Small Tel Aviv Apartment Sells for $850,000 Without Parking or Balcony

A two-room apartment measuring 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 (approximately $850,000 USD). The apartment, located in the city's prime "Old North" district, lacks both a balcony and dedicated parking, with the latter being a significant expense in the area, potentially costing over half a million shekels.

The buyer, a French resident, intends to use the property for short-term rentals, such as Airbnb, anticipating a gross annual yield of around 5.5%. This price reflects approximately 63,000 shekels per square meter, a figure considered high given the absence of a balcony and parking, though the high floor and view likely contributed to the cost.

The building itself is undergoing a Tama 38/1 renovation, which involves strengthening the original 1957 structure and adding 2.5 floors. Upon completion, the building will house 22 units, a mix of existing and new ones. Other new apartments in the project, ranging from 50-56 square meters, have sold for between 3.16 and 3.7 million shekels.

Despite the high price, the deal is considered reasonable for the area. However, potential risks include higher taxation for short-term rentals, which could be treated as business income, and increased municipal taxes if classified for hotel use. Neighborly disputes and legal challenges could also arise.

Real estate agents note a growing interest from both local and international investors in small, prime-location apartments in Tel Aviv that can serve as both vacation homes and income-generating assets. The proximity to beaches, cafes, and public transport is seen as a strong selling point for short-term rental demand.