Foreign buyers flock back to Israel's real estate market

Tel Aviv  / Photo: Shutterstock

Real estate agents in Jerusalem and along the Mediterranean coast, report a surge of interest in buying homes in Israel, especially from US buyers.

Real estate agents report that American Jewish buyers have closed dozens of deals for luxury homes in Israel over the past year, mainly in Tel Aviv and Jerusalem. The deals have been closed via transatlantic Zoom calls, emails and even by people sneaking into Israel despite the closed skies.

"The Wall Street Journal" devoted a major feature to the matter last week in a piece entitled "American homebuyers are flooding Tel Aviv's property market." The article spoke of dozens of deals and of current major interest in luxury homes in Tel Aviv.

The article quoted Tel Aviv-based Beauchamps Estates director Matthew Bortnick saying, "The market used to be dominated by buyers from the UK and France, but Americans now equal them. The largest deals and top end of the luxury market are also dominated by Americans." He said the biggest sale of 2020 was a purchase by an American couple in the Arlozorov 17 condo, for NIS 84 million, or $25.2 million.

Tel Aviv-based real estate agent Oren Katz, who specializes in the high-end market, agreed with the sentiment expressed in the article. "Until now the market was mainly British and American and the American market was dormant. Here and there people might buy but suddenly there is a real buzz with people having made a decision."

Among other things Katz has represented Russian-Israeli billionaire Roman Abramovich in his big real estate deals in Israel. Katz added, "There is interest and a lot of mails and American brokers are contacting us about collaborations. This is something we have not known previously. After the first lockdown the contacts with Israel started. In recent months we have toured properties with Americans. Some of them perhaps have Israeli citizenship and others I don't know how they got into the country. With most of the deals we are contacting each other online or on the phone."

"The Wall Street Journal" also quoted Inna Fleshler, marketing director for Israel Sotheby’s International Realty, who said that, "Most high-net-worth clients want properties that are either directly on the waterfront or one street back from the water, which has pushed the average price of prime seafront property to $4.8 million. There is steady demand. Tel Aviv is a hot market. Supplies are low, because there’s not a lot of space to build."

According to "The Wall Street Journal" "The employment opportunities and hip, urban vibe attract a young mix of international residents, while the year-round good weather and beachfront location appeals to families and retirees."

Years of falling purchases

On the other hand, the Ministry of Finance chief economist said that only 420 apartments were sold to foreign residents in the first half of 2020. The chief economist noted, "While it is safe to assume that the low number of purchases by foreign residents was registered to a great extent because of the technical difficulties for foreigners entering Israel, in many cases the foreign residents were helped by Israeli contacts and so there is not one explanation for the fall."

The real estate market for foreign buyers has been falling for 15 years. The peak was in 2005 and 2006 when 5,000 apartments were sold in each of those years, representing 6% of all apartment sales in Israel. The numbers fell sharply, especially after the financial crisis in 2008.

One third of all apartments sold in Israel to foreign residents, has consistently been in Jerusalem, for religious reasons. After that, the Sharon region and especially Netanya and Herzliya Pituah have been popular with foreign buyers as well as Tel Aviv.

Oren Cohen, who specializes in high-end properties in Jerusalem talks about dozens and perhaps even hundreds of US Jews who have been showing interest in Israeli properties in the past year. He said, "I have completed some very expensive deals by Zoom and I'm in contact with others who are scared to complete such expensive deals online and they are waiting until the skies open up completely so that they can come to Israel and do the deal."

Both Cohen and RE/MAX Vision real estate agency franchisee Ariyel Maresky  said that if until recently people were buying 2-3 room vacation homes in the city center or in Mamilla or near the Kotel, today foreign residents are buying larger 4, 5 and even 6 room apartments. Previously the apartments were for the holidays but now the apartments are being sold to families who are planning to live in the city at some time in the future.

Another surprisingly popular location is Ashkelon. RE-MAX Ashkelon franchisee Yaron Rosenhek said that US Jews never showed interest in the southern coastal city in the past but over recent months he has had 12 enquiries from US Jews considering buying a property in Ashkelon. "This is a new trend of American Jews thinking about immigrating to Israel and settling in Ashkelon," he said.

Katz speculates that the reason for the rise in interest from American Jews is that in the US in 2021, Jews feel less secure than in the past.

Cohen says he feels this with the religious Jews he deals with in Jerusalem who feel an atmosphere of political and economic instability in the US. "The demonstrations there and the storming of the Capitol and the way Covid-19 has been handled in Israel compared with there have convinced them."

But with most people reluctant to close deals over Zoom, only when the skies fully reopen will we discover just how serious this trend is.

Published by Globes, Israel business news - en.globes.co.il - on March 21, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Tel Aviv  / Photo: Shutterstock
Tel Aviv / Photo: Shutterstock
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