Yerushalayim Surpasses Tel Aviv as Israel’s Leading Real Estate Hub

By Aryeh Stern

Yerushalayim has emerged as Israel’s primary real estate market since 2022, overtaking Tel Aviv in new construction activity, according to the Central Bureau of Statistics. With nearly 5,800 new building starts in the past year, Yerushalayim sets a national record for the 21st century, largely attributed to Mayor Moshe Lion’s vigorous building policies.

The shift in construction trends across Israel is attributed to the National Planning and Building Commission’s policies and the Mechir Lemishtaken government-subsidized housing program, dispersing new housing construction to peripheral and previously neglected areas in central Israel.

Despite this dispersion, Yerushalayim and Tel Aviv remain dominant in new housing development. In 2023, one in every six new apartments under construction was in either Yerushalayim or Tel Aviv.

While Tel Aviv experienced an acceleration in new home construction between 2016 and 2021, Yerushalayim surpassed its coastal rival once again in 2022. Both cities reported record-breaking building starts, with Yerushalayim initiating 5,781 apartments and Tel Aviv starting 5,083. This significant construction surge in Yerushalayim is attributed to Lion’s open-door policy for real estate developers, coupled with increased demand from various demographics.

The Yerushalayim municipality’s proactive approach, including the establishment of a development department to facilitate building permits, has further accelerated construction efforts. City Engineer Yoel Even emphasizes the municipality’s efforts to remove obstacles and streamline procedures for developers.

In terms of apartment transactions, Yerushalayim consistently leads, with Tel Aviv slipping in rankings. In 2023, Yerushalayim recorded 4,915 apartment sales compared to Tel Aviv’s 2,620. The decline in overall transactions, particularly noticeable in Tel Aviv, reflects economic fluctuations and market dynamics.

The disparity in apartment prices between Tel Aviv and Yerushalayim, coupled with Tel Aviv’s susceptibility to national economic trends, contributes to contrasting real estate landscapes. While Yerushalayim anticipates sustained growth in construction activity, Tel Aviv faces challenges such as an oversupply of unsold apartments and a potential slowdown in construction rates.