French Buyer Acquires Tel Aviv Apartment for Short-Term Rentals
A two-room apartment spanning 52 square meters on the sixth floor of a building at 220 Ben Yehuda Street in Tel Aviv has been sold for 3.3 million shekels to a French resident. The buyer intends to use the property for short-term rentals, such as Airbnb.
The apartment is located in "Old North" Tel Aviv, a classic area planned in 1932. The neighborhood was rezoned in 2016 to allow for the reinforcement of older residential buildings under urban renewal plans, though the small plot sizes often necessitate strengthening existing structures rather than full demolition and rebuilding.
New apartments in the area typically sell for around 70,000 shekels per square meter, with prices ranging from 50,000 to 80,000 shekels. The building itself, originally constructed in 1957, is undergoing a Tama 38/1 urban renewal project, which includes strengthening the structure and adding 2.5 floors. Upon completion, it will house 22 units, with 10 existing and 12 new ones.
Recent sales in the building for similar-sized new apartments have ranged from 3.16 to 3.7 million shekels, averaging about 64,000 shekels per square meter. A penthouse unit sold for 9.85 million shekels. Despite appearing lower than the area's average, the prices are considered relatively high due to the lack of balconies and dedicated parking spaces, with parking in the area costing upwards of half a million shekels.
The current transaction reflects a price of approximately 63,000 shekels per square meter, considered high given the absence of a balcony and parking. The high floor and view contribute to the price. While deemed a reasonable transaction, potential challenges for short-term rentals include higher income tax and municipal taxes if classified for hotel use, as well as potential objections from neighbors and legal intervention.
Real estate marketers note growing investor interest in small, prime-location apartments in Tel Aviv suitable for both vacation use and rental income. Projections suggest a monthly income of around 15,000 shekels during peak season, potentially yielding a gross annual return of about 5.5% before expenses, taxes, and occupancy fluctuations. Appraisers observe price stability and a slight increase in this building, with the lack of parking and balconies being less critical for investors focused on short-term rentals, especially given the proximity to the sea.
