Buying Penthouses in Israel: The Definitive Guide (2025)
If you want to buy, rent, or invest in an Israeli penthouse this year, you’re in the right place.
The truth is:
The Israeli luxury market has completely changed in the last 12 months.
(Especially in Tel Aviv and Jerusalem.)
In this guide, I’m going to show you exactly what’s happening with prices, yields, and taxes right now.
The best part?
I’ve researched everything as of late 2025 so you don’t have to.
Let’s dive right in.
The “Luxury Paradox”: Why Penthouses Are Defying the Market
Here is the deal:
The general housing market in Israel is cooling down.
According to Q3 2025 data, general home prices in the Tel Aviv district actually fell by 7.6%.
But the luxury penthouse market? It is operating in a totally different reality.
Why?
Scarcity.
While standard 4-room apartments are sitting on the market, “Trophy Assets” (penthouses with sea views or Old City views) are seeing resilient demand.
The Data:
Tel Aviv Luxury: Prices for prime penthouses have hit 100,000–150,000 NIS per square meter.
Jerusalem Surge: Unlike the coast, Jerusalem prices are up 9.3% year-over-year.
The Takeaway: Don’t wait for a “crash” in the ultra-luxury sector. High-net-worth buyers are parking cash in top-tier assets as a hedge against volatility.
Buying vs. Renting: The 3% Rule
Should you buy a penthouse or just rent one?
This is the #1 question I get.
And the answer lies in one simple number: 3.1%.
That is the average gross rental yield for luxury apartments in Tel Aviv right now.
If you are an investor: That yield is low. (Ideally, you want 5%+). However, you aren’t buying for cash flow. You are buying for capital appreciation. Tel Aviv prices are predicted to grow 15-20% cumulatively over the next 5 years.
If you are a resident: It is almost always cheaper to rent than to buy.
Cost to Buy: ~25 Million NIS for a luxury penthouse.
Cost to Rent: ~30,000–40,000 NIS per month.
The math heavily favors renting if you want to keep your liquidity liquid.
Location Analysis: Tel Aviv vs. Jerusalem
Most people think Tel Aviv is the only game in town.
They’re wrong.
Here is the breakdown of where the “Smart Money” is going in 2025.
1. Tel Aviv (The “Old North” & Seafront)
Vibe: Cosmopolitan, fast-paced.
Price: 68,000 NIS/sqm (Average) to 150,000 NIS/sqm (Luxury).
Trend: The “Sde Dov” neighborhood is releasing huge inventory, but the classic “Old North” remains the king of value retention.
2. Jerusalem (The “Future-Proof” Market)
Vibe: Historic, spiritual.
Price: ~3.12 Million NIS (Avg Apt) / 9M+ NIS (Luxury Penthouses).
The Secret: Look for properties near the new Light Rail lines. Data shows these locations are seeing a “Future-Proof Quotient” boost, outperforming heritage neighborhoods that lack accessibility.
The “Tax Trap” (New for 2025)
This is huge.
If you haven’t bought property in Israel since 2024, you need to read this.
The government has updated the tax rules to cover war costs.
Here is what you need to know:
VAT is Up: The Value Added Tax jumped to 18% in January 2025. This applies to new developer purchases (including that penthouse “on paper”).
Purchase Tax (Mas Rechisha): If you are a foreign resident, get ready to pay. The tax starts at roughly 8% on the first shekel and climbs to 10% for luxury tiers.
The Olim “Loophole”: New Immigrants (Olim) got a win. You now pay 0% tax on the first ~1.98 Million NIS of value.
Pro Tip: Always calculate your “All-In” price.
That 20 Million NIS penthouse is actually costing you nearly 22.5 Million NIS to close.
The Bottom Line
Buying a penthouse in Israel in 2025 is a defensive play, not a cash-flow play.
Buy if: You want a dollar-denominated “safe deposit box” with a view of the Mediterranean or the Kotel, and you plan to hold for 10+ years.
Rent if: You want the lifestyle without locking up $5M+ in an asset yielding only 3%.
Invest if: You focus on Jerusalem’s emerging transport hubs or Tel Aviv’s scarcity-driven “Old North.”
What do you think?
Are you bullish on Jerusalem or Tel Aviv for 2026?
Let me know.
