{"id":31315,"date":"2016-12-23T01:20:43","date_gmt":"2016-12-23T06:20:43","guid":{"rendered":"https:\/\/thatdope.com\/travel\/investments-in-israel-the-property-boom-explained-by-an-expert\/"},"modified":"2016-12-23T01:20:43","modified_gmt":"2016-12-23T06:20:43","slug":"investments-in-israel-the-property-boom-explained-by-an-expert","status":"publish","type":"post","link":"https:\/\/thatdope.com\/travel\/investments-in-israel-the-property-boom-explained-by-an-expert\/","title":{"rendered":"Investments in Israel: the Property boom explained by an expert"},"content":{"rendered":"
<\/p>\n
Palace Magazine <\/a>asked\u00a0Alexander Karolik-Shlaen EMBA, economist, real estate investor and CEO of Panache Management, his views on investments in Israel.\u00a0<\/em><\/p>\n Most of the time, I am interviewed or asked to advise on investments in Asia<\/a> and particularly in Southeast Asia, which became the focal point of world growth and investment. However, this time the magazine\u2019s editor asked me something rather surprising, to analyse and write about the relatively unknown to most readers in Asia \u2013 the property boom of Israel.<\/a><\/span><\/p>\n I was glad to pick up on this fascinating subject as I was in Israel last summer and also a couple of years back, when I was looking for targets to invest in various technology, pharmaceutical and biomedical companies on behalf of a mainland Chinese local government organisation. After many interesting meetings, I also naturally checked on property, as I do in many other countries, for my investors and for myself.<\/span><\/p>\n When the world was in the throes of the worst financial crisis since the Great Depression, home prices in the US, Europe and Asia came crashing down, many individuals and banks went belly-up, but Israeli property prices rose. The property sector picked up speed as the crisis dragged on in many leading Western and Asian economies. It was as if Israel was a world unto itself. <\/span><\/p>\n According to the Central Bureau of Statistics (CBS), during the world economic crisis of 2008-2009 Tel Aviv property prices went up by a mind-blowing 41%! The situation was driven by local internal factors, namely, the very conservative behaviour by banks that was imposed by the Central Bank and a strong local economy.<\/span><\/p>\n An enormous money-making machine of innovation, research and development and technology, Israel is the world\u2019s leading start-up nation.<\/span><\/p>\n A tiny country of only 8 million people \u2014 0.1% of the world\u2019s population \u00a0\u2014 has more companies listed on the NASDAQ than any country in the world save the United States and China. Frequently cited as the world\u2019s most vibrant innovation hub, Israel boasts more start-ups per capita than any other country on the planet and the highest rate of entrepreneurship worldwide among women and among people over 55. This means more people are part of this tech driven economy. <\/span><\/p>\n Israel also produces more scientific papers per capita than any other nation, not to say, the highest number of scientists and engineers per capita. All of this translates into one of the highest rate of patents filed and to an amazing list of Israeli inventions that changed our lives.<\/span><\/p>\n The money that made local entrepreneurs rich is also handsomely rewarding many other a men and women who work for these successful enterprises. Eventually that money is found its way to property.<\/span><\/p>\n For the past six years, the Bank of Israel has been fighting the strong Shekel \u2013 one of the world\u2019s best performing major currencies \u2013 with a combination of ultra-low interest rates and aggressive currency interventions. A combination of low mortgage rates and land shortages have fuelled rising home prices in Israel. Prices have skyrocketed by 80% in nominal terms since 2007, according to the IMF.<\/span><\/p>\n The Geocartography stated that 82% of luxury apartments were sold in Tel Aviv and 12% in Jerusalem, with Herzliya and Netanya trailing behind. Even more expensive apartments \u2013which cost more than USD 8 million and account for 5% of the luxury deals \u2013 were found only in Tel Aviv.In Jerusalem, 27% of luxury apartments sold for USD 5.5 \u2013 8 million, while in Herzliya and Netanya the most expensive luxury units sold for less than USD 5.5 million. However,\u00a0<\/span>landed houses there go for much higher prices.<\/span><\/p>\n Tel Aviv, of course, leads the charts with an average price of USD 20,500 per square metre (approx. USD 1,905 per sq. ft.), compared with USD 19,000-19,700 per square metre (approx. USD 1,765 \u2013 1,830 per sq. ft.) in Herzliya or Jerusalem. The price per square metre in Tel Aviv can go up to as much as USD 38,000 (approx. USD 3,530 per sq. ft.) in luxury projects.<\/span><\/p>\n The city is well-known for its beautiful Mediterranean beaches. However, there are also great restaurants, bike culture and nightlife, making it one of Israel\u2019s most popular cities for property investment by foreigners.<\/span><\/p>\n Israel doesn\u2019t always come to mind immediately when one thinks of a leisure destination or buying a property. However it has been ranked as one of the top places to visit whether you\u2019re looking to see historical sites or party the night away. <\/span><\/p>\n Now allow me to show you some statistics that make the picture clearer. Israel\u2019s unemployment rate fell to 4.8% in May 2016, its lowest level since 1983, according to the CBS. Some economists believe this to be the \u201cnatural rate of unemployment\u201d. The country\u2019s unemployment rate has been gradually declining since 2003 and generally speaking, there is no unemployment in Israel. Wages have been rising at a 5% annual rate and have done so more or less for the last few years. Hence, the price increase of property is pretty clear \u2013 the country\u00a0<\/span>is booming.<\/span><\/p>\nIsrael, a world unto itself<\/span><\/h2>\n