All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.
Yes, the analysis of Tel Aviv's property market is included in our pack
Wondering about purchasing a property in Tel Aviv? You're not alone!
Many people are enchanted by Tel Aviv's vibrant atmosphere and dream of owning a contemporary apartment or a stylish penthouse there.
Still, would it be a smart investment? Are property prices increasing in Tel Aviv? What is the price per sqm? Should I buy property in the White City or Florentin? Are there any secret taxes? Where are the best yields?
We've solved it for you.
The SandsOfWealth team has really dug into this market. As a matter of fact, we've put all our findings together in a pack. Get it now.
In the lines below, we'll share useful information and some practical tips.
How's the real estate market in Tel Aviv?
What's happening with the property market? Some say it's going up, others say it's going down. Our approach is distinct—we rely on fresh data and stats to reach the correct conclusions.
Property types
In Tel Aviv, you can find various types of properties for sale, including apartments, penthouses, houses, and condominiums.
Apartments are common and come in different sizes, suitable for individuals or families. Penthouse units are typically located on the top floors and offer stunning city views.
Houses provide more space and often include a yard, ideal for those seeking a larger living area.
Condominiums offer shared amenities like gyms and pools, providing a convenient lifestyle choice.
Whether you're looking for a cozy apartment or a spacious house, Tel Aviv offers a range of property options to suit different preferences and needs.
Buy or rent?
(If you plan to use it yourself and not as a rental)
If Tel Aviv, the bustling coastal city of Israel, is where you plan to settle, you may be considering the advantages and disadvantages of buying versus renting.
Without a doubt, you should buy if you want to acquire equity and take advantage of potential appreciation in real estate value in Tel Aviv.
Actually, the property price-to-rent ratio is a good metric to look at for this kind of decision. It's a simple way to gauge the impact of rental earnings on covering the property's cost.
According to Numbeo, the property price-to-rent ratio in Tel Aviv is around 44.18, which is very high.
A high price-to-rent ratio typically suggests that buying a property is relatively expensive compared to renting it.
Property prices in Tel Aviv
On average, according to the last reported data from Central Bureau of Statistics, Israel, purchasing a property in Tel Aviv would cost you around $16,500 per square meter.
Naturally, prices are quite spread out. The value of a square meter for a beachfront property in Tel Aviv might differ from a city-center apartment. You'll get a more detailed in our pack for buying property in Tel Aviv and in Israel.
To give you a sense of scale, it is more than Paris or even London.
Obviously, housing prices in Tel Aviv are higher (120%) than in Jerusalem.
The most expensive neighbourhoods in Tel Aviv are probably Neve Tzedek, Old North, and the waterfront area, while the cheapest areas tend to be south of the Yarkon River.
Trends
First and foremost, we have to acknowledge that Israel offers, today, a lot of stability to investors. The last Fragile State Index that has been reported for this place is 42.6.
Keep this in mind when thinking about whether it's a good idea to buy a property in Tel Aviv.
Besides that, if we look at the IMF's GDP forecasts, Israel's economy is expected to soar by 14.4% in the coming 5 years, resulting in an average GDP growth rate of 2.9%.
If you intend to invest in real estate in Tel Aviv it's a good thing because when the economy grows, people tend to become wealthier, which usually results in higher housing prices.
Also, in Israel, the average GDP per capita has changed by 9.9% over the last 5 years. It's a good number.
This is a strong positive signal: housing prices in Tel Aviv might become more expensive in 2024 and later on.
However, if we check the UBS Global Real Estate Bubble Index, we can see that the Tel Aviv property market is currently overvalued and presents a risk of a bubble (the index is at 1.59 and there is a bubble risk for a score above 1.5).
Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Israel right now.
Buying property in Tel Aviv
Buying real estate in Tel Aviv can be difficult due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property in Tel Aviv and in Israel.
Buying process
Within our pack, we've covered the entire buying process extensively. This includes a detailed breakdown of prices and yields based on the area, advice on negotiating prices, and information about obtaining a mortgage.
