Last year was a successful one in the luxury real estate market, even compared to the beginning of this year. In January 2021, 59 luxury home deals were made – the highest for NIS15,500,000, in Tel Aviv. In February, 57 luxury deals were recorded, the highest for NIS29,785,100, also in Tel Aviv.
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Here's an interesting fact: January 2021 saw a year-over-year decrease of 42% (59 deals, compared to 102 in January 2020). February 2021 saw a decrease of over 40% (with 57 deals, compared to 96 in February 2020).
Last year was tough in terms of public health and the economy. However, a new study, commissioned by the Israel Hayom Real Estate Magazine, shows that, surprisingly, the luxury market has barely felt the impact of the lockdowns and restrictions imposed during the pandemic.
The year will be remembered in Israel's real estate history books as the year of the coronavirus. The pandemic, as has been widely discussed, is not only a health crisis but also an economic one. The study reinforces the conjecture that Israel's wealthy suffered the consequences of the crisis less than others, at least when it comes to buying luxury properties at sky-high prices.
The study was conducted by a real estate expert and former Chairman of the Real Estate Appraisers Association Ohad Danos. It examined the number of deals for luxury properties made in the course of 2020, broken down according to month and city.
Luxury properties are defined as properties sold for at least NIS 5 million. The study included new and second-hand properties. The number of deals in 2018 and 2019 was also examined.
How much?
In 2018, 931 luxury properties were sold, while in 2019, when the luxury market was just beginning to bounce back after a few tough years, 1,045 deals were completed.
In 2020, a total of 922 luxury properties were sold in 57 Israeli settlements – a number that should by no means be taken lightly. After all, the Israeli public was under lockdown for a quarter of the year (87 days); nevertheless, in nominal terms, the difference represents a minimal drop of about 12% compared to 2019, and only about 1% compared to 2018.
Apparently, the lockdowns had a double impact, felt in opposite directions. On the one hand, they created a real physical barrier when closing deals, particularly with regard to luxury properties. On the other hand, quite a few wealthy people apparently decided to take steps they had previously delayed, with tempting investments abroad becoming irrelevant.
The study shows a high correlation between the lockdown periods and the number of deals per month. The lowest number of deals was recorded near the end of each lockdown. The third lockdown continued far into 2021, until Feb. 21.
The significance of these findings is that the public is interested in buying luxury properties, but could not complete transactions due to logistic problems.
Where?
Looking at the geographical breakdown, we can see that out of 57 localities where luxury deals were signed, there were only nine with a two-figure number of deals.
At the top of the list, and far above the rest, is Israel's luxury real estate capital, Tel Aviv, with no less than 430 deals – about 47% of the total. Tel Aviv saw a surge in luxury deals, with its wealthy residents improving their positions, buying luxury properties, and generally taking advantage of the narrow window of opportunity that opened in 2020. In this context, we should mention one of the largest deals – a penthouse on HaYarkon Street that sold for NIS108 million.
In the second place, trailing far behind Tel Aviv, was Jerusalem with 162 deals – showing that, despite the pandemic and its outsized impact on the city, some buyers took the opportunity to grab attractive luxury properties.
In third place was Herzliya. Although it recorded only 67 deals, in January and July 2020 two deals were made in the city totaling together about NIS 456 million (over NIS 200 million each). In fact, Herzliya tops the list of Israel's ultra-luxury property deals for 2020.
Following is Ramat HaSharon, with 34 deals. Netanya, a relatively inexpensive city in the luxury market, came in a surprise fifth with 30 luxury deals. Ramat Gan had 28, Ra'anana and Givatayim each had 23, and, at the bottom of the two-figure list, was Savion with a paltry 16 luxury deals.
Clearly, the Tel Aviv District leads the pack. However, in Jerusalem and in key cities in the Central District quite a few luxury deals were also completed.
When?
A month-by-month analysis shows that the largest number of deals were made in January 2020, when the coronavirus crisis had not yet broken out, and in the summer months (June-August), when no lockdowns were imposed and when the market usually peaks.
Looking at the highest-priced deals, here as well Tel Aviv tops the list. In nine out of 12 months the largest deals were signed in the city. In the other months, the largest deals were in Herzliya (twice) and in the moshav Bnei Zion.
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"Israel's rich have definitely grown richer during the pandemic," adds Danos. "The problem is that while they are, as usual, enjoying their money and power, the weaker classes continue to take the hardest hits. Importantly, the real estate market in Israel has again proven that it is strong and stable, which gives us hope that construction will continue and that apartment supply will increase – a change that is sorely needed."
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