Author: Shaun Isaacson

Since October 2023, the Israeli real estate market has responded erratically to the many shocks and side-effects of the Iron Swords War, but the overall picture shows prices rising as fast as our national blood pressure!

In the Israel’s Central Bureau of Statistics latest review of changes in home prices from September 2023 to September 2024, they offer a clearer overview of the past 12 months. Despite rocket attacks and war on multiple fronts, the index of housing prices rose overall by 6.7% – one of the highest rises in recent years. Prices of new apartments rose by 3.6%.

Showing amazing resilience, or perhaps opportunism among investors, we saw an increase of 11.1% in Haifa prices, 9.5% in the North of Israel, 5.2% in the South of Israel, 7.7% in the central region, 5.9% in Tel Aviv, and 1.7% in Jerusalem.

Shaun Isaacson, CEO of Creative Estates Israel property management, recognizes that this is part of an on-going trend over the past decade.

“No matter how scary the news, demographic growth continues to drive the sale of apartments. My Jewish clients around the world tell me that they are more concerned about the long-term increase in antisemitism than the short-term impact of the war. They believe in the resilience of our country, and are willing to invest in the rebuilding of the northern and southern cities most affected by rocket attacks.

“Investors should not wait for the Israeli real estate “bubble” to burst, because even Hamas, Hizbollah, Iran and the Houtis have not been able to burst it!  These increasing house prices are further proof that #Am Yisrael Chai!”

Photo: Missile intercepted over Ashkelon – photo by Haim Zach / GPO

Do you know how much your property in Israel is earning every month? What rents are being collected and what costs are being incurred? Money management is a key element of the CEI property management service.

Creative Estates Property Management in Israel offers monthly updates to every property owner, providing real-time information on the return on their investment. Shaun Isaacson, CEO of Creative Estates Israel, keeps methodical records and provides monthly updates on every financial transaction for each property that they manage. Investors can monitor the electricity bills, bank charges, building committee fees, municipal taxes and insurance policy costs for their property. They can check that the rental payments have been received – often crucial when mortgage payments are due – and monitor the management costs and other expenses that they are paying. 

Monitoring expenses can be particularly crucial when a tenant leaves a property and Creative Estates advertises for new tenants and signs a new letting contract. Advertising and legal costs are kept to a minimum to ensure that the change of tenancy does not damage the profitability of the apartment. 

“Our goal is to keep every property fully tenanted so as not to miss a single month’s rent”, explains Shaun. “We look for high-quality tenants who can be relied upon to pay their rent on time, give proper securities and to keep the property clean and in good condition. At the same time, whenever we have a vacancy, we make it our priority to advertise in the right places and interview potential candidates quickly.  We provide real-time updates to our clients so that they can see that their income stream is steady and reliable.”

Shaun Isaacson not only has an MBA business qualification, but he is also a qualified Israeli lawyer, so he takes care of the rental contracts and all legal matters for his clients. This saves on legal expenses and speeds up the process of signing new tenants. It also means that he can advise his clients on any legal issues that arise with the building committee, local income tax rules, and any other aspect of real estate legislation. 

Simon J. from London is one of Shaun’s long-standing clients. He says: “I have had pleasant business dealings with Shaun as managing agent for my apartment since April 2013. As a lawyer, he was able to answer my questions on tax immediately and satisfactorily, he sends me regular updates, and always helps me save money where I can.”

When heating rental properties in Israel during the winter, safety and cost efficiency are the clear priorities for all landlords, tenants and property managers.

Israel’s winter season is short but can get very cold, particularly since homes are built to stay cool and are not insulated to stay warm!

As experts in managing properties in Israel, at Creative Estates we are conscious of the need to provide heating and cooling for the rental homes that we manage. Today, we recognize the dangers of using bar heaters, which can easily catch fire, so we make sure that tenants are using safe radiators and making optimum use of the heating systems that exist.

Standard Israeli Heating Systems

Air conditioning systems are widely used for heating in the winter, particularly in Central Israel where winters are generally mild. They are cost effective and only require slight modification of the vent direction between summer and winter use. Some ceiling fans have a reverse direction function, which can help to drive warm air back down from the ceiling to the floor.

