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nterest rates are easing and the war’s shock is fading, setting the stage for a gradual rebound in Israel’s real estate market, driven mainly by new construction. The coming years will see a sharper split between upgraded and neglected buildings, with the strongest percentage gains moving toward rail‑linked suburbs.

    **2026 – First Phase of Recovery**

    Tel Aviv will lead the recovery. Demand for new apartments, especially those nearing completion or finally launching after delays, is expected to strengthen. Buyers are prioritizing quality of life—modern infrastructure, well‑maintained buildings, safe rooms, organized homeowners’ committees, and predictable upkeep. Many are willing to pay a premium for these features. Developers, in turn, are likely to hold firm on prices, offer fewer incentives, and scale back the upgrades that previously helped close deals. Modest but clear price growth in new builds is realistic.

    The second‑hand market will remain weak. Older, unrenovated buildings with poor maintenance, weak ownership structures, and no realistic renewal prospects will see little demand. Even in strong locations, outdated apartments will need to be priced accordingly. Sellers testing the market may be disappointed, and those waiting for a dramatic rebound could end up selling for less than expected.

    **2027 – Confidence Grows**

    If security stabilizes and rates continue to fall, buying confidence will rise. New construction will keep appreciating at a steady, healthy pace—more a normalization than an explosive surge. The divide between modern or renovated buildings and neglected ones will widen. A second‑hand apartment retains value only if the building does. Properties in buildings with dirty lobbies, cracked stairwells, aging infrastructure, no shelter, and no renewal plans will trade at deeper discounts. Even in desirable Tel Aviv neighborhoods, apartments requiring full renovation in poorly maintained buildings could sell in the mid‑to‑low 40,000 shekels per square meter range—reflecting the market’s current direction.

    **2028 – Stabilization and Peripheral Growth**

    Assuming the war is clearly behind Israel and Aliyah continues to rise, the market should settle into a more stable, predictable cycle. Tel Aviv will remain the most expensive entry point, especially for new construction, luxury penthouses, and beachfront properties. The biggest upside in percentage terms will shift to peripheral cities linked to mass transit. By then, Israel’s three major light‑rail lines—Red, Green, and Purple—are expected to be fully operational, creating a transformative, traffic‑free public transportation network that will accelerate economic and population growth in surrounding cities.

    Cities such as Givatayim, Ramat Gan, Bat Yam, Herzliya, Rishon Lezion, and Holon are already emerging as population and investment hotspots. As buyers realize their budgets stretch further a short train ride from Tel Aviv, demand and annual appreciation should rise. Further north, places like Netanya and Caesarea are likely to attract a growing mix of new immigrants, young families, and returning Israelis.

    A wave of new construction will reach the market over the next several years. While added supply could soften price spikes, a healthier supply base supports market stability, offers real choice for buyers, and keeps pricing grounded. Developers with serious buyers will still need flexibility, as many prefer homes ready within six months rather than years. New‑build prices should remain stable or rise modestly; projects delivering high‑quality finishes without forcing costly upgrades will outperform those selling basic finishes at premium prices.

    **Aliyah as a Major Demand Driver**

    With global antisemitism rising, instability abroad, and a deepening sense among Jews worldwide that Israel is their long‑term home, the country may be entering one of the strongest immigration waves in decades. New immigrants will need housing, often renting first and buying later. Just as Zichron Yaakov became a magnet for Olim families, new immigrant communities are likely to emerge across the country in the coming years.

    **A New Market Cycle**

    Israel’s real estate market is moving into a new cycle shaped by selectivity, infrastructure, and demographic change. Since the early 2000s shift to a freer market economy, the sector has matured through rapid growth and correction. The next phase will bring steadier expansion, smarter construction policy, potential reforms, and significant demographic shifts. Since October 7, Israel has changed in ways it is still beginning to understand. Combined with international pressures on Jewish communities, these shifts may push Israel into a fresh period of growth, moving from the Israel that was to the Israel that is now becoming.