Now, we're providing you with a simplified version.
This is the step-by-step process to purchase a property in Tel Aviv:
- Determine your budget and property requirements for Tel Aviv.
- Engage a licensed Israeli real estate agent familiar with Tel Aviv's market.
- Review and choose suitable properties, considering city regulations like the "TAMA 38" plan.
- Conduct property inspections and due diligence, considering the "Va'ad Bayit" (Building Committee) regulations.
- Negotiate the price and terms with the seller, adhering to Israeli property laws.
- Hire a property lawyer experienced in Tel Aviv real estate to draft or review the contract.
- Sign the contract and pay the deposit, typically 10% of the property price.
- Apply for a mortgage with an Israeli bank, if needed.
- Obtain necessary permits and approvals from the municipality and the Israel Land Authority.
- Complete the property transfer at the Land Registry (Tabu), where ownership is officially transferred.
- Pay the balance and associated taxes, like the "Mas Rechisha" (Purchase Tax).
- Collect the keys and take possession of your new property in Tel Aviv.
Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Israel.
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Where to find a property
Here is a list of websites where you can find properties in Tel Aviv.
- BHII - A real estate company specializing in properties for sale and rent in Israel, offering a wide range of options and services for individuals and investors.
- iHOMES - A bilingual real estate marketplace in Israel, offering free listings and searching for buyers, sellers, renters, and flatshares.
- Green-Acres - The leading international second home portal with listings in multiple countries, including Israel.
- OnMap - A platform offering quick, accurate, and specific search tools to simplify the process of finding assets, with a focus on real estate.
- Best Abodes - Find A Property Israel is a platform where you can search for property listings in Israel and place free property adverts.
Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Israel.
Properties & Budget
As mentioned before, the average price per sqm in Tel Aviv is $16,500. A 1-bedroom property of 60 square meters would cost approximately $990,000, and a 2-bedroom property of 85 square meters would cost approximately $1,403,000.
However, as you can guess, property prices will differ based on the attributes of the property and its specific location.
Expect higher property prices in the top areas of Tel Aviv. For about $3,120,000, you could think about a house in Neve Tzedek, but a residence on Rothschild Boulevard might be priced at $3,710,000.
Yet, there are places that won't cost you as much. You may find a condominium in Holon for $540,000, or you might encounter one in Bat Yam priced at $450,000.
Find a more detailed breakdown in our full pack for buying property in Israel.
Risks and pitfalls
Here are the main pitfalls when buying a property in Tel Aviv, Israel:
- Non-Israeli citizens face restrictions on purchasing certain properties.
- Complex leasehold system may lead to unexpected ownership challenges.
- Political instability can impact property values and investment security.
- Heavily urbanized areas may lack green spaces and open areas.
- Unique building regulations may require specialized understanding.
- Risk of property disputes due to historical land ownership complexities.
- High demand and limited supply result in competitive bidding.
- Potential security concerns due to geopolitical situation in the region.
We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.
Everything you need to know is included in our Israel Property Pack
Living in Tel Aviv
Living in Tel Aviv offers a vibrant and diverse city life with plenty of entertainment, culture, and activities to enjoy.
Cost of living
The cost of living in Tel Aviv is generally higher than in other parts of Israel. The prices for food and accommodation are particularly high, but entertainment and transportation are relatively affordable.
Here are some examples to better understand the cost of living in Tel Aviv:
- Rent for a one-bedroom apartment in Neve Tzedek neighborhood: $1,800/month.
- Monthly public transportation pass (Rav-Kav): $70.
- "Hummus" and "falafel" lunch for two at a local eatery: $20.
- "Goldstar" beer at a bar: $5.
- Groceries at Shuk HaCarmel market: $200/week for a family of four.
- Basic utilities for an 85m² apartment with the Israel Electric Corporation: $180/month.
- Ticket to a live music show at Barby Club: $30.
- "Sachlav" at a local cafe: $4.
