Israel is one of the countries that experienced a decade-long real estate boom, which started back in 2006 and continued higher despite the financial crisis. Although it is a small country compared to other Western nations, Israel had been an attractive place for real estate investors.
That is why the current article will examine the growth path experienced by the country for the past ten years, how does that compare to other developed nations and some prospects for the near term.
The Israel real estate boom
Between 2006 and 2016 (with the exception of the year 2011), Israel had been one of the countries that experienced dramatic price increases, despite domestic political uncertainty and security threats. Home prices increased by 112% in the above-mentioned period, according to the information released by the Central Bureau of Statistics.
“An imbalance between supply and demand had been one of the main drivers of rising prices”, says Ofir Eyal Bar, an Israeli businessman and real estate investor that has recently moved to London and started getting involved in the local real estate market, “construction volumes continue to be low while the demand stays high, due to a lot of foreign investors coming in, as they see the potential of the Israel real estate market”.
During the second half of 2018, prices had cooled down. The area covered by Jerusalem Periphery towns saw prices fall by 4.37%, followed by Tel Aviv, where prices were down by 3.72%. Yet, some areas saw prices continuing to rise in Q2. Haifa was on top of the list, with prices rising by 2.66%. The Southern District with +1.83%, Jerusalem with +1.53%, and the Northern District with +0.9% complete the list and show that despite the cooling of the upward trend, there were areas where the real estate market continued its ascendency.
For the near future, investors like Ofir Eyal Bar, with holdings that ranges from residential buildings in Israel and other places to materials mine in South Africa, still believe that Israel has a few important areas where the real estate market can continue its rising trend. Hadera, Rehovot, Petah Tikva, Haifa, and Tel Aviv are just a few of the profitable investment areas since they are primarily large cities or highly populated areas where demand for properties is still very high.
Realty ViP Israel and Cushman & Wakefield Inter Israel, are just two of the local important real estate players in Israel, together with many other private investors like Ofir Eyal Bar, and they are well familiar with the obstacles of global real-estate investments. Both these domestic real estate players as well as foreign investors are expected to keep the Israel market on an ascending path during 2019, in line with the expectations for some of the biggest countries in the world.
Real estate at a global scale
During 2018, some Asia-Pacific countries had been leading the ranking in terms of the real estate market performance. According to the International Luxury Property Expo (ILPE), 2018 was the highest upturn in prices for the Asia-Pacific region. Growth reached 11.5% in Singapore, while Tokyo experienced a 9.4% growth. Japan’s capital was boosted by the upcoming 2020 Tokyo Summer Olympics, while the entire region was supported by political stability and optimistic economic outlooks.
The European market was dominated by Madrid, Spain, where prices rose by 10.4% and the number of transactions increased by 13%. Foreign investors from the United Kingdom, France, Belgium, and the United States had been behind the rising trend. Berlin took the second spot, trailing Madrid by 2% and ending the year with an 8.5% increase in real estate prices.
Outcomes for 2019 are positive for certain areas across the globe. Prices in Madrid, Berlin, and Paris are expected to grow by an estimate of 6% during the year, while Miami and Vancouver are expected to follow with 5% and 3%, respectively. Los Angeles, Sydney, as well as Geneva and Melbourne, are also other cities where real estate investments could flourish during this year. “Israeli investors continue to appreciate real estate in these areas and the stability it provides”, says Ofir Eyal Bar, “yet the Israeli market keeps providing interesting opportunities”.