How much is a home costing NIS 1m in 2011 now worth?

Arlozorov Street, Tel Aviv

"Globes" finds wide variations from city to city and compares Israeli real estate investments to the stock market.

If you'd have invested NIS 1 million in Israeli real estate ten years ago, what returns would you have earned over the past decade? This is composed of two parts - the rise in the price of the property and rent earned over the decade, if the property was for investment and rented out.

"Globes" looked at properties in major Israeli cities and made some calculations. While it is known how much the property was purchased for ten years ago, today's price is an estimated value by appraisers.

Estimating rental returns and annual maintenance costs is more problematic but using data from the Central Bureau of Statistics "Globes" has made some educated calculations and boiled the numbers into to an annual percentage return since 2011. In reality, returns are likely to be less as it is not always possible to have an apartment continually rented out.

The rise in property prices over the decade was clearly highly uneven with not unexpectedly Tel Aviv and Jerusalem outstripping other cities in terms of property price rises and rental returns.

It is important to note that by far the biggest return on the investment would have been in the rise in the apartments price rather than the annual rent collected. So before buying an investment property for rent, the most important calculation is location for selling rather than renting.

Another important factor is enhancement. The properties examined by "Globes" in Tel Aviv and Jerusalem were both old apartments in very small buildings with the potential to be upgraded as part of urban renewal or earthquake retrofit programs with light rail projects being built by the apartments, making them more attractive. A buyer who looks carefully into these matters will find that the research pays off within a few years.

For the sake of comparison, after this list of properties, is a list of returns over the past decade in the various indices on the Tel Aviv Stock Exchange (TASE).

How much are NIS 1 million apartments from ten years ago worth today?

Tel Aviv: 61 Arlozorov Street. A 70-sq.m., three-room, second floor apartment built in 1957 is today worth NIS 2.3 million (the building has not undergone TAMA 38 earthquake retrofit). Annual return on rent: 163%.

Jerusalem: 43 Borochov Street, Kiryat Hayovel. A 47-sq.m., 2.5-room, second floor apartment built in 1960 is today worth NIS 2.18 million. Annual return on rent: 156%.

Rishon Lezion: 14 Abarbanel Street. A 75-sq.m., three-room, third floor apartment built in 1999 is today worth NIS 1.48 million. Annual return on rent 87%.

Haifa 3 Kaudras Street, Ramat Shaul. A 102-sq.m, four-room, first floor apartment built in 1980 is today worth NIS 1.65 million. Annual return on rent 95%.

Petah Tikva: 77 Rothschild Street. A 90-sq.m., four-room, eighth floor apartment built in 1973 is today worth NIS 1.4 million. Annual return on rent 75%.

Netanya: 18 Ha'Ari Street. A 91-sq.m., four-room, seventh floor apartment built in 1980 is today worth NIS 1.45 million. Annual return on rent 80%.

For the sake of comparison with investments on the Tel Aviv Stock Exchange (TASE) over the past 10 years: the Tel Aviv 25/35 Index has risen just 25%, the Tel Aviv 90 Index has risen 115%, the Banking Index has risen 80% and the Oil and Gas Index has fallen 50%. Over the past 10 years the Nasdaq market has risen 400%.

Published by Globes, Israel business news - en.globes.co.il - on March 25, 2021

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

Arlozorov Street, Tel Aviv
Arlozorov Street, Tel Aviv
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