Neighbourhoods and spots
Since we always want to show things clearly, we made a table that tells about the neighborhoods in Tel Aviv. For yields, prices and rents, check our property pack.
| Neighborhood | Description | Strengths | Weaknesses |
|---|---|---|---|
Jaffa is a historic neighborhood with a unique blend of ancient and modern culture, offering vibrant markets and beautiful beaches. | Rich cultural heritage, lively atmosphere, proximity to the sea. | High population density, limited parking options. | |
Neve Tzedek | Neve Tzedek is a trendy and upscale neighborhood known for its charming streets, boutique shops, and artistic vibe. | Artistic ambiance, fashionable boutiques, well-preserved architecture. | High living costs, occasional tourist congestion. |
Rothschild | Rothschild is the heart of Tel Aviv's financial district, famous for its Bauhaus architecture and lively nightlife. | Central location, bustling nightlife, Bauhaus buildings. | Noisy streets, limited green spaces. |
Florentin | Florentin is a hipster hotspot with a vibrant arts scene, diverse cuisine, and a youthful atmosphere. | Creative community, diverse food options, lively street art. | Noisy nightlife, sanitation issues in some areas. |
Old North | Old North is an upscale residential area close to the beach, known for its tree-lined streets and cosmopolitan atmosphere. | Proximity to the beach, elegant residential properties, well-planned streets. | High living costs, limited parking. |
Ramat Aviv | Ramat Aviv is a affluent neighborhood with a mix of residential and academic institutions, including Tel Aviv University. | High-end residential options, close to the university, green spaces. | Can be quiet during academic breaks, expensive housing. |
City Center | City Center is the commercial and cultural hub of Tel Aviv, featuring a mix of businesses, shopping, and entertainment. | Abundance of amenities, diverse shopping options, cultural venues. | Crowded during peak hours, traffic congestion. |
Nahalat Binyamin | Nahalat Binyamin is an artsy neighborhood known for its craft market and artistic events. | Artisanal crafts, vibrant street fairs, creative community. | Busy during market days, limited parking. |
Kerem HaTeimanim | Kerem HaTeimanim, or Yemenite Vineyard, offers a taste of traditional Tel Aviv with its small houses and authentic Yemenite cuisine. | Yemenite restaurants, cozy atmosphere, community feel. | Limited parking, narrow streets. |
Montefiore | Montefiore is an eclectic neighborhood with a mix of residential and commercial spaces, known for its trendy cafes and boutiques. | Hipster vibe, trendy cafes, boutique shopping. | Noisy nightlife, limited parking. |
Life in Tel Aviv
Tel Aviv is one of Israel's top economic hubs, with a vibrant and diverse economy that ranges from high-tech to finance, from tourism to fashion. It is also a major center for start-ups, with many international companies based in the city.
Referring to the IMF's data, the GDP of Tel Aviv constitutes almost 36% of Israel's GDP. Investing in property in a city with a strong GDP is smart because the city's thriving economy suggests more jobs, higher demand for real estate, and stable property values, making it a favorable investment environment.
What expats usually like the most in Tel Aviv is the vibrant nightlife and the beautiful Mediterranean beaches. They also enjoy the city's vibrant culture, excellent dining options, and its proximity to other parts of Israel.
Another great point to note is that Tel Aviv is an incredibly safe city, with a crime index of only 27, which is a really good score. Most crimes are minor crimes.
A good point for a property investor - Tel Aviv has a light rail system called the Tel Aviv Light Rail, which opened in 2011.
In Tel Aviv, access to healthcare is generally good, with a range of public and private services available.
Finally, it is worth noting that the Tel Aviv University ranks among the top 250 universities in the world.
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Renting out in Tel Aviv
For those aiming to buy property solely for renting out and earning income.
Long-term
Tenant Profiles in Tel Aviv
According to the data reported by Wikipedia, the home ownership rate in Israel is 65%, which is average.
It means that, if you decide to buy and rent out in Tel Aviv, there will be a good number of people who can become your potential tenants.
