Foreign residents bought 33,600 apartments in Israel in 2002-11, just 4% of all homes bought during this period, the Ministry of Finance reports in a study on foreign residents' activity in the real estate market. Purchases by foreign residents were characteristically high - in the second quarter of 2011, the average price of an apartment paid by a foreign resident was NIS 1.73 million, 62% above the average home price paid by Israelis.
60% of apartments bought by foreign residents were in Jerusalem and Tel Aviv, although projects in coastal cities such as Netanya and Eilat are also a focus of attention.
The Ministry of Finance says that one-fifth of apartments sold by foreign residents were bought by other foreign residents, and that foreign residents bought only 2% of apartments from Israelis.
Almost 40% of the apartments bought by foreign residents in the second quarter of 2011 were new apartments. In comparison, 22% of apartments bought by Israelis were new apartments.
A section of the Trajtenberg Committee recommendations, which the government approved in March, calls for foreign residents to pay double the arnona (local property tax) on apartments occupied by less than six months a year. Most of these apartments are owned by foreign residents - mainly Jews - who reside in them during the holidays and in summer. The Jerusalem Municipality has already said that it wants to double the arnona on empty apartments, in an effort to revive ghost neighborhoods, such as Mamilla (Kfar David) in the city center adjacent to the Old City, and to lower home prices in the capital.
The municipality is waiting for approval from the Ministry of Finance and Ministry of Interior, and the government's decision in March has yet to be applied.
Published by Globes [online], Israel business news - www.globes-online.com - on May 9, 2012
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