential projects aimed at this tech-driven crowd.
With Jerusalem frequently in the media spotlight as a tech hub, and social media showcasing its modern living spaces, the city's allure is only growing. Young professionals are increasingly drawn to the vibrant lifestyle and opportunities the city offers.
Sources: Made in JLM, VC Cafe
5) Demand for senior-friendly housing in Jerusalem will grow as the population ages
Jerusalem's population is aging rapidly, with a significant increase in elderly residents expected by 2025.
By then, the number of people aged 65 and older will rise by 20%, adding to the current 75,000 seniors. This shift means more demand for homes tailored to older adults, featuring accessibility and convenience. In Israel, people are living longer, with life expectancy reaching 82.7 years in 2024. This longevity naturally boosts the need for housing that supports senior living, like homes with easy access to healthcare and community services.
The government is already on it, rolling out a master plan to help seniors age in place. This initiative aims to increase the availability of senior-friendly housing and make Jerusalem a more age-friendly city. The plan includes infrastructure improvements to meet the needs of the growing elderly population.
For potential property buyers, this trend signals a promising opportunity. Investing in properties that cater to seniors could be a smart move, given the rising demand for accessible housing. As the city adapts to its aging residents, properties with features like elevators, ramps, and nearby medical facilities will likely become more valuable.
Moreover, the city's vision to support its aging population aligns with global trends. Many cities worldwide are making similar adjustments, recognizing the importance of creating environments where seniors can thrive. Jerusalem's proactive approach could serve as a model for others.
Sources: WHO Age-friendly World, Earth Population Database
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6) Property values in Arnona will rise as it becomes a top choice for expats
Arnona is quickly becoming a hotspot for expatriates, leading to a noticeable rise in property values.
One of the main draws is the increased demand for housing in Jerusalem, especially from foreign residents. In 2024, it was noted that 55% of housing purchases in the capital were made by expatriates, with Jerusalem being a top choice.
Arnona's charm is further enhanced by its improved infrastructure and amenities. The neighborhood boasts a beautiful, green environment, wide roads, and easy access to public transportation, supermarkets, malls, and parks, making it a perfect fit for families and expatriates seeking convenience and quality of life.
Positive media coverage has also played a role, highlighting Arnona as an attractive neighborhood for expatriates due to its budget-friendly prices and accessibility. This kind of attention tends to draw more buyers and renters, pushing property values even higher.
Real estate agencies have reported a surge in interest for Arnona properties, with some noting a 30-40% price increase in desirable properties over the past few years. This trend suggests that Arnona is becoming a preferred choice for those looking to invest in Jerusalem.
Sources: Globes, CapitIL Blog
7) City center rents will keep rising due to high demand from locals and expats
Rents in Jerusalem's city center are climbing and will likely keep rising due to strong demand from both locals and expatriates.
In September 2024, the average rental price hit 5,037 ILS, up from 4,971 ILS in June 2024, showing a clear upward trend. Jerusalem's population is booming, with over 966,200 residents in 2023, which is double that of Tel Aviv. This growth is fueled by both new arrivals and current residents who prefer the vibrant city center.
Expatriates are flocking to Jerusalem, with 14% of new immigrants choosing the city over others like Tel Aviv in 2022. Many of these newcomers are high-income professionals, further boosting demand for city-center housing.
Even though the government is trying to increase housing supply, new construction isn't keeping up with demand. This shortage of new developments in the city center is pushing rental prices higher.
Jerusalem's strategic location and cultural allure also attract tourists and business travelers, leading to a high demand for short-term rentals. This, in turn, drives up long-term rental prices as well.
Surveys show that young professionals and families are drawn to the city center for its amenities and infrastructure, adding to the housing demand in these areas.
Sources: Jerusalem Institute, Jerusalem Post, Israel Price Forecasts, CEIC Data
8) Rents in luxury areas will drop slightly as more high-end properties become available
In 2023, Jerusalem saw a huge jump in luxury apartment construction, with new units rising from 2,500-3,000 annually to about 7,000, and expectations of over 8,000 in 2024.
Despite high demand, vacancy rates are climbing in upscale areas. Take the Broshim Campus in Jerusalem, for example, where only nine out of 25 floors are occupied. Similarly, the Raoul Wallenberg 16 tower in Tel Aviv’s Ramat HaHayal is 80% empty.
Jerusalem's real estate market is facing a glut of luxury properties. In the German Colony's Hashlosha project, penthouses are going for NIS 100,000 per square meter, while garden apartments fetch NIS 70,000. This shows that while demand exists, the market is getting crowded.