If you decide to buy and rent out to long-term tenants, you should target young professionals, expats, and students who are attracted to Tel Aviv's vibrant city life. Alternatively, you can target the growing number of tourists who come to Tel Aviv for its beaches, nightlife, and culture.
Here is a little summary table we've made for you.
| Property type and area | Profiles of potential tenants | What they are looking for | Expected monthly rent in $ |
|---|---|---|---|
Apartment in City Center | Professionals, expats | City living, convenience | $1,000 - $2,500 |
Flat in Rothschild | Youthful crowd, artists | Trendy neighborhood, nightlife | $800 - $1,800 |
Studio in Florentin | Students, young professionals | Lively area, affordability | $600 - $1,200 |
Condo in Neve Tzedek | Young couples, urban dwellers | Charming atmosphere, artsy vibe | $1,000 - $2,000 |
2-Bedroom Apartment in Jaffa | Families, expats | Historic area, seaside living | $1,200 - $2,800 |
High-rise Apartment in Ramat Aviv | Professionals, families | Modern amenities, university proximity | $1,200 - $2,500 |
1-Bedroom Apartment in Old North | Singles, young professionals | Urban living, local atmosphere | $800 - $1,500 |
Rental yields
As of today, rental yields in Tel Aviv are floating around 2 or 3%. It's low. Among other things, this low performance can be explained by Tel Aviv's high housing prices relative to other cities in Israel, which makes it difficult for landlords to generate a high rental yield.
In Tel Aviv, rental yields tend to be highest for apartments in central neighborhoods such as Neve Tzedek, Florentin, and the Tel Aviv Port, due to their high demand and proximity to public transportation, restaurants, and cafes. Additionally, the southern neighborhoods of Jaffa, Neve Sharet, and Tel Baruch offer excellent rental yields due to their low prices, despite being a bit further away from the city center.
For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.
Finally, be aware that rental incomes in Tel Aviv are taxed at 10%, which is very advantageous.
Short-term
You could also decide to rent short-term to visitors exploring Tel Aviv, such as tourists, business travelers, or those attending conferences or events. Students studying abroad or those relocating to the city could also be potential tenants.
If you decide to go with that option, look for properties in the Neve Tzedek and Florentin neighborhoods of Tel Aviv. Both areas are popular with tourists and offer a range of rental options.
Currently, there are approximately 9,000 active Airbnb listings in Tel Aviv, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $193, which is quite high.
You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Tel Aviv can make around $2200 per month. Also, the average occupancy rate is estimated at 63%.
Is it worth buying real estate in Tel Aviv then?
Buying a property in Tel Aviv can be a smart move if you're planning to make it your home and take advantage of the potential for long-term equity growth. Tel Aviv's strong economy, stability, and diverse tenant market make it an attractive option for those seeking a vibrant city life. Plus, if you look at the high property price-to-rent ratio, it's evident that buying is often more financially advantageous than renting in the long run. However, be prepared for sky-high property prices, as Tel Aviv ranks among the world's most expensive real estate markets.
Additionally, there's a risk of overvaluation in the market, so you must weigh the potential for returns against the inflated prices. Moreover, non-Israeli citizens may face restrictions on certain property purchases, and geopolitical factors could introduce uncertainty.
On the other hand, if you're an investor solely looking for rental income, Tel Aviv might not be the ideal choice. The city's rental yields are relatively low due to the high housing prices, making it challenging for landlords to generate substantial rental income. Moreover, the limited supply and competitive bidding in the real estate market can further complicate investment decisions.
In summary, for those looking to settle in Tel Aviv and capitalize on its dynamic lifestyle and economic opportunities, buying property can be a wise decision. However, investors primarily interested in rental income might find more favorable opportunities in other markets with better rental yields and lower barriers to entry.
It all boils down to your specific goals and financial capacity when considering a property purchase in Tel Aviv.
Make sure you understand the real estate market in Tel Aviv
Don't rush into buying the wrong property in Israel. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.
The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.