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Nov 19, 2012

Rental yields low in Israel

			Last Updated: Nov. 19, 2012
TEL AVIV - YAFO Apartments	COST (US$)		YIELD (p.a.)	PRICE/SQ.M. (US$)
TEL AVIV - YAFO Apartments	TO BUY	MONTHLY RENT	YIELD (p.a.)	TO BUY	MONTHLY RENT
60 sq. m.	498,000	1,609	3.88%	8,300	26.81
80 sq. m.	666,080	2,014	3.63%	8,326	25.17
95 sq. m.	780,140	2,419	3.72%	8,212	25.46
120 sq. m.	990,960	2,742	3.32%	8,258	22.85
200 sq. m.	1,874,400	n.a.	n.a.	9,372	n.a.
TEL AVIV - SUBURB Apartments
70 sq. m.	668,280	n.a.	n.a.	9,547	n.a.
120 sq. m.	1,260,240	n.a.	n.a.	10,502	n.a.
170 sq. m.	2,043,740	n.a.	n.a.	12,022	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 USD 8,500 per square metre (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 USD 9,500 to USD 12,000 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 Canada’s 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 Tel Aviv, the average price of owner occupied-dwellings increased by 3.7% in the year ending to Q3 2012, according to Israel’s Central Bureau Statistics. The same observation is made by the latest Global Property Guide survey, which found that the average prices per sq. m. of apartments rose by 3.7% to USD 8,500 in November this year, from around USD 8,200 in August last year.

A 120 sq. m apartment now costs around USD 8,300 per sq. m., whereas last year, it only cost around USD 7,800 per sq. m. In Herzliyah Pituach, a 120 sq. m. apartment now costs on average, USD 10,500 per sq. m.

Renting an apartment in Tel Aviv would cost you anywhere from USD 23 per sq. m. per month to around USD 27 per sq. m. per month, which means that you can rent a 60 sq. m. apartment for about USD 1,600 per month, and a 120 sq. m. apartment for around USD 2,700 per month - not inexpensive! (We don’t 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 very poor. They range from 3.32% to 3.88% only. This tends to support the popular view that property is somewhat overpriced.

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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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