Experts foresee a shift in the supply-demand balance. Oren Cohen, CEO of the Oren Cohen Group, points out that foreign buyers have historically driven the luxury market in Jerusalem. However, since the Iron Swords War began, there's been a rise in interest from wealthy foreign residents, but it's not enough to soak up the new supply.
Sources: Jerusalem Post, Ynet News
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) Virtual reality tours will be widely used for property viewings in Jerusalem, especially by international buyers
Virtual reality tours are now a staple for property viewings in Jerusalem, especially for international buyers.
With the rise of virtual reality in real estate, over half of adults have experienced a virtual tour by 2023. This tech-savvy approach is favored by 67% of home buyers who prefer listings that offer virtual tours. The market for these tours is booming, with expectations to hit USD 12,345.5 million by 2033, growing at a rapid pace of 29.3% annually.
Jerusalem's property market is seeing a surge in interest from international buyers, particularly from Jewish communities abroad. This trend is partly fueled by increasing antisemitism in the diaspora, prompting many to consider relocating to Israel. For these potential buyers, virtual tours are a practical solution, offering a way to explore properties without the need for immediate travel.
The convenience of virtual tours has become even more appealing due to travel restrictions and the ease of remote property viewing. By 2023, a significant 54% of buyers wouldn't even consider a home without first taking a virtual tour. Properties with virtual tours are also seeing a 48% increase in interest, highlighting their growing importance in the buying process.
Virtual tours allow buyers to efficiently explore multiple properties from anywhere in the world, making them an indispensable tool in today's real estate market. This trend is particularly beneficial for international buyers who can now make informed decisions without the need for costly and time-consuming travel.
Sources: PhotoUp, RE/MAX Jerusalem, The Luxury Playbook, Market.us
10) Property values will rise in Jerusalem neighborhoods with new light rail stations due to network expansion
The expansion of Jerusalem's light rail network is set to boost property values in neighborhoods with new stations.
Historically, areas near existing light rail stations in Jerusalem have seen property prices soar, with some experiencing a 172% increase over a decade. This pattern suggests that the new stations will likely have a similar effect, making these neighborhoods more appealing to potential buyers.
Improved public transportation often leads to higher real estate prices. For instance, an international survey found that properties within half a kilometer of a mass transit system can see values rise by 20% more than those not served by the system. This means the new light rail stations will likely make nearby properties more attractive, driving up demand and prices.
Real estate agents are already noticing increased interest from buyers in neighborhoods with planned light rail stations. This interest is largely due to the enhanced quality of life and accessibility that the light rail system promises. The buzz around these benefits is further fueled by media coverage, which highlights the potential for increased property values.
In Jerusalem, the light rail expansion is not just about transportation; it's about transforming neighborhoods. The new stations are expected to bring a significant uplift in property values, making these areas more desirable for both living and investment.
As the light rail network grows, it's not just the convenience of travel that attracts buyers. The promise of a better lifestyle and the potential for property value appreciation are key factors driving interest in these neighborhoods.
Sources: Globes, Jerusalem Post, Buy It In Israel
11) Demand for luxury apartments in Mamilla will keep rising due to its prime location near the Old City
The demand for luxury apartments in the Mamilla area is on the rise thanks to its prime spot near the Old City.
In Mamilla, property prices are climbing, with new apartments fetching between NIS 55,000 and 70,000 per square meter, while penthouses go for NIS 85,000 or more. This price surge highlights the strong demand in this sought-after neighborhood.
Since the Iron Swords War in Gaza, there's been a noticeable uptick in luxury apartment sales in Jerusalem, largely driven by foreign buyers. For instance, in 2024, Jewish communities from abroad snapped up nearly 30 apartments in the Holyland project, underscoring a sustained interest in high-end housing.
The allure of Mamilla is further boosted by its proximity to the Old City, a historical gem that draws foreign residents eager to settle in Jerusalem. This location is a major pull for those seeking permanent homes in the city.
International buyers are increasingly eyeing Jerusalem, spurred by rising antisemitism in countries like the USA, Canada, England, and France. This trend is particularly evident in the growing demand for luxury apartments in Mamilla.
Media coverage also plays a role, shining a spotlight on Mamilla’s appeal and amenities, which in turn fuels interest in its luxury properties.
Sources: Jerusalem Post, Globes, Virgin Atlantic
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12) Property sales in the German Colony will slow as new developments draw buyers elsewhere
The German Colony in Jerusalem is facing a potential slowdown in property sales.
One major factor is the rising property prices in the area, making it less affordable for many. This surge is largely due to affluent foreign residents looking for permanent homes, as highlighted by Oren Cohen, CEO of the Oren Cohen Group.
