War and Peace – The Effect on the Israeli Real Estate Market

It has been several months since the the most recent missions of the Israeli Air Force over Gaza and we are still feeling the effects of this latest war on the local real estate market. Foreign investment in Israeli real estate has all but disappeared.

During the first days of the war and afterwards many foreign investors sold off their apartments at prices of up to 15% less than what they bought them for. Many foreign investors who had been considering purchasing apartments cancelled their plans.

Jewish foreign investors seem to fear war and its effect on Israel and its economy and have abandoned the Israeli real estate scene.

In addition to the lack of foreign investors in the Israeli real estate market, there are also less Israeli investors. Where did these investors go? To Florida. Due to the falling prices of real estate in Florida and other US locations, many Israelis have begun to buy up apartments in these areas and rent them out through maintenance companies who guarantee these investors a set monthly income.

The Israeli government chased away Israeli investors in local real estate by raising purchase tax on the purchase of additional apartments and creating difficulties financing these purchases with a mortgage. The result is a steady flow of money out of the country and less apartments available for rent.

Perhaps it is time for the Israeli government to rethink its policies concerning the investment of Israelis and foreigners in Israeli real estate.