Tel Aviv is the leading city in investor purchases in the first three quarters of the year • The prices are indeed high, but the investors are sure that they have not gone down, and that the rent will rise • The way to attract investors to the Negev is to hold promotions, but it is not certain that they will simply rent the apartments
According to the Chief Economist’s data, in the first three quarters of 2022, investors purchased 14,600 apartments, a decrease of about one-third compared to the amount of apartments they purchased in the corresponding period in 2021. The main reason for the fall in purchases is the increase in the purchase tax on investors, in November of last year, but it seems that the Bank of Israel’s interest rate increases also did their part and caused further reductions among investors.
In addition, the investors increased the sale of the apartments in their hands, and in the first nine months of the year they sold more than 20 thousand apartments. The chief economist tried several times to investigate the causes of the phenomenon, but was unable to obtain clear findings. For example, it seems that in some places investors ran into financial and other problems, which spurred them to sell the apartments.
Another factor that encourages investors to sell their apartments, but not at a loss, is the high increases since the outbreak of the Corona virus. The apartment price index rose by 33%, and it is possible that there were investors who believed that such a profit rate, which alone reflects a return of about 10 years, is a strong enough factor to sell the apartments they purchased with a total return of about 40% (since the outbreak of the corona virus).
Tel Aviv is indeed a peak, but there are also sharp decreases in the amount of purchases. There are no exact figures yet for the first three quarters of the year, but in the first two quarters of the year, investors reduced the amount of their purchases by more than 40% compared to 2021 – because the price takes its toll, even when it comes to wealthy people.
Jerusalem is in second place on the list of investments. 957 apartments were purchased by investors in the first three quarters of the year. The average price of a 4-room apartment in the city is about NIS 2.77 million, and the rent is NIS 5,328 a month. “A city with very limited inventory, which is mainly in Kiryat Menachem, Kiryat Yuval, Har Huma, Pisgat Ze’ev and the Governor’s Palace,” says Kvatinsky. “These are the cheap neighborhoods that people know will always be in demand, because the city is growing and growing.”
“Not all residents in Bat Yam can rent by the sea”
A surprising place that is at the top of the cities popular with investors is Bat Yam. With many projects, especially by the sea, and in the context of urban renewal, with quite a few price reductions made in the city, it has jumped up a lot in the ranks of investors.
Bat Yam. Investors come because of the prices / Photo: Shutterstock Bat Yam. Investors come because of the prices / Photo: Shutterstock
Kvatinsky believes that, similar to Kiryat Gat, investors came to Bat Yam because of prices, and not because of real demand they identified. “It’s a trendy city that sits on the sea and on the light rail route, but not the whole city is adjacent to the sea and not all the residents there can afford to rent in the towers built along the coast. I’m not sure that this will last and that the city will attract new renters.”
Even in Bat Yam, the prices of new apartments have risen greatly, and it can be assumed that a popular renter would rather go to Holon in Ayalon, where the prices are more reasonable, but the city is not the top investment destination.
