French Buyer Pays $815,000 for Small Tel Aviv Apartment Lacking Balcony, Parking

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 $815,000). The buyer, a French resident, intends to use the property for short-term rentals, such as Airbnb.

The apartment is located in the "Old North" of Tel Aviv, a classic area planned in 1932. The building itself, originally constructed in 1957, is undergoing a Tama 38 renovation, which involves strengthening the existing structure and adding two and a half floors. Upon completion, the building will have 22 housing units, 10 existing and 12 new.

Despite the lack of a balcony and dedicated parking, a significant drawback in Tel Aviv where parking can cost upwards of $125,000, the price per square meter is around 63,000 shekels. This is considered a reasonable price for the area, especially given the high floor and the view. New apartments in the district typically sell for 50,000 to 80,000 shekels per square meter.

Real estate experts note that while the price might seem high for a unit without these amenities, it's less of a concern for investors planning short-term rentals, particularly given the prime location near the beach and city attractions. The potential gross annual return on investment is estimated at 5.5%, before expenses, taxes, and occupancy rates.

However, the investment carries risks. Short-term rentals face potential challenges from taxation, which could be significantly higher than for standard long-term rentals, and municipal taxes (arnona) might be levied at commercial rates. Additionally, neighbors and legal challenges could disrupt operations.