Luxury property market in Israel has become as hot as the Mediterranean sun.
Real-estate prices in the country have doubled in the past decade, particularly in Tel Aviv and Jerusalem, according to research provided to Business Insider by global real estate agent Savills.
The two cities, along with Herzliya Pituach, have transformed into a hotbed for the luxury property market, Daniel Knobil of Home Search Israel, which helps clients find luxury homes, told Business Insider. “Luxury” is defined as a home priced anywhere from $2 million to $15 million, he said.
The rise in luxury hotels, apartments, condos, and homes in these areas has ultimately been sparked by economic growth as well as an increase in overseas buyers and travelers.
A tech boom is minting millionaires
Called “the next Silicon Valley” and referred to as “Startup Nation,”Israel has undergone a high-tech revolution, according to Knobil.
“Israel has become one of the world leaders in bio technology, cyber technology, artificial intelligence, online games, and high-tech agriculture,” he said.
It’s home to more startups per capita than any other country, and attracts more venture capital per person, Business Insider previously reported.
While multinational tech companies like Google, Apple, Facebook, and Microsoft have research centers in Israel, the country is also a hub for a plethora of successful local tech companies— Google bought GPS navigation app Waze for $1 billion and Intel spent $15 billion acquiring Mobileye for its autonomous driving technology.
As a result of this tech boom, “there have been extremely successful Israeli companies making extremely successful wealthy Israelis,” Knobil said. “The country has gone through a real revolution, which has fueled a demand for luxury houses and apartments.”
In this increased demand for luxury products and properties, high-rise condos have grown very quickly in the past 18 years and more luxury hotels and restaurants have developed, he added.
A rise in anti-Semitism in Europe is driving Jews to buy homes in Israel as an ‘insurance policy’
Aside from economic factors, there are also cultural factors at play. More Jewish immigrants are making Aliyah — migrating to their homeland of Israel — as a result of increased anti-Semitism across Europe, according to Knobil.
“In countries like France and Belgium, the Jewish communities are feeling insecure,” he said. Consequently, many Jews in Europe feeling nervous are purchasing second homes in Israel as a back-up plan, sparking an increased demand in luxury property. This is particularly true of Jews living in France, as well as those in Ukraine and Russia, Knobil said.
There has also been a resurgence of anti-Semitism in Germany, even taking shape as violent attacks, which German Chancellor Angela Merkel recently called “worrying,”according to CNN. A recent survey by the European Union found that more than one-third of European Jews have considered emigrating over the past five years because of a surge in anti-Semitism.
There’s also what Knobil calls “the Corbyn factor” in the UK — Jeremy Corbyn, the leader of the Labour Party and leader of Her Majesty’s Most Loyal Opposition, is anti-Israel, Knobil said: “The Corbyn factor has had a massive influence on English Jews purchasing homes in Israel.”
According to an October 2018 poll, 38% of British voters believe Corbyn is an anti-Semite, The Times of Israel reported. And according to The Times in the UK, the Labour Party has failed to fully investigate more than 200 complaints of anti-Semitism against Corbyn, Business Insider’s Ben Gartside reported.
Knobil, who specializes in the UK market, said he’s seen an uptick in English Jews purchasing homes in Israel following the UK’s last general election in May 2017 when Corbyn did better than expected. In the ensuing 20-month period until December 2018, Knobil said, “I personally have been involved in purchases of Israeli residential property that comes to an aggregate of $45 million. If you take the 20-month period previous that, it would be $15 million.”
There’s also a small percentage of Jews from Argentina and Brazil purchasing homes in Israel because of the poor economic situation in their current countries, he added.
“These are holiday homes or insurance homes — they’re doing it as an insurance policy in case they feel they need to leave where they’re living,” he said.
While the government has tried to institute policies to cool down the property market by implementing a 3% higher purchase tax for foreign buyers, Knobil said it hasn’t been particularly successful because Jewish communities across Europe are so keen on getting that “insurance policy.”
Tel Aviv is a top travel destination, and tourists seek luxury
But the luxury property market in Tel Aviv hasn’t just been catering to the demand of wealthy Israelis and overseas buyers both looking for residences — it’s also meeting the needs of travelers.
“Tel Aviv has seen a recent influx in tourism and from that, an increased demand in luxury hotels,” Galit Heller, director of sales and marketing at The Jaffa, a five-star hotel in Tel Aviv, told Business Insider. The city has been cited as a top travel destination across multiple outlets, including CNN’s 2019 list of places to travel and a fourth-place ranking on Virtuoso’s list, indicating a general consensus that Tel Aviv, and Jaffa in particular, is a top place to visit, she said.
“With an increased popularity, and a previous lack in the luxury hospitality scene, we see many luxury hotels popping up across Tel Aviv,” Heller said.
She said the typical luxury-seeking guest at The Jaffa is middle-aged (40-70 years old) and international — mostly from America, with some from the UK, Europe, or Russia — often traveling for leisure, but sometimes visiting for family occasions or work.
Heller said these modern travelers are seeking a different kind of luxury than what’s typically defined by grand, brand name hotels. In addition to top amenities, the best service, and location, they’re looking for a certain kind of experience. For example, The Jaffa creates a luxury experience that immerses guests in local history and culture, she said.
“They receive an authentic reflection of the local community and I think that is what modern day luxury is — connecting guests to local luxury,” Heller said.
Israel’s luxury property market boom may not last for long, though. “I think at the moment, it will level out — there’s been such a growth of these luxury homes, the supply is now meeting the demand,” Knobil said.
Article from business insider