Top deals: Herzliya houses trump Tel Aviv penthouses

The houses in Herzliya Pituah triumphed last year, and not for the first time, over Tel Aviv’s penthouses. The most expensive residential deals in Israel in 2022 once again proved that with all due respect to Tel Aviv’s luxury high-rise apartments, there is no substitute for a large house and extensive garden, especially when it is overlooking the sea.

There were three homes sold for more than NIS 100 million in Israel in 2022 – two of them were a stone’s throw from each other in Herzliya Pituah and the other was in Tel Aviv. Normally there are no more than two such real estate deals in Israel over NIS 100 million in any given year.

Although the full final figures are not yet available for 2022, from the data already released it is possible to draw a fairly accurate picture of what happened last year in Israel’s high-end, luxury housing market. There were 348 deals over NIS 10 million that have been recorded on the Israel Tax Authority website for 2022, representing 0.3% of the overall homes purchased in Israel last year.

Even if more deals are added to the site in the coming weeks, it will not significantly change the fact that there were 40% less such high-end deals over NIS 10 million in 2022 than there were in 2021. This is a bigger fall than in the overall market where there was a 25% decrease in the number of houses sold last year compared with 2021. In fact in the first four months of 2022, over two thirds of the high-end housing deals were completed, with only one third of the deals over NIS 10 million in the remaining eight months of last year.

Between luxury and mega-luxury

It is important to distinguish between luxury and mega-luxury because a large part of the fall in deals last year was in the lower luxury range between NIS 10 million and NIS 40 million. In this price range buyers are more dependent on the large mortgages that they take and are therefore more sensitive to interest rate hikes. Buyers in the higher mega-luxury range are less concerned about interest rates and the number of deals in this price range only fell 205 last year.

Why this decrease, if the buyers are indifferent to the economic situation in Israel? Firstly, because these high-end buyers are not completely indifferent. No one likes to invest a huge fortune in real estate in a country in economic crisis, even if they have the necessary funds. Secondly, the global situation is not so marvelous to say the least. Thirdly, the war in Ukraine and the measures taken against Russian oligarchs make it very difficult for them to purchase homes in Israel, and real estate agents in Israel say that, unlike in previous years, since the outbreak of the Russia-Ukraine war they are almost not on the market. All of this makes 2022 unique in this respect, and despite the huge prices fetched by some properties last year, which in recent years was predominantly the preserve of foreign residents, the money in 2022 spent buying high-end properties was mostly Israeli.

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If until a few years ago there was talk of an “invasion” of oligarchs and other foreign residents to Herzliya Pituah, the market there has stayed firm despite their disappearance. In this mega-luxury neighborhood, 26 deals of over NIS 10 million were recorded in 2022, compared with 31 deals in 2021.

The most expensive deal of 2022 was on the most expensive street in the country – Galei Techelet Street in Herzliya Pituah. In the western part of the street, adjacent to cliffs overlooking the Mediterranean, are Israel’s most expensive homes. There is the former US Ambassador’s residence bought in 2020 by the late Sheldon Adelson for NIS 230 million. In 2010, Teddy Sagi purchased the house next door to Adelson’s house, at 46 Galei Techelet Street, from businessman Zaki Rakiv for NIS 145 million.

In a deal recorded on the final days of 2022, Israeli-Russian businessperson Boris Kuzinez sold his house at 66 Galei Techelet for NIS 173 million – a 1,000 square meter house on 1,300 square meters of land. The house was bought by the S. Horowitz law firm as trustees, which refused to comment on the matter, although it would appear that the person behind the deal is an Israeli businessperson.

The price puts this deal ahead of the one in which Roni and Ifat Irani, the owners of the Factory 54 fashion company, bought a three-floor 1,200 square meter penthouse in the Shalom Meir Tower in Tel Aviv for a reported NIS 145 million.

Back to Teddy Sagi and Galei Techelet Street, where last year the Israeli billionaire completed the third most expensive deal in 2022 when he bought 56 Galei Techelet for NIS 100.8 million – a seven-room 870 square meter house on a 1,000 square meter – from businesswoman Arlene Strelitz.

Breaking the record price of NIS 200,000 per square meter

In the fourth largest residential real estate deal last year Shari Arison sold her three-floor penthouse on the 24th-26th floors of the tower at 1 Hashoftim Street in Tel Aviv to French-Jewish businessman Marc Eisenberg for NIS 90 million.

At 55 Hayarkon Street in Tel Aviv is Israel’s most expensive real estate project – David Promenade Residences, a 28-floor luxury high-rise developed by Henry Taic, who also owns the David Intercontinental Hotel. In the tower deals have been completed at NIS 130-160,000 per square meters and last year a 438 square meter apartment on the 24th floor was sold for NIS 88 million. And that has not been the most expensive apartment sold in the tower. In 2021, a 680 square meter apartment on the 20th floor was sold for NIS 108.6 million – reflecting a record price of more than NIS 200,000 per square meter.

Back in Herzliya Pituah on Ha’eshel Street, at the end of 2021, Ori Allon, owner of real estate tech company Compass and the former owner of Hapoel Jerusalem basketball team, purchased a house on the street for NIS 180 million. In 2022, two other top-rated deals were carried out in this street. In the sixth highest deal last year, a foreign resident purchased a 500 square meter house on a 1,000 square meter lot in Haeshel Street for NIS 87 million. Nearby, in the eighth highest deal a 700 square meters house on 2,200 square meter near the German embassy was sold for NIS 62.8 million.

The seventh highest deal last year was in Tel Aviv’s Neve Tzedek on Shabazi Street where a 750 square meter home was sold for NIS 80 million.

This constant competition, between the luxury of a huge penthouse in a high-rise in the heart of Tel Aviv and a large house and garden in Herzliya Pituah will persist in the market, and not only because of the contrasting nature of the properties, but mainly because of the geographical proximity between them. There are places in the world where the distance between neighborhoods with luxury housing and the heart of the city prevents the existence of such competition, whereas here the distance between the houses and penthouses is just a few kilometers.

What will the luxury real estate market look like in 2023? Economic problems are likely to weigh on the market or at least dampen the appetite, even among the wealthiest, to purchase homes during this period.

The political uncertainty, and planned government measures, may also affect this market, in which buyers want first and foremost quiet, calm and safe places to invest in real estate.

Published by Globes, Israel business news – en.globes.co.il – on February 14, 2023.

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