The Unseen Asset: Why a Storage Room is the Smartest Upgrade in Israeli Real Estate
In Israel’s crowded and competitive real estate market, buyers focus on square meters, balconies, and proximity to the city center. Yet, a powerful, often underestimated feature is quietly reshaping property values: the private storage room, or “makhsan” (מחסן). This is not merely about convenience; it’s a strategic financial decision that adds tangible value, enhances rental yield, and boosts resale potential in a market defined by limited space.
The Numbers Don’t Lie: A Market Shift Towards Utility
As Israel’s population grows and urban apartments become more compact, the demand for extra space has intensified. Developers of new construction projects have responded by integrating private storage rooms, particularly in mid to high-end buildings. This feature directly addresses a major pain point for city dwellers. In cities like Tel Aviv, where every square meter is a premium, a storage room can command a price premium of 5-15% over comparable units without one. For renters, the value is just as clear, with apartments featuring storage often fetching an extra ₪500–₪1,000 per month.
This trend is a direct reaction to market realities. With a persistent housing shortage driving prices, buyers expect more functionality for their investment. Features like storage rooms, once considered a luxury, are now becoming essential amenities for families, professionals, and downsizers.
Price vs. Value: Deconstructing the Storage Room Premium
On paper, an apartment with a dedicated makhsan carries a higher price tag, often adding ₪50,000–₪150,000 to the total cost in central districts. However, a purely cost-based view misses the bigger picture. The true calculation is one of value and return on investment (ROI). For an investor, the slightly higher rental income can improve annual yield in a market where returns typically hover between 2.5% and 4%. For a homeowner, it eliminates the recurring cost and inconvenience of external storage units, which are themselves a growing business in space-starved cities like Tel Aviv.
| Metric | Apartment Without Storage | Apartment With Storage |
|---|---|---|
| Average Price Premium | Standard Market Price | + ₪50,000 – ₪150,000 |
| Monthly Rental Premium | Baseline Rent | + ₪500 – ₪1,000 |
| Typical Rental Yield | ~2.5% – 3.5% | ~2.8% – 4.0% |
| Resale & Liquidity | Standard Market Time | Sells faster with broader appeal |
Spotlight: 5 Key Neighborhoods Where Storage Unlocks Value
The demand for new construction with storage is not uniform across Israel. It is most pronounced in dense urban areas and family-oriented suburbs where space is at a premium.
Ramat Gan: The Commuter’s Edge
Popular with professionals commuting to Tel Aviv’s business districts, new high-rises in Ramat Gan frequently include storage as a standard feature. Buyers here are often young families and professionals who value the proximity to the city but require the practicality that older, smaller Tel Aviv apartments lack. The gross rental yield in Ramat Gan for an apartment with good amenities is around 3.08%.
Petah Tikva: The Family Growth Hub
As one of the Gush Dan region’s key satellite cities, Petah Tikva is undergoing significant expansion with family-focused projects. Here, a storage room is a major selling point for households with children, sports equipment, and seasonal items. Its housing prices have seen modest growth, making it a value-driven alternative to Tel Aviv.
Jerusalem (Har Homa & Arnona): Balancing Tradition and Modern Needs
In Jerusalem, new developments are increasingly catering to the expectations of both local and international buyers, for whom amenities like a Succah balcony and a storage room are essential. Neighborhoods like Har Homa and Arnona offer modern construction standards where storage is part of the package, appealing to families seeking a balance of affordability and functionality in the capital. The average home price in Jerusalem reflects this demand for modern amenities.
Netanya: The Coastal Investment Play
Netanya’s coastal zones are a magnet for foreign investors and Israeli buyers seeking a lifestyle upgrade. New projects in sought-after areas like Ir Yamim boast premium amenities, and storage rooms enhance their rental appeal to both long-term tenants and tourists. With gross rental yields projected between 3-5%, the inclusion of a storage unit strengthens the investment case.
Holon: The Ascent of the Mid-Market
Holon attracts mid-market buyers who appreciate modern buildings with thoughtful designs. For this demographic, a storage room is a practical extra that significantly improves quality of life without the price tag of central Tel Aviv. As urban renewal projects continue, Holon represents a solid investment in functional, modern living.
The Investor’s Calculus: Analyzing the ROI
Beyond convenience, buying an apartment with a storage room involves several financial considerations. Two key recurring costs are Arnona (municipal property tax) and Va’ad Bayit (building maintenance fees).
- Arnona: This tax is calculated based on the property’s size in square meters, not its value. A storage room is typically included in the calculation, often at a reduced rate compared to living space, adding a marginal amount to the annual bill.
- Va’ad Bayit: These fees cover the maintenance of common areas like elevators, gardens, and lobbies. In new buildings with extensive amenities, these costs can range from a few hundred to over a thousand shekels per month, and the storage area’s square footage may be factored into your share.
Despite these minor additional costs, the financial equation remains favorable. The enhanced desirability for both renters and future buyers often outweighs the marginal increase in running costs, protecting the property’s long-term value and ensuring its liquidity in a competitive market.
Too Long; Didn’t Read
- A private storage room (“makhsan”) is a high-value feature in new Israeli apartments, driven by demand for utility in dense urban areas.
- Properties with storage can command a price premium of 5-15% and rent for ₪500-₪1,000 more per month.
- This feature is most common in new projects in central cities like Tel Aviv, Ramat Gan, and Jerusalem, as well as growing family hubs like Petah Tikva.
- From an investment perspective, the added rental income and higher resale value often provide a strong Return on Investment (ROI), despite slightly higher taxes (Arnona) and maintenance fees (Va’ad Bayit).
- For buyers, it’s a practical upgrade that enhances lifestyle and future-proofs the asset against an increasingly space-constrained market.
