The global pandemic affects all areas of life, including the Israeli real estate market. And yet, despite the isolation, investors and buyers are rather optimistic, as the experience of the past years proves the country’s ability to quickly recover from recessions. In this article, we will briefly analyze how the coronavirus and the Israeli real estate market affect each other.
According to the Ministry of Finance, the number of acquired real estate units in Israel in the second quarter of 2020 decreased by 27% compared to the previous year. Analysts link the coronavirus and the Israeli real estate market, believing that home sales are falling amid the economic crisis caused by the spread of COVID-19.
Experts note the importance of personal meetings in such a business as real estate, which are the basis of any successful interaction. However, the closure and suspension of incoming flights caused a slowdown in growth across the country.
Coronavirus and Israel’s Real Estate Market: Impact of the Pandemic on Home Sales
Coronavirus and the Israeli real estate market today. The consequences of the ongoing coronavirus outbreak, affecting the Israeli real estate market, were most acute in the center of the country. So in Tel Aviv, one of the most demanded cities in the Israeli housing market, sales fell by 33.6%.
The Israeli government has been trying for years to narrow the gap between supply and demand in real estate, but according to consultants, the coronavirus has contributed to its widening. At the same time, there is still uncertainty in the behavior of the market, so it is rather difficult to predict the development of the situation in the future. If there have been no significant changes in relation to individual property objects with large developers, then in projects with several owners there is a decrease in rental rates. Readiness to reduce rent for small office premises is noted, and other flexible conditions are offered in apartment buildings. In both cases, the scale of these processes, reflecting the impact of the coronavirus on the Israeli real estate market, is not large enough to speak of a definite trend. At the same time, in general, there has been some growth in demand among potential buyers who are reconsidering their priorities and considering investing in projects that promise a higher standard of living in the coming years. The commercial real estate market in Israel is currently booming, especially in Tel Aviv, in areas close to major transport hubs.
Israel’s Residential Sector Trends
As for the residential real estate sector in Israel, many immigrants today prefer to live in the center of the country. Currently, for example, Tel Aviv has seen a rapid growth in the number of large international companies. Accordingly, the demand for housing is also increasing, as many employees want to be closer to their place of work.
While hi-tech professionals are attracted to job opportunities in cosmopolitan Tel Aviv, religious communities prefer Jerusalem. There are many compelling reasons to move to some of the high-growth cities along the coast. In any case, the closeness to the sea and the center is appreciated in the real estate market in Israel.
When buying an apartment or house in Israel, everyone is obliged to pay land tax, which depends on the value of the acquired property, as well as on the personal status of the buyer. Citizens of the country, immigrants and tourists are entitled to different benefits and pay different amounts of taxes. Also in Israel there is a property tax of the municipal or regional council.
The potential of the Israeli real estate market
Despite the coronavirus, the real estate market in Israel remains attractive due to its high potential and low risk. Many residents of Europe, America, as well as the countries of the former Soviet Union express their intention to move here for permanent residence.
Due to the demand, Israeli property sellers are finding ways to showcase properties on the Internet, focusing on distance selling. International shoppers are limited in their ability to travel due to coronavirus-related measures, however, in the background, business is conducted remotely as usual and transactions are not held back. Clients are provided with information and professional advice on issues the rights, finance and taxation they need to make remote decisions with confidence.
In any case, the positive dynamics for developments in the future still remains. Indeed, as noted, Israel’s ability to recover from crises is unique.