A real estate deal with an unusual amount of hundreds of millions of shekels took place in Tel Aviv last August – according to a post published by Galit Ben Naim, who is responsible for reviews of the Chief Economist’s Division at the Ministry of Finance.
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Ben Naim revealed in a post on Facebook that in August an unusual transaction took place in Tel Aviv, but did not provide details beyond that. “One of the most expensive transactions in the local housing market ever, when even a price of ‘up to one hundred and twenty’ (one million shekels) is not high enough,” Ben Naim pointed out.
From information obtained by Globes, it appears that this is a property located in district 5 of the city (which includes the heart of the city), in one of the existing buildings, and apparently spreads over an entire floor, and it is a deal that was apparently closed for over NIS 100 million. It is not yet known who the parties to the deal are and what the exact price is.
Tel Aviv is in danger of a bubble
Ben Naim added that “Where was the apartment purchased? In a city that ‘starred’ this week in a UBS study in another index, of a high potential for the existence of a bubble,” she wrote, pointing to Tel Aviv.
A research report by the Swiss bank UBS, published about a week ago, indicates that the city of Tel Aviv is at high risk of a real estate bubble, and this is because of the amount of mortgages that have not yet been repaid. The report also shows that the nominal rate of increase compared between the second quarter of 2022 and the first quarter of 2021 is 20 %, and in this respect Tel Aviv ranks fourth in the world, after Miami, Los Angeles and San Francisco.
On the other hand, the price increase considering the rate of inflation during this period was 12.9% in Tel Aviv – and in this respect it ranks second, only after Miami. According to the data, in the last ten years prices in Tel Aviv have increased by 5.4%.
Also in the rental sector, the report shows that the time required to return an investment in a property is currently 45 years – 11 years more than the time required in 2012.
In general, the Central District leads the price increases and pulls the national housing price index upwards. In the last year, apartment prices in this district increased by 21.2%; The northern districts (20.3%) and Haifa (20.1%) also pulled the index upwards. The districts of Jerusalem (increase of 17.6% in the last year), Tel Aviv (17.1%) and South (16.2%) are the districts that recorded the more modest annual increases.