Hot water supplies in most Israeli homes are generated by solar energy, with solar panels and hot water storage tanks on the roofs of most buildings. In the winter, the lack of sun can leave tenants without sufficient hot water, so most homes have secondary hot water systems. These can be powered by electricity or gas, and usually include timer systems so that tenants can program them to provide hot water at the times they want to take showers.

Installing New Heating Systems

When updating properties and considering heating options, we usually recommend that property owners switch to gas, which has become much cheaper than other fuels in recent years, and particularly since Israel discovered and started to use its own offshore gas reserves.

Installing underfloor heating is a popular facility to add when a property is being renovated, because it is necessary to take up the floor tiles in order to lay hot water pipes. This is particularly worthwhile in Jerusalem and other towns where temperatures frequently drop to freezing.

Safety First

While tenants prefer to keep doors and windows closed when heating their home, it is important that heating and hot water systems have sufficient ventilation systems for safety. Where heaters are powered by gas, rooms must be well ventilated so that poisonous and toxic fumes can escape. It is also highly recommended to install smoke alarms and even carbon monoxide alarms near such heaters.

If you are a landlord and you would like advice on the most cost-effective and safe way to heat rental properties in Israel, contact Shaun Isaacson at Creative Estates Israel.

With the rainy season about to start, here are our top ten tips for preventing any floods, leaks or pipe bursts in your Israel property this winter.

Israeli homes are really designed for the summer, which is generally three times longer than the winter season. Most houses and apartments are built with stone floors, poor insulation and minimal drainage systems, unsuited to coping with sudden rainstorms and even snow in some parts of the country.

At Creative Estates Israel, we have many years of experience in managing holiday homes and rental properties and pre-empting winter crises. From experience we know that all properties, whether tenanted or empty, should always be thoroughly checked at the start of the winter to ensure that they are weather-proof. Here is our checklist.

1) Cleaning Gutters and Drains

Before the first rainfall of the season, make sure that water cannot collect in places where it may cause flooding inside your property, such as window ledges, door sills and air conditioner pipes. Ask your upstairs neighbours to do the same, so that you do not find water leaking through your ceiling from their balcony. Your building manager (Va’ad Bayit) should also clear leaves and garbage from the drains and walkways around the entrances to the building, to prevent flooding and slipping accidents.

2) Checking for Leaks and Cracks

Water can seep through the smallest cracks and will always find the weakest points through which to escape, often causing leaks or dampness in the walls. You may be able to see the marks of damp or mold on the walls or ceilings showing where last winter’s leaks occurred. Persistent dampness during the winter months can cause allergies and breathing difficulties, as well as damaging furniture, furnishings and the building structure. Landlords are expected to protect their properties against leaks and dampness, and they may be held liable for damages caused to their neighbors if they fail to do so.

3) Water Heating Systems

Most residents and tenants only turn on their supplementary electric water heater when the weather turns cloudy and cold. If it has been unused during the summer, it is sensible to check your water heating system before you turn it on for the first time. Boiler systems may be used to power radiators as well as providing a supply of hot water, so you should have both functions checked. Lives can be saved by removing bird’s nests and other blockages from flues, because if the ventilation system is blocked when the boiler is turned on you might cause carbon monoxide poisoning. When calling a maintenance engineer, remember that Israeli boiler systems are known collectively as ‘Yunkers’, named after the original Israeli manufacturer.

4) Central Heating Systems

In apartment buildings, the central heating may be centrally controlled by the management committee, with fixed dates for turning them on and off. Individual apartments may have supplementary air conditioning units or other electric room heaters.

5) Positioning Room Heaters

Put safety first when positioning and using electric room heaters. Keep them out of reach of children and make sure that soft furnishings – curtains, cushions, mattresses and clothes – cannot fall onto them and cause a fire.

