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NYT: Second-home boom boosts Jerusalem, Tel Aviv real estate
American, European investors transforming Israel’s high-end real estate market, especially in Jerusalem and Tel Aviv, New York Times reports. Prices for prime properties are up significantly over a year ago, as is overall foreign investment in Israeli real estate
In a detailed article published in its Friday edition, the New York Times takes a look at American Jews’ new-found penchant for “buying a second home in Israel rather than the Hamptons.” According to the newspaper, buyers are not seeking a quick profit but rather intend to live in their second homes part of the year.
Israel’s high-end real estate market is being transformed by the influx of foreign investments, with parts of Tel Aviv and nearby Ramat Gan being turning into a “mini-Manhattan”, reports the Times. According to Israel’s Central Bank, foreigners bought real estate worth $1.2 billion in 2006, up from $445 million in 2003.
Priced out of prime neighborhoods
In Jerusalem, non-Israelis – mainly Western Europeans and Americans - purchased about 25 percent of all homes and apartments sold in 2006, focusing their buying spree on prestigious city center neighborhoods such as Rehavia, Talbiyeh, the German Colony, Old Katamon and Mamilla, all a short stroll from the city’s Jewish holy sites.Local home buyers, finding themselves priced out of prime neighborhoods, are not necessarily happy with the trend.
In Tel Aviv, where prestige projects now sell for about $6500 per square meter, up about 30 percent from a year ago, high-rise projects by Philippe Starck, Richard Meier and Donald Trump either being built or are on the drawing boards.
Mediterranean views command a premium, explains the New York Times, and renovated Bauhaus properties are also popular, explaining that Tel Aviv was declared a UNESCO World Heritage Site in 2003 because of its 4000 Bauhaus buildings. However, the newspaper warns, “buying into this unique architectural heritage is not for the meek”, citing the premium such structures command.
In 2006 foreign purchasers made up approximately 5 percent apartment- and home-purchasers in Israel but about a third of those who invested in the luxury market, defined as properties valued at $5000 per square meter or more. A new record was set by the Carnival Cruise Lines heiress Shari Arison, who spent $13 million for a three-level penthouse in central Tel Aviv. Most American investors, however, are investing more modest sums, from $400,000 to $1 million.
