The real estate bubble in Israel is breaking new records: How much would you pay for a two-room apartment in Tel Aviv, measuring 60 square meters (645 square feet) in size?
An apartment on the 16th floor of the White City Tower, bordering on the southwestern neighborhood of Neve Tzedek, was sold recently for NIS 4.7 million (about $1.3 million), or NIS 78,000 ($21,400) per square meter.
The buyer is an artist from New Zealand, who asked to design the flat without walls in order to "let the view and the sea enter the apartment." The only walls, which will be transparent, will be in the bathroom overlooking the sea.
Penthouse at Neve Tzedek project. Armani design (Simulation: ArcDeco)
According to Ran Ben-Avraham, VP marketing and development at Z.M.H Hammerman, one of the companies building the tower, "The buyer came to Israel on her first visit and fell in love with the Neve Tzedek area. She heard about the tower from friends living in Tel Aviv.
"Today there are hardly any apartments left in the tower, apart from the penthouse floors which will enjoy the city's urban landscape, the sea and the Giorgio Armani design."
The White City project is located on Yitzhak Elhanan Street in Neve Tzedek, and is being built by Z.M.H Hammerman, Eurocom and the Bruner family. It includes a 30-story tower and two additional five-story buildings with lofts and commercial areas.
The public spaces, designed for the project tenants, will include a luxurious spa, a gym, an outdoor swimming pool with a sunbathing deck, a lobby, a lounge, a conference room, a cinema, and more.
So far, a total of 136 apartments have been sold in the project for more than NIS 700 million ($193 million). Half of the buyers are Israelis living in the country and the rest are foreign residents, some of whom plan to make aliyah in the coming years.
The luxury market has been making no progress in the past few months, but from time to time we hear of a major deal, sometimes irrational, reflecting a bubble.
"That's how the luxury market works," explains RE/MAX Israel CEO Bernard Raskin. "It's unique tailor-made work, so it doesn't always have rules."
For example, a group of buyers led by Canadian businessman Moti Maximoff recently finalized a deal for the purchase of 12 apartments at a total value of more than NIS 100 million ($27.5 million) with developers of the Meier on Rothschild tower. An entire floor was purchased for NIS 44 million ($12 million).
The most expensive deal per square meter was for a huge apartment measuring 612 square meters (6,600 square feet) in size, divided into 10 rooms and located on the 17th floor of the David Promenade Residences project being built by entrepreneur Henry Taic on Tel Aviv's Hayarkon Street.
The apartment was sold for NIS 81.46 million ($22.5 million), a record price for an apartment in Israel, reflecting a value of some NIS 133,100 ($36,700) per square meter.
Real estate entrepreneur Inbal Or tried to market her luxury building in northern Tel Aviv's Bavli neighborhood with an apartment offered for NIS 170 million ($47 million), but soon realized that she would have to reduce prices.
In practice, dozens of luxury projects are being built in Tel Aviv and its surroundings, with apartment prices starting at NIS 5 million ($1.4 million).
Thousands of apartments are planned for the upper echelon of the Israeli society – but the question is whether there is indeed a target audience. Luxury entrepreneurs' general target is Diaspora Jews, some of whom are even looking for apartments outside the Israeli metropolis.
In fact, the luxury market has also reached Netanya (NIS 8.5 million), Ashdod (NIS 30 million), and even Haifa, where an apartment was recently put on the market by the Ashdar company for NIS 18 million ($5 million).