Bought an apartment in Tel Aviv - and sold at a loss of one million shekels
A couple who bought an apartment on Dizengoff Street waited 4 years only to discover that the apartment's price had dropped significantly. On the other hand, those who held an apartment in Tel Aviv for a long period earned over 10% per year.
Nearly 4 years ago, a couple purchased an apartment on Dizengoff Street in Tel Aviv. There was a good reason for this: the location was great, real estate prices were climbing in 2022, and the feeling was that the phenomenon many then called the 'real estate bubble' would not stop. The deal, signed in September of that year, when interest rates had already begun to rise, included a 74-square-meter apartment at a price high relative to the surroundings: they paid 4.94 million shekels for a 3-room apartment on the first floor.
Recently, the owners decided to sell. They put the apartment up for sale and were forced to lose money to get rid of it. The contract was signed at the end of June, with the transaction price standing at 3.8 million shekels. The seller lost over a million shekels to get rid of the apartment. It is possible they bought another apartment, or they simply understood that this is the price you pay to realize an asset in Tel Aviv during this period.
Tel Aviv can pull the entire apartment index up or down. It constitutes an important share of it, as over half of the transactions are from the center and Tel Aviv. When the share is high, every transaction has weight, including this one.
In contrast, those who held an apartment for the long term earned over 10% per year. On Emanuel HaRomi Street, for example, a person sold an apartment that had been in his possession for over 19 years. He purchased it in April 2007 for 996 thousand shekels, a very low price even compared to small apartments, and sold it just recently for 3.07 million shekels. This is a street parallel to Ibn Gabirol — within walking distance of all of Tel Aviv's entertainment centers. And yet, this is a 45-square-meter apartment that reflects a price of over 68 thousand shekels per square meter. The profit: 208%.
One can see many transactions in Tel Aviv, but usually, those who held an apartment for the short term lost money. Those who held an apartment for the long term surely earned. Recently, an asset owner realized an apartment on Ben Yehuda Street, which he had purchased in November 2021, at exactly the same price he bought the apartment for — 3.5 million shekels. But when looking at the overall transaction, he lost. This is called a real capital loss. The buyer bought an apartment and sold it after paying lawyers, and sometimes a broker as well.
And finally, we took another transaction that was made recently in which the seller bought the apartment at the end of 2020. After all, in the two years that followed, there were increases of nearly 30%, and on the other hand, there has been a stagnation in the Tel Aviv market in the recent period. We checked what happened to that buyer, who bought the apartment for 2.816 million shekels. Well, he sold that same apartment on Klonimus Street for a price of 3.5 million shekels. The yield: nearly 25%. That is, those who purchased apartments even before the increases of 2021 earned. Is this a decent profit? A yield of nearly 5% per year. In such periods, this is not a bad figure, but it also testifies to the slowdown in the market that has been echoing since the beginning of 2023.