6) Adjusting Air Conditioning Units

Many people choose to use wall-mounted air-conditioning units for heating during the summer. If so, it is crucial to adjust the vents so that they point downwards to send warm air circulating around the room. Otherwise the upwards setting that you use for cold air in the summer will just heat your ceiling! Remember to clean the filters too.

7) Adding Window Insulation

Israeli homes have very little insulation, so precious heat can be lost through windows and walls. It may help to check that your trissim (window blinds) close tightly and do not rattle in the wind. Hanging curtains and putting draught-excluders along cracks in walls and under doors can keep help to keep the cold outside and the heat inside.

8) Preparing for Power Cuts

It’s not unusual for the power to go out at any time, so it’s good to prepare emergency back-up systems such as alternative power supplies for important appliances like freezers and computers, emergency lights for stair wells, and supplies of candles and matches. In some areas it is advisable to keep a kerosene heater or other non-electric heating source to keep you warm during extended power outages.

9) Protecting Water Pipes

If your home is in an area where the pipes may freeze, we recommend leaving a tap dripping slowly during very cold periods, to prevent pipe bursts. It’s a good idea to disconnect outdoor watering systems during the winter, to save water and to protect the pipes and connectors from damage.

10) Checking on Empty Properties

If there are empty properties in your building that are not taken care of, all the above problems can spread from their apartment to yours. Leaking pipes that go undetected can cause long-term water damage in other parts of the building. If you know that your neighbours are going away for the winter, recommend that they get a property company to check on their home.

Creative Estates Israel manages properties all over central Israel and we send our maintenance teams to every property to check that everything is ready for winter and stays water-tight. To speak to Creative Estates about checking and managing your property in Israel, contact Shaun@CEIsrael.com

Susan’s mother owns an apartment in Israel that she hasn’t visited in three years. Susan keeps an eye on it and pays all the bills, but it’s becoming a headache. Who knew that an empty apartment would still need so much maintenance! Susan has taken care of a burst pipe that happened in the winter and the upstairs neighbor’s kiddie pool leaking through the ceiling in the summer!

“We really don’t want to sell it, but we want someone to take over the hassle of managing it. If it could be rented out and generate an income, my mother wouldn’t complain! She would probably gift the money to her grandchildren!”, says Susan with a smile.

Updating Empty Apartments

Susan spoke to Creative Estates several months ago and we put together a proposal for her. We visited her mother’s apartment and gave her a list of problems that needed attention. Even if they got through another winter without a serious flood, it was clear that the seals on the doors to the mirpesset (balcony) were cracking and would need replacing soon. Dripping faucets were contributing to higher water bills, and the ceilings showed signs of water damage and neglect. Investing money in the apartment would only make sense for Susan’s family if they could recover the money.

The second section of our proposal included a costed plan for fixing up the empty apartment, upgrading the bathrooms, painting and decorating the rooms, and making it more attractive for renters. We showed her that the costs of this “shiputz” could be recovered by rental income in under two years. That would give them a window of time to decide whether to sell the apartment or keep it in the family.

Turning Liabilities into Assets

Susan gave the matter some thought and discussed it with her mother and brother in the U.S. “I always thought about my mother’s apartment as a liability rather than an asset. It was a headache to check on it every month, particularly during COVID when my parents were unable to visit Israel. Since my father passed, my mother lost her enthusiasm for visiting Israel, and we can probably put her up in our home more easily these days anyway”, she said.

With real estate prices rising steadily and high demand for rental properties in many cities, landlords today can earn good income by renting out empty apartments that are rarely used. Since many owners have jumped onto the AirBNB bandwagon – particularly in Jerusalem, Tel Aviv and all over Central Israel  –  thousands of long-term rental properties have been taken off the market. Rental incomes are high, and overseas owners can earn up to 60,000 NIS approximately per year without incurring income tax.

No-Obligation Consultation

Shaun Isaacson explains: “Investing in your real estate in Israel always makes sense. We see apartments that have suffered from lack of attention over the years, but it costs surprisingly little to update and upgrade them to suit long-term tenants. Because we have a team of builders, plumbers, electricians and painters who maintain our property portfolio, we charge less than most Israeli contractors. It’s in our interest to do a good job because we will be fielding complaints from tenants if we do not!”

