People invest in real estate for different reasons, not only for its economic profitability. However, it is highly recommended that you expand your horizons and see what else you can get out of your investment. Are you looking for real estate in Israel? Let's see where you should look to maximize your investment, and consider a few criteria.
It is unclear why people are talking about a housing crisis, when real estate purchases are not stopping and in fact are increasing. The mortgage amounts taken in Israel are increasing every year, and so you should at least know where you should invest to guarantee an adequate return from your income-generating property. At the end of 2014, the scope of purchases reached a 12-year high, but this does not mean you will not find any investment opportunities in Israel – it only means you have to pay more attention.
Purchases of real estate for investment are actually on the rise
We know that some places in Israel are yet to achieve their peak price, and therefore you can still buy apartments there that are below their full potential prices. However, it is highly recommended that you seek advice on real estate purchases from specialists, such as expert lawyers, since, it turns out, apartments do not generate the desired returns everywhere, so that expert advice and consultation are necessary. Surprisingly, the scope of purchases is actually increasing in what we call peripheral towns – Yavne, Nazareth Illit, Safed and Ramle, for example. In other areas, closer to the center and more in demand, prices have already peaked, so that there is less expectation that real estate investments present good returns and generate profits.
Highly sought-after locations in Israel
It turns out that the investors of Israel prefer to buy their real estate away from the center. We already see a certain rise in apartment prices in Ashkelon, Beer Sheva and Yeruham, for example. So if you want to purchase real estate for investment in Israel, where else should you look? First of all, you can still find bargains there. Yeruham is a promising city, with the new IDF training base city build nearby, and its communal revival makes it a town of hope. Ashkelon is currently being run by an energetic mayor, and a new master plan with 12,000 newly approved residential units will offer new opportunities, in addition to ones already under construction.
Other master plans were approved in cities such as Afula, which has seen an awakening of real estate prices, just like other towns around. It turns out that this cities also offer lease returns that can meet your expectations, and therefore rents are going up too. Sefad, for example, has the best return on rented apartments, due to its proximity to different tourist centers increase its lease potential.
Integrated apartment value
Any real estate investor knows that his or her return consists of two primary components – the rent to be received and the value of the apartment as it increases over time, subject to surrounding development, urban renewal plans and expanding employment and transportation solutions. So, if you are looking for such places for a smart investment, peripheral areas offer many opportunities, and this is where the real estate bargains are. Where should you look if not in distant locations, that can offer rural quality of life, such as community expansions and communal towns? It is also recommended that you look into investing in moshavim, or agricultural communities, where you can find especially large plots for sale, allowing the construction of a brand new property on the land. If you intend to develop into real estate investment, you should really invest in planning and building new property on plots of land identified by professionals. This is a developing area in the real estate industry, dealing with land intended for construction not only of high-rise buildings, but also single-family detached houses. You can find more of these areas in agricultural communities and small towns – interested in drawing new, economically strong populations – rather than in large urban centers.
Where should you look for investment opportunities?
In densely built areas, you should look not only at the return on rented apartments, but also inspect the rate in which apartment prices rise. In addition to the surprising Yeruham, Tel Aviv is always a real estate hit, although you find less renewal of 'evacuation and construction' complexes, as you find in Beer Sheva's D Neighborhood, for example, which has become a hit yielding double digit returns for investors, both in terms of the apartment's value and the revenues from leasing it. Harish, Givatayim, Rishon Lezion, Kiryat Shmona, Eilat, Dimona, Caesarea, Ramat Gan and Haifa – you have to keep in mind that luxury real estate investors will always prefer the most prestigious cities, such as Caesarea, almost regardless of the price.
Eli Shimony - Israeli law firm representing clients on all civil/commercial legal issues in Israel. For any questions please contact us and we will be happy to assist.
Email: [email protected], Tel: +972-52-2769773, +972-3-5507155.
The above article is a general information only and it is not intended to replace a legal advice.