Tel Aviv Real Estate Market Report: Q1 2025

The Tel Aviv real estate market sustained its leadership as Israel’s most dynamic and prestigious housing environment through the first quarter of 2025. Despite high prices, the city continued to attract strong buyer demand, with transaction volumes increasing by 6.9% compared to Q1 2024. The average property price rose sharply by 11.2% year-over-year, reaching ₪4,820,000 by the end of March. Factors such as Tel Aviv’s thriving technology sector, international appeal, and limited availability of land contributed significantly to maintaining the city's strong housing momentum.

During Q1, Tel Aviv's market activity remained brisk across both residential and commercial sectors. A total of approximately 1,890 transactions were recorded between January and March. The average price per square meter across the city rose to ₪59,200, a 12.8% annual increase. Properties in Tel Aviv spent an average of just 43 days on the market, reflecting robust buyer competition and limited supply. The total mortgage volume for the quarter reached ₪8.6 billion, an increase of 15.8% compared to the same period last year, indicating healthy financing activity despite rising borrowing costs.

Apartments continued to dominate sales, with around 1,620 units changing hands in Q1 alone. The average apartment price stood at ₪4,360,000, marking a 10.3% increase year-over-year. Penthouses remained a strong performer in the luxury segment, recording approximately 85 transactions at an average price of ₪12,800,000—up by 17.9% from Q1 2024. Townhouses, with around 44 sales, saw their average prices climb to ₪9,680,000, while garden apartments, a preferred choice among families, averaged ₪6,210,000 across 155 transactions.

Neighborhood-specific trends continued to demonstrate wide pricing disparities. Rothschild/Lev Hair remained one of the most expensive areas, with average property prices reaching ₪7,910,000 and a per square meter price nearing ₪82,000. Homes in this area sold swiftly, with an average marketing period of just 27 days. Neve Tzedek surpassed expectations, with average prices hitting ₪8,330,000 and properties moving even faster—within an average of 24 days. Northern Tel Aviv showed healthy growth as well, with average prices of ₪6,700,000, while Florentin continued to be relatively more affordable at ₪3,940,000. Jaffa maintained its momentum with an average price of ₪3,520,000, driven by strong interest in the area's unique seaside charm and ongoing regeneration efforts.

Several significant residential developments pushed sales figures higher in Q1. Notably, ToHA Residences sold 72% of its 182 luxury apartments at an average price of ₪95,400 per square meter. Sarona Gardens, another premium project, achieved an 81% sales rate across its 156 apartments at an average of ₪70,000 per square meter. In Neve Tzedek, a landmark high-rise nearing completion achieved 90% sales, commanding an impressive ₪88,000 per square meter. Other key projects included the Jaffa Port Residences and Rothschild 22 Extension, both reporting strong pre-sales figures ahead of full completion.

Urban renewal projects also played a crucial role in shaping Q1 activity. Pinui-Binui (evacuation and reconstruction) schemes accounted for several hundred new housing units under development. Meanwhile, TAMA 38 reinforcement projects added density and structural resilience to existing residential buildings, particularly in older neighborhoods such as South Tel Aviv and Florentin.

Tel Aviv’s commercial real estate sector demonstrated resilience and strength in the first quarter. Office space transactions totaled about 145 deals, with an average sale price of ₪8,380,000 and a price per square meter around ₪46,200. Retail property sales remained strong as well, with 104 transactions at an average of ₪6,720,000. Mixed-use assets, which combined retail and office space, showed particularly impressive results with a 15% increase in transactions compared to Q1 2024. Industrial properties, while a smaller share of the market, maintained steady prices, averaging ₪4,920,000.

Several major commercial developments also reached critical milestones during the first quarter. Azrieli Town Tower neared full leasing with over 91% of its 25,000m² office space occupied. ToHA Phase 2 reported 83% pre-leasing for its 53,000m² of premium office facilities. Sarona Market's retail expansion added new vibrancy to the midtown retail corridor, boasting near full occupancy by the end of March.

Investment returns in Q1 remained attractive, particularly for high-end residential and commercial assets. Apartment rental yields averaged 2.7%, while annualized capital appreciation reached 10.3%, resulting in an impressive combined ROI of 13%. Penthouses offered slightly lower yields of 2.2% but higher appreciation rates, generating a total return of around 19.8%. Office space investors benefited from strong fundamentals, enjoying rental yields of approximately 4.3% and capital gains exceeding 13%, with retail investors seeing slightly higher yields around 5%.

Foreign investors remained highly active in Q1, accounting for nearly 30% of all transactions during the period. North American buyers comprised the largest share at 37%, followed by French buyers at 22%, and UK investors at 13%. A growing segment of buyers from Eastern Europe and Asia also entered the Tel Aviv market, drawn by the city’s resilience, prestige, and long-term investment potential.

Several underlying factors fueled Tel Aviv's market strength in Q1. The tech sector continued expanding, with several multinational firms opening R&D centers in the city. Major infrastructure projects, particularly expansions of the light rail and green line services, contributed to property value appreciation in adjacent neighborhoods. The city’s global reputation as a technology and cultural capital, combined with the scarcity of buildable land, kept pressure on prices.

Nevertheless, a few challenges tempered overall optimism. Housing affordability continued to deteriorate, with the average property price now more than 15 times the average annual salary. Proposed changes to property tax regulations aimed at discouraging speculative investment created some uncertainty among investors. Construction costs remained high, climbing an estimated 17% year-over-year, which affected both new project feasibility and timelines. Additionally, the sensitivity of premium buyers to fluctuating interest rates became more evident compared to previous years.

Looking ahead to Q2 and beyond, Tel Aviv’s market fundamentals remain strong. Prices are expected to continue rising by 7–9% through the next quarter, though transaction volumes may moderate slightly as affordability pressures grow. New project launches are anticipated to decline by about 5%, primarily due to limited land availability and rising development costs. Rental prices, already at historic highs, are forecast to climb an additional 10–12% during the second quarter, particularly in highly sought-after neighborhoods like Neve Tzedek, North Tel Aviv, and the Tel Aviv Port area.

In the luxury segment, properties priced above ₪10 million continued to show particular strength. During Q1, 91 ultra-luxury transactions were recorded, with an average price of ₪17.5 million, up nearly 19% compared to Q1 2024. Notably, about 53% of these buyers were foreign nationals, many of whom sought sea-facing properties, where premium values ranged between 35–45% higher than comparable inland properties.

In the rental market, conditions tightened further during the quarter. Average monthly rents rose to ₪10,700, representing a 14.7% year-over-year increase. The vacancy rate fell to just 1.7%, and lease durations continued to extend, reflecting tenants' desire for long-term stability amidst rising prices. Neve Tzedek remained Tel Aviv's most expensive rental area, with average monthly rents reaching ₪18,200.

This report is based on a detailed analysis of transaction records from the Israel Land Authority, data from the Tel Aviv Municipality’s Planning Department, aggregated reports from major real estate agencies, mortgage lender statistics, and construction permit data. The data covers the period from January 1 to March 31, 2025, with a sample size of approximately 1,890 residential and 310 commercial transactions.

This market analysis was prepared by www.offplanisrael.com, experts in Israeli real estate market research and investment insights. For customized market reports, property investment consultations, or additional data inquiries, please contact them.

Disclaimer: The information provided in this report is for informational purposes only and does not constitute financial advice. While efforts have been made to ensure accuracy, market conditions are subject to change.