One of the factors in the steady upward trend in property prices over the past 10 years is the steady increase in immigration to Israel. Shaun Isaacson discusses how Aliyah affects the Israeli real estate market and what he advises investors who are planning to make Aliyah in the future.
Demand for property in Israel is driven both by increasing immigration from countries where Jews feel uncomfortable (like France, the Ukraine, Turkey and Venezuela), and also by planned Aliyah by people of all ages from English-speaking countries, for whom Aliyah is generally an ideological or lifestyle choice. Immigrants of different nationalities choose to settle in different cities around Israel – some are motivated more by price and some by the communities where they will feel most at home. This means that real estate prices in cities such as Herzliya, Ra’anana and Jerusalem are much less elastic than other places, because of the consistently high demand from Anglo Olim.
According to statistics from the Ministry of Immigrant Absorption, between 2001-2016 34,000 Olim settled in Jerusalem and 27,000 immigrants moved to Tel Aviv. During the past 15 years, almost 10,000 Olim from France and 10,000 Russian Olim chose to live in Netanya, while 21,000 immigrants moved to Haifa.
While Anglos tend to choose the communities where they have friends, many other immigrant populations tend to move en masse to more adventurous and cheaper places. Thousands of French Olim have moved all the way to Eilat and over 1,000 recent arrivals from Argentina moved to Beersheva. Ashdod, Ashkelon, Bat Yam, Beit Shemesh, Kfar Saba, Modi’in, Petach Tikva and Rishon LeZion are also popular destinations with many nationalities – there is an entire neighbourhood of Petach Tikva known as Little Belgium! There is no doubt that the steady flow of immigrants has helped to keep the rental markets strong in these cities, and also has an impact on property sale prices.
Although the Go South! and Go North! campaigns run by Nefesh BNefesh are incentivizing immigrants to move beyond Israel’s overcrowded urban communities, it requires an additional degree of courage for someone making the big move to Israel to choose a rural destination. Generally Olim prefer to start out in familiar territory where they have an existing support network to help them adapt to the challenges of Aliyah, and that often means renting their first home in a community where they know people from back home.
Shaun Isaacson, CEO of Creative Estates Israel, often helps Olim to find rental properties in Israel and also manages properties for ‘potential Olim’. “We have tenants in some of our properties who have just immigrated to Israel. I generally recommend to people that they rent for a year or more rather than buying a property when they first make Aliyah, because it helps to check out the area before putting down roots.
“At the same time, many of my property owning clients have bought Israeli real estate as a buy-to-let investment with a view to making Aliyah and living there later. In the current climate, I usually encourage investors to buy the property that will give them the best rate of return, even if it is not in an area where they can envisage living. The rental income will continue to flow when they themselves move to Israel and decide where they want to set up home.
“Getting a foot on the Israeli property ladder before making Aliyah is usually a good financial decision. But investment decisions should not be confused with deciding where in Israel you would like to live, particularly if your Aliyah is a few years ahead. Who knows how the real estate map of Israel will have changed by the time you arrive!”
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