Letter from Israel

Real Estate Rumble in Tel Aviv

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By Meredith Price

 

As Tel Aviv's popularity grows, so does the cost of rent.

"I don't think I'll win the bidding war," grumbles my friend Rona after seeing the fourth apartment for rent in one week. "I saw a guy in a suit heading into the building just after I left, and he'll probably offer them more."

With the apartment rental crisis getting worse every day, Tel Aviv property owners have started auctioning rent. Whoever bids highest gets the apartment, and with prices these days already through the roof —especially relative to the average salary —it's becoming impossible for many to stay in the city.

For the second time that day, Rona and I commiserated about the fact that every decent apartment in Tel Aviv is both exorbitantly expensive and difficult to rent because of the high demand and low availability.

"It's a nightmare," she says. "I'm considering moving back to Jerusalem."

Part of the problem is that Israeli law permits anyone anywhere to buy property here as long as it is privately owned. There are considerable tax exemptions for foreign citizens designed to encourage investment from abroad. According to the Bank of Israel, foreign investment in property here for 2006 totaled $1.43 billion vs. $192 million in 2002. And although U.K. residents were the highest percentage of foreigners to purchase real estate last year, it's hard to believe it wasn't the French.

Every August, Tel Aviv is overrun by les Français, but this year the numbers are particularly high. Topless sunbathers reading French gossip magazines indolently fry their skin on chaises longues for hours at a time. Families of French vacationers hit the beaches en masse by day and fill the restaurants by night. Everywhere you go, French is being spoken. Bakeries catering to the French, such as Boutique Central, advertise fresh baguettes, croissants and êclairs au chocolat. Le Librarie, a small French bookstore on Masaryk Square, is sold out of the French papers by 10 every morning. Corner cafês now cater to French tourists by offering menus in French, and places like La Gâterie (a hole-in-the-wall delicatessen on Ben Yehuda Street that sells the best croissant sandwiches in the city) rival the well-established French favorites, La Brasserie and Raphael's.

Signs saying "on parle Français" pop up in hair salons, bike rental stores and, most of all, real estate agencies. In fact, many of the real estate agencies within two miles of the beach have information about property in two languages: Hebrew and French. If the Americans or Brits can't read Hebrew or French, they're out of luck. Of course, the dollar signs and square meters are pretty universal, and their ratio is inßated. The going rate for a 45-square-meter, two-room, renovated apartment in an old building near the sea is $250,000. For those not familiar with the square meter system, it's about one square meter to 10 square feet, which means this apartment is about 450 square feet.

If you look at the average salary in Israel vs. the cost of even a minuscule apartment in Tel Aviv, things get even more outrageous. The average Israeli makes about 4,000 NIS a month (less than $1,000). Trying to buy an apartment, even a very small one, in the city of Tel Aviv is nearly impossible for anyone under 40 unless they have financial help from their parents or a trust fund.

According to Ynet News, the average monthly price for a two-room apartment in south Tel Aviv rose by 10 percent in May, now averaging $580 a month. For those who know Tel Aviv, the southern part of the city has a reputation for being the cheaper, more bohemian quarter where large apartments can be found at bargain prices. These days, even that is no longer true. A three-room apartment in central Tel Aviv, where the real estate is much more valuable, now averages $1,100 a month. The going rate for a two-room in the northern part of the city is about $830 a month.

A friend of mine who was paying $650 for a small apartment in the center of the city recently got a call from her landlady. She raised the price by $200 a month and told my friend, who has been living there for more than two years, to pay it or leave by the end of the month. Another acquaintance visited a small, run-down place on King George Street this summer. The landlord was asking $600 a month, which attracted hordes of desperate apartment hunters. And, there was no running water in the apartment! It's like a farce. Only, it's reality. Two neighbors in our building recently left for a similar, unexpected price hike by the landlord. Apartment owners everywhere are illegally slicing up 80-square-meter apartments into four, 20-square-meter cages and making huge profits. And like much else in the country, the government seems to be ignoring the problem. It's landlords gone wild, and they are taking advantage of the increased tourism and demand like rabid beasts.

Prices are so ridiculous that an engineer from Rehovot who wants to spend two weeks with his wife and three children in central Tel Aviv is willing to pay $200 a day for our two-room apartment. That's the rent for three months!

And with the increased tourism, the terribly low exchange rate with the dollar, and the once best-kept secret that Tel Aviv is one of the coolest places on the planet spreading like global wildfire, an end is nowhere in sight.

"That's it," says Rona, stirring some sugar water into her iced coffee as we continue to discuss the lamentable real estate crisis. "I'm moving to Jerusalem."

I don't blame her.

Meredith Price grew up in Marietta and bought a ticket to Tel Aviv on Sept. 10, 2001. She writes a column on Israeli innovations and cultural features for The Jerusalem Post. You can reach her at meredithmprice@yahoo.com.

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