Tel Aviv Homeowners Face Dilemma: Wait for Urban Renewal or Sell at a Loss

Homeowners in Tel Aviv's Neve Sha'anan neighborhood are grappling with a difficult choice: hold onto their properties hoping for urban renewal to boost their value, or sell them at a loss in the current housing market. Prices for three-room apartments, particularly in older buildings, have dropped by 10-15% over the past year, a trend that began in late 2025, according to Eyal HaOshner, Vice President at HaOshner Real Estate Appraisals.

Some owners are unwilling to accept lower prices. Realtor Itay David shared an instance of a homeowner who listed an 80-square-meter apartment for the same price he paid four years ago, only to withdraw it from the market when he realized he couldn't achieve his asking price. This owner opted to wait rather than sell at a loss.

Neve Sha'anan has attracted investors due to its relatively low entry price for Tel Aviv, rental income potential, and the prospect of urban renewal. However, holding onto properties until future projects materialize requires significant financial capacity and patience, especially with current high interest rates and purchase taxes. Investors often focus on smaller units, typically 45-55 square meters, with some projects even offering furnished, managed apartments for rent.

Other sellers include heirs looking to liquidate family assets and investors who no longer wish to wait. David notes that while the expectation of urban renewal still helps close deals, the timeline for these projects remains uncertain. He recently sold a renovated 60-square-meter, 2.5-room inherited apartment to a young couple for investment, which is currently rented for approximately NIS 5,000 per month. The building had secured most signatures for a "Pinui-Binui" (evacuation-construction) project, a key factor in the purchase.

Significant price disparities exist within Neve Sha'anan itself. Newer buildings with amenities like elevators and safe rooms command higher prices than older ones, with street environment and proximity to developing areas also influencing value. Prices per square meter in new projects on streets like HaCongress and HaGra are considerably higher than in older buildings. Areas bordering Florentin and Menachem Begin Road behave more like extensions of the city center, while inner parts of the neighborhood have different market conditions. Rental prices also vary, with a three-room apartment in an old building renting for NIS 4,500-5,000 monthly, compared to NIS 6,500-7,000 in a new building.

Despite the drop in asking prices for sales, the rental market remains stable, with little change in rent levels compared to last year. This means property owners' monthly income may not increase while they await property value appreciation. Demand comes from various groups, including foreign workers and asylum seekers seeking affordable small apartments, as well as young people, students, and artists wanting to stay close to central Tel Aviv. HaOshner states, "It's easy to find a tenant, but difficult to raise the rent."