Betting on Israel is pretty much like using Grays Sports Almanac in “Back to the Future” to bet on playoff showdowns, or the All-Star Game. You almost can’t go wrong. In all of Israel last year, only one city saw apartment prices slip (in Ashkelon prices edged lower from an average ticket price of NIS 1.33 million to NIS 1.32 million). How did the rest of the country fare? In the first three months of the year (2023) prices countrywide were up 10% year-over-year – but how did they do last year? Good question: last year they were up 20.3%!
Now, what would have happened if you were one of the naysayers just a year-and-a-half ago? What must go up, must go down, after all! You could say that dynamics here are different than other countries, but truth be told, supply and demand work here just the same way they do elsewhere. Believe it or not, Sderot – yes the city situated less than a mile from the Gaza Strip has seen prices rise in ways no less than spectacular. Sderot, through thick and thin, missile barrages, hiding for cover, bomb shelters and all, prices – even there – kept on climbing.
Will demand always outstrip supply? It could very well seem that way, but in case you were wondering, just imagine the date is September 1, 2021. Somebody, maybe a speculator or an investor asks you: “Where do you think real estate prices have gone up the most in the last decade?” Are you ready for this?! Real estate prices here in Israel were up 345.7% according to Money.co.uk, outstripping every other country in the world. And just in case you were wondering, inflation – then – was rising at an annual clip of 0.92% a year, not so shabby.
So, do you think Israel’s a good place to put your money? The answer – if you haven’t yet figured out the answer is a resounding yes!
Now, I don’t want to say that the political system here is messed up – it is – but there’s more than that. The inefficiencies here, not just with the building process, but with registration andzoning new properties simply make it a seller’s market. And you, if you aren’t already an owner, can become a homeowner quicker than Doc is spontaneously combusted by a bolt of lightning in “Back to the Future.” It really is that easy.
Where should you buy? As in every country, location, location, location, here in Israel is all the more pertinent. If you take a look Jerusalem, you will see the gentrification of so many neighbourhoods make it increasingly attractive. Certain new areas like Nof Zion in the south-eastern corner of Jerusalem, adjacent to the stunning Armon Ha-Natsiv Promenade, might draw your interest. With the entrenchment of the right-wing government, more credence is given to building projects that under a left-leaning government would be far less attractive. This is how the neighbourhoods of Yemin Moshe, Mamilla and Musrara suddenly found themselves in the heart of Jerusalem after the Six Day War. While no war is expected,geopolitical realities change the map, for better or for worse, having high-profile ramifications on the real-estate market.
What about judicial reform? Studies have shown that any change in the political landscape which may call a state less democratic can impair economic growth. However, like in the case of China, it was 40 years in the coming before the fallout was felt, most saliently in how it dealt with Corona and supply chains. Any downward cycle is nowhere on the horizon; GDP is expected to grow in Israel by 2.9% this year (the IMF puts U.S. 2023 growth at 2.1%), compared to last year’s stunning 6.5% growth.
In conclusion, the name of the game is to think long, leverage your capital, and hedge by putting your money in a country that’s been on fire ever since it showed up on the world map. Remember, what would have happened if you were too intimidated after seeing the phenomenal growth leading up to 2022. You would have missed the boat once again! They say that wise people, learn from other’s mistakes.
