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Luxury Real Estate in Israel


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Published On: Oct 18, 2012

Investing in Luxury Real Estate in the Holy Land

When the famous economist Milton Friedman was in Jerusalem, the reporters asked him if he could tell them the whole Torah (Jewish name for the first five books of the Jewish Bible) of economics while standing on one foot. He told them that there is no such thing as a free lunch, and all the rest is merely an explanation. 

You do not need to be a Nobel Prize winning economist though to explain the appeal of investing in luxury real estate in Israel. It is as basic as perhaps the most fundamental of economic laws – the law of demand and supply. You didn’t study economics? No problem. Suffice to say that, all else being equal, as demand for something increases so does its price and as supply of something increases, its price falls. This may not earn you a degree in Economics but it is a good start.
So how does this apply to the luxury real estate market in the Holy Land? For starters, Israel is tiny; smaller than the state of New Jersey. Consequently, its supply is very limited. As for demand, Israel may have only 6 million Jewish residents, yet you have a similar number of Jews around the world who consider Israel their home and want to own a piece of it. Consequently, the demand is strong and, with the increase in Muslim fundamentalism around the world, many of these Jews have bought or are looking to buy a home in Israel. Similarly, many of these Jews are people of considerable means.

We have ascertained that supply is tight and will remain so and that demand is strong and will remain so. Add to this that in any given country there are only a few places that are deemed to be luxury locales. In Israel, that would include certain areas of Tel Aviv and Jerusalem, Savyon, Herzliya Pituach, Kfar Shmaryahu, Arsuf, and Caesaria, with most investment opportunities limited to Tel Aviv, Jerusalem, and Herzliya Pituach. This further limits the supply side of the equation.
Add these very favorable demand/supply characteristics to one of the few vibrant economies in the world; add accommodative monetary policy and you have almost a perfect storm for investing in luxury real estate in Israel.
The world is undergoing historically difficult economic times, yet it is the top 1% who continue to flourish. This augurs well for luxury real estate in general and luxury real estate in Israel in particular.

Article was written by a luxury apartments in Tel Aviv project owners.

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