Report: Israel becoming new Dubai
New York Observer says foreign investors 'snapping up property in often troubled paradise,' but warns 'bubble is about to pop' due to 'fragile' economy and peace
"Israel is the fastest growing real estate market in the world right now," according to The New York Observer.
In an article published Monday, the weekly says foreign investors are "snapping up property in the often troubled paradise," but adds that this "might be a mistake."
New York Observer correspondent Laura Kusisto cites the "Global Property Guide" ranking of Israel as the hottest housing market for the last two years and the sixth fastest in the third quarter. She also mentions an "Associated Press" report, which pointed out that since four of the five markets where home prices rose faster than in Israel were recovering from sharp drops, Israel was effectively one of the hottest real estate markets around.
"In Tel Aviv, prices have risen 46% since the end of 2008 to an average of nearly $600,000 for a three-bedroom home. Jerusalem is up 15% this year to an average price of about $415,000," the report states.
But according to The New York Observer, Israel is "quivering with the fear" that it will suffer the same fate as "overheated markets like Dubai and, of course, the United States." It noted that Israel's Central Bank has raised interest rates several times in the last six months, hoping to "poor some cool water on the boom."
The weekly says the real estate in Israel has been flourishing due to the country's banking system, which has been "far more stable than" the US's. In addition, says the report, the flood of nearly 1 million Russian immigrants to Israel also increased demand for housing stock to a degree that's "almost unimaginable" in the US.
However, the weekly warns that "before the latest wave of New Yorkers decide to flock to the promised land, it's worth pausing to reflect on the perils. Experts there say the bubble is about to pop. Peace is, you know, fragile. So is the country's economy, which relies on a lot of American investment.
"Protest is also rising in the country, as many locals find themselves unable to find an apartment. Consider that salaries in Israel are significantly lower than New York, but an apartment is getting way more expensive. That could pressure the government to keep raising interest rates or change some of its current strict construction restrictions to allow for an increase in supply," The New York Observer stated.
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