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Aug 12, 2014

Rental yields very low in Israel


Last Updated: Aug. 12, 2014
TEL AVIV - YAFO Apartments COST (US$) YIELD (p.a.) PRICE/SQ.M. (US$)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
60 sq. m. 630,420 1,550 2.95% 10,507 25.83
120 sq. m. 1,219,920 2,318 2.28% 10,166 19.32
250 sq. m. 3,010,250 n.a. n.a. 12,041 n.a.
TEL AVIV - SUBURB Apartments
120 sq. m. 1,531,680 n.a. n.a. 12,764 n.a.
250 sq. m. 2,882,250 n.a. n.a. 11,529 n.a.
Districts researched:
Tel Aviv: Ramat Aviv, City Center, Sheinkin, Ben-Yehudah, Dizengoff, Kikar Hamedinah (Rothschild), Shikun Tsameret, Shikun Haketsinim, Neve Tsedek, Old Yaffo/Jaffa, and Sea Area
Source: Global Property Guide Definitions: Data FAQ See also: Update Schedule

Property prices in Israel are more expensive than anywhere else in the Middle East. Apartments in upscale residential areas of Tel Aviv cost on average US$ 11,000 per square metre (sq. m). A 120 sq. m apartment now costs around US$ 10,200 per sq. m., whereas two years ago, it only cost around US$ 7,800 per sq. m.  In the nearby suburb of Herzliyah Pituach, which is touted as the Israeli version of Newport Beach, property prices are even more expensive, ranging from US$ 11,500 to US$ 13,000 per sq. m. Many ambassadors and foreign diplomats reside here. Its villas and tree lined streets are within walking distance to beach. It is also a sought-after venue for high-tech companies.

These are the sort of prices that can be seen in Swiss cities of Geneva and Zurich, or in Canadaís Toronto and Vancouver.

The Bank of Israel issued a directive in October 2012 putting a ceiling on how much a home buyer can borrow against the price of house he is buying. Yet it denies that there is a housing bubble in Israel.

In Herzliyah Pituach, a 120 sq. m. apartment now costs on average, US$ 12,800 per sq. m.

Renting an apartment in Tel Aviv would cost you anywhere from US$ 19 per sq. m. per month to around US$ 26 per sq. m. per month, which means that you can rent a 60 sq. m. apartment for about US$ 1,500 per month, and a 120 sq. m. apartment for around US$ 2,300 per month. (We donít have rental figures for apartments in Herzliyah Pituach as it is an exclusive enclave whose rents are highly seasonal.)

Gross rental yields for apartments in Tel Aviv, i.e., the gross return on investment in an apartment if fully rented out, are under 3%, which is very poor. This tends to support the popular view that property is somewhat overpriced.






Comments

#1 GIL | August 07, 2010

The price above per sq. m is very general... because the prices for renovated apartments in Tel Aviv is much higher than that maybe double more like $9,204.99 per sq m. at least that is the deal I am signing tomorrow. Check out www.bartenura15.com for further information.

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