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All over Israel, many foreign apartment owners do not rent out their properties. This has led to the development of what is referred to as “ghost neighborhoods,” which are empty for a greater part of the year. This is compounded in Jerusalem by the many foreign buyers who purchase high-end properties and only use them 2-3 times a year for the Jewish holidays.
In order to stabilize the real estate market and avoid “ghost” ownership, the Finance Ministry and the Bank of Israel have brought changes in buying and mortgage policies, which may impact the outlook for investors.
Here are some recent trends which can help both the professional investor and home buyer better assess the Israeli real estate market:
Demand for luxury apartments remains – Wealthy buyers from other countries continue to invest heavily in symbolic and iconic places like the coast in Tel Aviv or close to the walls of Jerusalem’s Old City.
Price affected by Construction Index – A major part of housing contracts are attached to the Index of Residential Construction of the Central Bureau of Statistics. Foreign residents who convert currencies for investment can find the index affecting their anticipated investment expenses.
Vacation apartments may be the best deal – Jerusalem real estate also features properties which have been transformed into specialized “vacation apartments”. These properties are usually centrally located close to tourist attractions and holy sites. This allows owners to intermittently make personal use of their property as well as having ongoing income and a high return on investment.
Along with these trends, stability is still a concern for real estate markets. As elsewhere in the globe, there are many variables which are beyond control of the local market. At this point of time, however, the real estate sector in Israel looks bright for the near and mid-term.