A recent surge in deals in Jerusalem’s luxury housing market, with prices exceeding NIS 10 million, puts the city second only to Tel Aviv in terms of the number of luxury deals in the past 18 months, according to Globes.
Tel Aviv continues to lead the luxury housing market in Israel, and has even strengthened its position in this regard. On average over several years, 50-60% of transactions in this market are made in Tel Aviv, which generally leads in property prices sold. Herzliya, which traditionally competes with Jerusalem for second place, has fallen sharply to third place over the past 18 months.
Luxury has multiple definitions, including location and technical specifications, but for simplicity we define this market as consisting of homes costing NIS 10 million or more. These homes make up about 0.5% of the housing market as a whole, and as mentioned, most of them are in Tel Aviv.
Herzliya and Jerusalem account for about 15% of luxury home sales in each city, with the rest distributed across different cities, especially in the Tel Aviv-Sharon area.
Globes investigations show that of the 434 luxury deals that were carried out from January 2023 until the end of June of this year and that were registered with the Israeli Tax Authority, 256 (59%) were in Tel Aviv, 89 (20.5%) in Jerusalem, and 31 (7%) in Herzliya. There were 58 luxury deals in other locations, led by Ramat Hasharon (12), Raanana (10), Netanya (8), Ramat Gan (6), and Givatayim (5).
It is quite natural that Tel Aviv tops the list of luxury real estate, or at least it has been since the beginning of this century. Ten years ago it also topped the list with 50% of the deals.
The sharp rise in housing prices in Tel Aviv has increased its weight in the luxury housing market. In 2020, 52% of luxury housing deals took place in Tel Aviv. In 2021, the figure rose to 58%. In 2022, when there was a significant slowdown in the Tel Aviv housing market, its share of the national luxury housing market fell to 50%, but as we mentioned, it has recovered over the past 18 months to 59%.
Foreigners flock to Jerusalem
Jerusalem has seen a surge in home purchases by expatriates, helping it rise up the luxury goods market.
Purchases by expatriates in Israel peaked in 2005 and 2006, with more than 5,000 homes in each of those years. Since then, the number of such transactions has declined, to 1,000-2,000 in the past few years.
But something has changed in the pattern of these purchases. In the past, a third of the purchases made by expatriates were made in Jerusalem, but recently the percentage has doubled, and some of these purchases fall into the category of luxury goods, although by no means all of them.
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In November 2023, Globes reported on a phenomenon that began before the war broke out, whereby expatriates would organize the purchase of apartments in new projects within the same week, and sometimes even on the same day. This happened, for example, in the Midtown Jerusalem project of the Israel Canada Company and the 12 Sari Israel Street project of the AR Best Properties Company.
In the Midtown Jerusalem project, eight apartments were purchased on October 17, twelve apartments were purchased the next day, and eight more apartments were purchased a week later.
On December 21, Azorim’s day came, when it sold no fewer than 16 apartments in the project it is building at 27 Haneviim Street in Jerusalem for prices exceeding 70,000 shekels per square meter. Nine apartments exceeded the 10 million shekel threshold.
Sources in the Jerusalem real estate market say this is no coincidence, and that groups of religious Jews from abroad, especially from the Haredi community, are buying many apartments in the city, apparently because they sense growing anti-Semitism in their countries.
Herzliya sales down
On the other hand, there is Herzliya, a city that attracts real estate investments from residents abroad in a completely different way than those who buy in Jerusalem. Investments in Herzliya indicate economic globalization, the integration of Israeli companies into world markets, and the involvement of international financial institutions and others in Israel.
Between January 2023 and June 2024, only 31 luxury transactions were registered in Herzliya with the Israel Tax Authority, equivalent to 7% of all luxury goods transactions in Israel during that period. For comparison, in 2022, there were 61 transactions worth NIS 10 million or more in the city, equivalent to 12.5% of the total luxury goods market.
The decline in these numbers seems to indicate that the direction the country and the local economy are taking, especially what has been happening here since the war broke out, is not attracting the kind of expatriates who might have bought property in Herzliya in previous years.
This article was published in Globes, Israeli Business News – en.globes.co.il – on July 16, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.