Tech employees prefer to live in Tel Aviv

Technology employees are among the highest earners in Israel with the average gross monthly salary reaching NIS 32,215 in June, more than double the national average salary, according to the Central Bureau of Statistics. Between June 2023 and June 2024, the average Technology Employee salary increased by 8%, compared to 5.1% for all salaries in Israel.

So it’s no surprise that tech employees choose to live in the most in-demand areas. According to research by real estate website Madelan, the northern part of the Tel Aviv metropolitan area is the preferred place for tech employees to live, with central and northern Tel Aviv itself being the most popular, whether for buying or renting apartments.

Technology employees prefer Tel Aviv

There are two neighborhoods in central Tel Aviv that have the highest concentration of technology employees: Old North and the city center to the southeast including Marmorek, Dizengoff, Ben Gurion Street, Ibn Gabriel, Montefiore and the adjacent Sarona and Azrieli Center. According to Madlan, 27.4% of apartments in these areas are occupied by employees in the technology field.

In second place are the two neighborhoods surrounding Rothschild Street: the Live Hair neighborhood, including Carlebach Street and King George Street, and South Rothschild Street between Ahad Haam Street and Jaffa Road, with a concentration of 26.8% of technology employees.

In four other Tel Aviv neighborhoods, technology employees make up 25% of the population: the neighborhood just north of Old North between the Yarkon River and Ibn Gabriel Street, Jabotinsky Street and Metzitzim Beach; The western part of the Tel Aviv Levant between Gan Meir and Bograchov Beach; They walked between Harba Street and Kaplan Street; And Florentine. In fact, eight of the ten neighborhoods with the highest concentration of technology employees are located in Tel Aviv. The two exceptions are the new Galil Yam neighborhood in Herzliya and the Lamed Heyah neighborhood in Givatayim, where 25% of the population are technology employees.

Technology employees’ preference for clustering together in central Tel Aviv and Old North neighborhoods explains the high rent prices for nearby offices within “half an e-scooter battery,” in the language of technology employees and the landlords they serve. New office towers built in the area, including the Landmark project at Sarona, the Da Vinci Complex, the office towers at Peace Junction and Alon Towers, are trying to attract tech companies and offer the highest rental rates on the market, in part out of proximity to desirable neighborhoods.

In the preferred neighborhoods from 11 to 20 for tech employees, there are more diverse neighborhoods in the Tel Aviv metropolitan area, two of which are in Givatayim: Medina and Shenkin. Among the most prominent are the Yarok neighborhood in Kfar Saba and the 200 neighborhood in Hod Hasharon. Three other Tel Aviv neighborhoods are also included in the second ten: Old North-Central and South-West, New North-North and the area around Kikar Hamidina. Ramat Gan only appears in the rankings 21 to 30 with three desirable neighborhoods: City Center A, Hagavin Neighborhood and Haruzim Neighborhood.

Givatayim tops the list and Ashkelon is at the bottom

The Madlan survey covers 1,300 neighborhoods, including some with no tech staff at all. These include three neighborhoods in Dimona, four neighborhoods in Lod, two neighborhoods in Beit Shean, and neighborhoods in Ramla, Safed, Ashkelon, and Migdal Hamek. The survey was conducted by processing National Register of Citizens and Census data on statistical areas corresponding to neighborhood boundaries.

In terms of cities, Givatayim has the highest concentration of technology employees in the country (18.4% of all residents), due to the fact that it is a smaller and more homogeneous city in terms of demographics. Tel Aviv comes in second place (14.4%) with the popular neighborhoods mentioned above along with particularly low concentrations of technology employees, in neighborhoods such as Kfar Shalem, Ajami, Hatikva, and Jaffa C and D neighborhoods. Other notable cities in terms of population share of technology employees include: Ramat Gan and Hod Hasharon (13% of population), and Herzliya, Raanana and Ramat Hasharon at 12%.

In Haifa, known as “Silicon Valley” for chip companies in Israel, a rather low rate of technology employees was found at only 5.8%. Even in two of the largest cities – Jerusalem and Beersheba – the rate is very low (4.2% each). Among the major cities, Ashkelon comes at the bottom of the list with a rate of 2.4%.

Are the neighborhoods that tech employees look for also the most expensive? Not necessarily. There is only a partial correlation (about 50%) between the concentration of technology companies and the price per square meter of residential real estate. Thus, the most expensive neighborhood in Israel in terms of price per square meter, the neighborhood around Kikar in Tel Aviv (NIS 71,000 per square meter), ranks only 18th in terms of concentration of technology employees. Moreover, in the Lamed Heyah neighborhood of Givatayim, the price per square meter is relatively low compared to most of the Tel Aviv metropolitan area, NIS 39,000, but it ranks in the top ten. However, most of the neighborhoods in the top ten – the Central Tel Aviv and Old North neighborhoods – have price levels as high as around NIS 65,000 per square metre.

“Many young people move to Tel Aviv because of the sophisticated cultural and entertainment life, and the liberal atmosphere,” says Tal Koppel, CEO of Madelan. “Businesses want to hire the best people and therefore locate near youth communities. The result is a circular process that drives demand and raises prices.” It is not surprising that technology employees are concentrated in Tel Aviv, because it is a relatively high-salary industry, and Tel Aviv is the employment capital in almost all industries, but it seems that living there requires a technical salary – preferably more than one.

Published by Globes, Israel Business News – en.globes.co.il – on September 29, 2024.

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