Renovated Home, Raanana, East

400 sqm plot, 280 sqm built, 6 rooms, top location, NIS 5,100,000. January 2013

New Apartment, Raanana, East

125 sqm, 5 rooms, 4th floor, terrace, modern, high-end finish and top-of-the-line materials, NIS 2,620,000. May 2012

How well would you have done….

if you purchased a new 4 room apartment in Raanana, in say 2004?

In analyzing a return on a purchase of an apartment in Raanana I will focus on 4 room apartments in a single building, at No. 5 Shvil Ha Zahav, in the East of Raanana.

Based on actual sales prices, buyers purchasing such apartments off-plan in 2004 paid NIS 1,110,000. In 2007 sales were recorded at NIS 1,700,00. Three years later, in 2010, buyers paid NIS 1,880,000 for these apartments. One year later, prices climbed to NIS 2,100,000. The last sale recorded was in January 2013, at NIS 2,200,000.

This represents an almost 100% return on investment in a period of 9 years.

That was the situation till now.

As this building gets older the return will flatten somewhat. Not by much, however. This is a prime location and there is an absolute impossibility of newer product.

The lesson, as always in real estate, is location, location, location.

 

New Apartment, Raanana, East

120 sqm, 4 rooms, balcony, NIS 2,200,000. January 2013

New Luxury Apartment, Netanya, Nitza

200 sqm, balcony, 5 rooms, high-end finish, NIS 7,000,000. December 2012

New Luxury Villa, Raanana, East

800 sqm plot, 413 sqm built, high-end construction and finish, NIS 21,000,000. May 2012

 

4 room apartments, an ideal investment class

When less is more.   We are often asked by investors whether 4 or 5 room apartments make more investment sense.

Assuming all things are equal, I have little doubt that 4 room apartments make much more efficient investment vehicles. Rental returns on say a new 4 or 5 room apartments in good areas are more or less the same, at around 3.4% per year.

However, the magic of 4 room apartments lies in the great demand for these apartments. Whereas 5 room apartments are generally demanded by families with three or more children, the market for 4 room apartments is less defined. Tenants for these apartments range from young families to smaller families to retired couples who generally seek a spare room or office.

As a result, demand will be stronger and less seasonal. In addition, the upkeep and maintenance of 4 room apartments will be less severe.

Current prices for new 4 room apartments in Raanana are approximately NIS 2,200,000. Rental on these apartments are around NIS 6,200 per month. Current prices for new 5 room apartments in Raanana are approximately NIS 2,550,000. Rental on these apartments are around NIS 7,300 per month.