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An apartment for investment in the periphery was considered a winning solution.

Is this still the case?

In the past, investing in the periphery or in large cities outside the center paid off, but alongside the relatively moderate rise in prices, the rise in rents was halted.

Is this still a worthwhile move, or has the last train already left the station?

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Walla!

Real Estate

Sunday, 21 November 2021, 09:15 Updated: 09:27

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Last week we were informed that apartment prices in the most attractive areas of the country have risen by 10 percent in the past year.

This is an extraordinary figure, which raises the question of whether it is time to stop investing in the center and concentrate resources in the periphery.

On the face of it the idea makes sense, but it is very, very not self-evident.

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Project in Netivot (Photo: Yanir Yagna)

"Buying an apartment in the periphery today is less worthwhile"

Biran provides an example - an apartment in Be'er Sheva that cost NIS 850,000 and brings in NIS 3,500 from the rent, provided a 5 percent return in the past and today earns only 4 percent

Dafna Biran (Photo: Yossi Zucker)

"Prices are rising dramatically, but at the same time yields are falling and in the periphery yields are low anyway," says engineer Dafna Biran, managing partner at Orbach Halevi Architects. "When will the yield be high? "In Tel Aviv. The investment in a second apartment is usually for the purpose of renting, so it must be taken into account that even today in the periphery the rent has not increased. If the yield today in Tel is in the region of two percent or less, in Be'er Sheva the numbers are similar."

Biran provides an example - an apartment in Be'er Sheva that cost NIS 850,000 and brings in NIS 3,500 from the rent, provided a 5 percent return in the past and today earns only 4 percent, because rental prices do not increase according to the price of the apartment.

"Therefore," she concludes, "buying an apartment in the periphery today is less worthwhile than it was 4 years ago. Maybe it's actually good because it will calm the market, because a lot of apartments in the periphery are bought for investment and this is one of the reasons for rising prices. Real estate does not boil over and get better returns. The mess in the world does not come close to what is happening here, neither in those orders of magnitude nor in these short segments.

Such apartments can also be found in the periphery.

Eyal Apple Architecture, Interior Design Orly Dekter (Photo: Oded Smadar)

"The rental market is set to grow in the very near future"

Eyal Apel (Photo: Shirad Nissim)

There are also those who think that right now there is a last chance to buy before there is no other option. Architect Eyal Apple talks about prices in Haifa, for example: "Prices there have also risen, but more moderately than prices in the center of the country. In areas that are still cheaper and less in demand. "

Apple says that in the periphery or in cities far from the center there will always be a demand and it is possible to rent and also sell at a later stage.

"Although rental prices have not risen yet, demand for rents has risen because due to rising prices many people do not have the ability to buy an apartment today," he explains. It is worth buying them, although of course the priority will always be in the big cities - cities with ports, hospitals, industrial areas and academic institutions, which will always have demand for rent, because there are many sources for potential tenants and higher demand. High demand. "

Looking for an investment apartment outside Gush Dan?

The tips of a dark ram

• The most important thing to check is public transportation.

  It is important that in the area of ​​the apartment you bought there will be easy access to transportation, both internally and out of the city, proximity to main roads, Route 6, etc.

  Trains bring people to the employment areas and thus your apartment will be more attractive.

• Today it is very easy to check the issue of demographics in the shopping area with aspects on education, price level and socio-economic profile.

  Sites like Madlan and the authorities' websites can help you with the initial investigation.

• It is better to buy in developing areas, young couples and tenants have a tendency to rent new homes in more developed and new areas.

• It is better to buy an apartment that is already under construction or very close to a building permit, than buildings that are not clear when they will be launched.

  In addition, in a new apartment, the issue of maintenance will be easier in the future and you will be able to manage as far away as possible.

• It is important to research and make sure from whom to buy the apartment, choose a reputable company with a reputation.

  Contractors in the periphery are less well-known, sometimes even smaller, so a thorough inspection needs to be done.

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