If you have an empty apartment in your family that could use a little love and generate a little money, contact Creative Estates for a no-obligation consultation.”

2021 was far from a normal year for anyone, with interesting new patterns in real estate returns on investment across Israel. Surprising trends in rental returns and property prices in different cities created some interesting anomalies in the profits that Israel property investors earned last year.

The Central Bureau of Statistics report on housing prices and rents in Israel’s 15 largest cities, and the results make fascinating reading. They reflect the returns on real estate investment by measuring two components: the rise in value of the property, and the rents received. They also take into account the transfer tax due on the profit when properties are sold, and the exemption from income tax on rents up to NIS 5,196 per month, which influences how much landlords charge. The national average profit for Israel real estate was 3% returns on rents and an 8% rise in the value of the property, yielding a cumulative return on investment of 11% during 2021.

The Rush to Buy

The fourth quarter of 2021 was the craziest quarter in Israel’s history for home purchases, with a record 42,000 transactions. Investors rushed to buy properties before the tax increase on investment properties took effect, and other home buyers also jumped to complete their transactions.

Rishon LeZion, Ashdod, Kfar Saba, Haifa, Ramat Gan, Rehovot, Haifa, Jerusalem, Netanya and Rehovot all saw a steep increase in real estate prices. However, the trend was most pronounced in Tel Aviv – the city in which the largest number of new homes were bought in 2021, and where average prices rose by 30%. This micro-economy is disproportionately influenced by the technology company exits, IPOs, and high salaries in the technology sector. Many of these ‘unicorn investors’ have been buying up prestige apartments in the city center, where the supply is small and demand can inflate prices very quickly.

Lower Rental Returns

The absence of tourists in 2020 and 2021 led many property owners in holiday destinations to switch from short-term holiday lets to longer term rental contracts, which impacted the supply of homes. This probably contributed to the reduction in rental prices in some cities, particularly Tel Aviv and Jerusalem. For example, apartments in Tel Aviv – from small 1-room apartments to larger 4-room homes – earned rental returns for their owners of just 2.5% in 2021.

Despite lower rental returns, Tel Aviv investors who sold their properties in 2021 received the highest rate of return of any city in Israel. In the year to December 2021, the average price of a 3-room apartment in Tel Aviv jumped in value by 25%, from NIS 2.28 million to NIS 3.36 million. Real estate investors in the White City saw combined returns (based on the increase in value and the reduced rental returns) of between 22% and 28%, depending on the size and location of their property.

Southern Comfort

Surprisingly, the best rental returns in the country were earned in Beer Sheva, where a 1-2 room apartment purchased for NIS 570,000 at the end of 2020 generated rental returns of 4.3%. However, owners may have to hold on to these apartments for a few more years in order to receive a good rate of return, because their value fell by 2% during 2021.

For overall returns, Ashkelon topped the table, with a 4.2% rental return and an average price rise of 20% during 2022 for small apartments. Larger apartments in Haifa and Kfar Saba also performed well – the average five-room apartment in Haifa cost NIS 1.86 million at the end of 2020, and increased in value to NIS 2.15 million at the end of 2021. In Kfar Saba a similar apartment rose in value from NIS 2.7 million to NIS 3.1 million over the same period. Rental returns during 2021 averaged 3% in Haifa and 2.6% in Kfar Saba.

Looking Ahead

The increased purchase tax for property investors that took effect in November 2021 has depressed demand, and rental prices are continuing to fall in 2022. We look forward to the return of tourism and continued interest from families who are considering making Aliyah. The expected rise in interest rates will make mortgages more expensive, but this may strengthen the rental market as potential local purchasers decide to continue to rent. All these facts make it all the more important for real estate investors to hire skilled property managers to help them maximize the returns on their investment through careful stewardship.

If you own a property in Israel and would like to see if it could earn you better returns on your investment in 2022 and beyond, book a no-commitment confidential conversation with Shaun Isaacson, CEO of Creative Estates Israel.