Meanwhile, Jerusalem is buzzing with new housing developments. In 2023, the city saw nearly 5,800 new building starts, setting a national record for the 21st century. These fresh developments are drawing buyers with modern amenities and potentially more affordable options compared to the German Colony.
Government incentives are also playing a role. Programs like Pinui u’Binui are encouraging buyers to explore emerging neighborhoods. These initiatives have led to the construction of new residential units, replacing older housing in outer city areas.
Improved infrastructure and transportation links are making these newer areas more appealing. Buyers are finding these locations attractive due to better connectivity and modern facilities.
As a result, the German Colony might see fewer buyers as they are lured by the appeal of newer developments elsewhere in the city.
Sources: Jerusalem Post, Globes, Jerusalem Post
13) Demand for student housing in French Hill will rise because it's close to Hebrew University
The French Hill neighborhood is quickly becoming a prime spot for student housing thanks to its close proximity to the Hebrew University of Jerusalem.
With 23,500 students enrolled at the university in 2024, there's a significant demand for nearby places to live. French Hill is just a stone's throw from the Mount Scopus campus, making it a top choice for students eager to be close to their classes. The area is already home to many students and professors, which speaks volumes about its popularity.
One of the biggest perks of living in French Hill is its excellent public transportation. Numerous bus routes and a nearby light rail make getting to the university and around the city a breeze. This convenience is a major draw for students who need to balance their academic and social lives.
Recent real estate developments have also played a role in boosting French Hill's appeal. New housing and facilities are popping up, making the neighborhood even more student-friendly. These developments are not just about providing more living spaces but also enhancing the overall living experience for students.
French Hill's strategic location and growing amenities make it an attractive option for students. The neighborhood's transformation into a student hub is supported by its connectivity and the ongoing real estate projects that cater specifically to student needs.
Sources: Jerusalem Post, EduRank, Jerusalem Post
14) Investors will be drawn to Katamonim for properties with renovation potential as the area revitalizes
The Katamonim area in Jerusalem is on the brink of a major transformation, drawing in investors eager for renovation opportunities.
With property prices soaring in central Jerusalem, many buyers are now eyeing nearby neighborhoods like Katamonim. This trend is clear from the recent uptick in property transactions, with a 19.5% increase in second-hand apartment sales during the summer months of 2024.
The local government is also playing a big role in this shift. The Jerusalem municipality is pouring resources into the area, focusing on infrastructure and public spaces. A significant urban renewal project is in progress, where 170 old apartments will be replaced by 600 new ones, catering to the Jewish-Syrian community from the US.
New developments are popping up, adding to Katamonim's allure. One standout project includes five buildings, each rising 34 floors high. These buildings will offer modern amenities like a fitness room and a bet haknesset, and the tramway will run right in front, making the area more accessible.
Investors are taking note of these changes, seeing Katamonim as a promising spot for future growth. The combination of rising demand, government backing, and new developments is creating a buzz around the neighborhood.
As these projects unfold, Katamonim is set to become a vibrant hub, attracting those looking for both investment opportunities and a lively community atmosphere.
Sources: Globes, The Tel Avivi, Immobilier.co.il
We made this infographic to show you how property prices in Israel compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) Blockchain will make property transactions in Jerusalem more transparent and efficient
Blockchain technology is revolutionizing property transactions in Jerusalem, making them faster and more transparent.
In recent years, the real estate industry has seen a surge in blockchain adoption, with companies like Propy and PropertyClub leading the charge. These platforms have shown how blockchain can streamline transactions and cut costs. For example, Propy's platform has managed to reduce transaction times by 32.4%, thanks to automation and fewer intermediaries.
Blockchain's ability to provide immutable and transparent records ensures everyone involved has access to accurate information, speeding up the process. This transparency is crucial for building trust among buyers, sellers, and other stakeholders. The Israeli government's interest in blockchain, highlighted by their Digital Shekel project, suggests a future where blockchain could be integrated into land registries.
Cost savings are another big win with blockchain. PropertyClub has cut transaction management costs by 21.3% by using this technology. The reduction comes from less paperwork and fewer administrative tasks, which are often both time-consuming and expensive. Smart contracts also play a role by automating transactions when certain conditions are met, further reducing manual work and costs.
Blockchain offers a clear and tamper-proof history of property ownership, which is essential for ensuring trust in property transactions. This transparency is not just a bonus; it's becoming a necessity in today's real estate market. As blockchain continues to evolve, its role in making property transactions more efficient and transparent will likely grow.
With blockchain, the real estate market in Jerusalem is poised for a transformation, offering a more efficient and transparent way to buy and sell property. The technology's ability to reduce transaction times and costs while providing a clear history of ownership is a game-changer for the industry.
Sources: Debut Infotech, IJGEM, Axis Technical
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.