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Despite the many options proposed by the Government, the increase in demand for
real estate in Israel is still much higher than the rise in current supply. As of today, there
is an estimated shortage of about 150,000 units, and with that, for example, between
2007 and 2014, residential property prices in Israel rose by more than 100%. This
statistic illustrates the continued explosion in real estate prices in Israel, and even the
strong demand for massive growth in amount of building in Israel, and in accordance
to that, the high profit investment options in real estate in Israel.
Of course, it is necessary to clarify that in many cases around the world, the increase
in prices, both in real estate and in other markets, is the result of the rise in inflation.
However, the rise in real estate prices has consistently been much higher than the rise
in inflation, clarifying with certainty the high demand for real estate investments in
Israel from the establishment of the state almost 70 years ago. For example, over the
past decade alone, the average real estate prices in Israel climbed by more than 150%,
while the consumer price index rose less than 20%.
Moreover, another factor affecting the soaring cost of real estate in Israel is the rising
demand for office space, of which there is also a lack of construction at the national
level, since the success of the residential market led to reduction in the commercial
market, while the significant economic growth has created an increase in business
activity in Israel and a heightened need for office space.
Furthermore, statistics demonstrated that only in the city of Tel Aviv is there a lack of
supply of at least 200,000 square meters of commercial space. This does not include
the additional space required just owing to annual natural demand, which stems from
an increase of about 4% per year.
These factors have combined to produce a situation where the average rent of office
space just continues to rise and shows no sign of stopping.
Accordingly, the investment in commercial real estate is becoming as popular as an
investment in residential real estate, if not more, since in recent years, more business
owners have been purchasing commercial real estate for their own use or as an
investment. In addition, the yield from rental of office space in Israel ranges from 7%
to 12%, and the level of office rent continues to rise, since this stems from an increase
in GDP and rising standards of living, which only continue to grow.
Another investment channel which continues to be an excellent investment way in real
estate in Israel is in rental properties, whereby you can invest in any type of real estate,
residential, offices and commercial. In addition to their equity value, rental properties,
also generate cash flow from rental income and yield a return over time.
Rental properties in Israel are classified into different areas depending on the type
of use of the leased property and the nature of the renter - commercial real estate,
office, industrial and residential apartments. Each domain is characterized by the
designated assets, rent per square meter and yield which differs for each and every
investor. For example, the total area of commercial real estate which includes malls,
The investment in commercial real estate is becoming as popular as an
investment in residential real estate, if not more, since in recent years, more
business owners have been purchasing commercial real estate for their own
use or as an investment.