Property in Tel Aviv is very expensive, and rental yields are poor
Residential Valuation Specialist | August 18, 2016
|Last Updated: Nov. 02, 2017|
|TEL AVIV - YAFO Apartments||PRICE/SQ.M. (US$)||YIELD (p.a.)||PRICE/SQ.FT. (US$)|
|TO BUY||MONTHLY RENT||TO BUY||MONTHLY RENT|
|JERUSALEM - apartments|
All yields are gross - i.e., before taxes, repair costs, ground rents, estate agents fees, and any other costs. Net yields (what you´ll really earn) are typically around 1.5% to 2% lower.
Source: www.immobilier.co.il Definitions: Data FAQ See also: Update Schedule
Gross rental yields i.e., the rental return on a property if fully rented out, before all expenses, are poor in Tel Aviv and Jerusalem - almost at Monaco-like levels. Gross rental yields for apartments are near or under 3% (though some areas have higher yields).
This tends to support the popular view that property is somewhat overpriced in Israel.
Tel Aviv is a more expensive city to buy or rent property in generally than Jerusalem. In both cities prices have risen strikingly in the past few years. Prices in Tel Aviv range from US$10,000 to US$21,000 per square metre (sq. m.), whereas four years ago, we found the cost of a 120 sq. m. apartment to be typically around US$ 7,800 per sq. m.
These are the sort of prices that can be seen in Swiss cities of Geneva and Zurich, or in Canada´s Toronto and Vancouver.
Renting an apartment in Tel Aviv would cost you anywhere from US$27 per sq. m. to US57 per sq. m. per month. Renting in Jerusalem is likely to cost you US$19 to US$35 per sq. m. per month.
Despite Tel Aviv´s higher purchasing price, it generally generates higher yields. The City Center (4.58%) and Ramat Aviv (3.84%) are the best-yielding areas in Tel Aviv. In Jerusalem, it is Rehavia (3%) and the City Center (2.84%).
Round trip transaction costs are low to moderate on residential property in Israel, with most costs paid by the buyer. See our Israel residential property transaction costs analysis and Round-trip transaction costs in Israel compared to the continent