Market Trends and Foreign Demand
- Surging Diaspora Investment: Real estate agents report a rising trend of diaspora Jews purchasing property in Israel, often driven by concerns about rising antisemitism abroad and a desire for a safe haven. Some clients have openly said they “don’t feel safe” in their home countries and want a fallback home in Israel ( rising trend of diaspora Jewry purchasing property in Israel – The Jerusalem Post ) One property firm saw overseas sales jump 78% since mid-2023, prompting a 60% expansion of its staff to meet demand ( rising trend of diaspora Jewry purchasing property in Israel – The Jerusalem Post )
- Resilient Post-War Market: Despite the recent conflict and subsequent ceasefire, Israel’s housing market remains resilient and is still growing ( rising trend of diaspora Jewry purchasing property in Israel – The Jerusalem Post ) Demand from both local and foreign buyers has stayed high, buoying prices and activity even after months of uncertainty. Economic indicators also instill confidence: GDP grew 3.8% in Q3 2024 with a 21.8% surge in residential construction investment, and inflation held at 3.5%, outperforming global trends ( rising trend of diaspora Jewry purchasing property in Israel – The Jerusalem Post ) These factors suggest strong fundamentals underlie the real estate sector’s momentum.
Major Property Development Updates
- Jerusalem Tower Project Approved: A significant development plan in central Jerusalem took a step forward. The Jerusalem Urban Renewal Subcommittee approved the “Davidka Complex” plan, which calls for constructing two high-rise towers (38 and 39 stories) at Davidka Square (“Davidka Complex: 40-Story Towers Approved in Jerusalem”) The project will include 390 new apartments, 20% of them small units (up to 55 m²) aimed at increasing affordable housing options (“Davidka Complex: 40-Story Towers Approved in Jerusalem”) It replaces an aging complex – including the well-known Abraham Hostel and adjacent residential wings – on a historic square that dates back to Israel’s early years (“Davidka Complex: 40-Story Towers Approved in Jerusalem”) The plan was revised from an earlier single-tower proposal (43 floors, 456 units) into a twin-tower design and resubmitted at the end of January (“Davidka Complex: 40-Story Towers Approved in Jerusalem”) The mixed-use development will incorporate residential space, offices, commercial areas, a hotel, and public facilities, while coordinating with Jerusalem’s transit infrastructure (the light rail runs through the site, and provisions are made for a future railway station) (“Davidka Complex: 40-Story Towers Approved in Jerusalem”) This approval is a key milestone, enabling the plan to move toward the formal permitting and construction phase.
Government Policy and Housing Updates
Budget Impasse Affecting Housing Projects: Government fiscal policy is in the spotlight as Israel operates without an approved 2025 state budget. A senior Treasury official warned that the current stopgap “continuing budget” (about ₪100 billion short of the proposed budget) limits new government spending and planning (Israel’s 2025 budget delay puts economy and projects at risk – Israel News – The Jerusalem Post ) One consequence is a delay in post-war rebuilding efforts: rehabilitation plans for communities in the northern and southern regions – areas impacted by recent conflict – are largely stalled under the funding constraints (Israel’s 2025 budget delay puts economy and projects at risk – Israel News – The Jerusalem Post ) Without a new budget, grants for rebuilding homes and infrastructure in those areas cannot move forward, creating uncertainty for residents awaiting assistance. Officials caution that if the budget isn’t passed soon, the situation could worsen, further slowing projects and development initiatives across the country (Israel’s 2025 budget delay puts economy and projects at risk – Israel News – The Jerusalem Post )
Other Policy Moves: In the backdrop, authorities are adjusting fiscal levers to manage the housing market and war recovery costs. (For instance, tax measures taking effect in 2025 raise VAT on new home purchases by one percentage point and add a surtax on high-value property gains (Housing snapshot: Home sales and rentals across Israel in January 2025 | The Times of Israel) aimed at cooling demand and generating revenue for recovery efforts.) These policy changes, while not all announced today, form part of the context influencing Israel’s real estate landscape as of February 4, 2025.
