Luxury High Up: High Rise Towers (in and around Tel Aviv)

Tel Aviv skyline is still pocked with tall construction cranes, even after two decades. Yet developers seem to find a few open lots to build large buildings. The latest large construction area, just north of the main train station (Sovidor / Central station), is at it's final phase of construction. An extension to one of Tel Aviv's old upscale neighborhood (Bavli.) Also, in other areas of Tel Aviv and surrounding towns (Givatay'im, Ramat Gan, Petach Tikva) high rise luxury apartments are being built at a steady pace. These buildings are typically 20 stories or more high (up to 39 stories.) In these new towers 2 to 3 bedroom apartments, on average, sell between 2 to 3 million shekel ($550 to $830 thousand.) Design is similar: finished in glass and white stone exterior. Interior is modern in an open floor plan unique to Israeli design.

Economically, high rise luxury residential construction is changing the Israeli landscape. Somehow, families can afford what seems to be expensive properties. In many locations, high rise luxury apartments cost three to five times what apartments built thirty years ago a block away are selling. Luxury apartments is creating sub-sectors in interior design, high-cost home appliances, designer furniture, and various technology driven products (home theater, smart home, and gaming.) The economic environment is causing high inflation in the real estate field, not just in new construction. It is causing raise in property cost in older neighborhoods which will probably never be converted to new construction, but are in good locations. There is a trend in revitalizing and upgrading older buildings, either completely at once or one apartment at a time. There is also pressure from builders and customers on banks to increase credit lines. The changes are so sweeping, forcing the Bank of Israel (the national state regulator) to decrease credit availability to personal mortgages. Another consequence of the high inflation in real estate is the investment in the real estate market instead of other forms of investments (equities, bonds). In a small country, every movement where money is invested and created disturbs something else. So everyone gets ready for changse and somehow follows the changes, either actively of just by sitting at the sidelines and watching.     

Israel's architects and builders are creating a unique modern design style. New complete neighborhoods and new buildings in older traditional areas gleam in white and glass. They are distinct by sharp lines delineating each floor and small balconies. Israel's luxury construction industry is starting to gain international appeal. The last decade, Israeli architects and construction companies have been plowing their trade in Africa, Europe, Asia, and America. Israel's unique urban-modern construction, with steady growth in desire to upgrade their living standards, created an opportunity for the building industry. Yet, just like in other fields, Israeli companies are not satisfied in the small local market. While exact numbers are hard to verify, architects and builders hint at 30% to 50% of all construction design and management work being done outside Israel. An additional benefit of the luxury residential construction experience comes in the form of high-end commercial building experience. From medium to large malls all the way to office and industrial construction, Israeli architects have experience in a wide range of building types. So if you need a place to invest and want a good return, take a look at the Israeli high-rise residential and commercial building sector. You can also invest indirectly in Israeli construction and engineering companies traded on the Tel Aviv stock exchange.