Proximity to Tel Aviv Red Line pushes up housing prices

Just NIS 378,000 was the price paid for an apartment at 107 Jerusalem Boulevard in Jaffa in 2003, which was resold in November 2020 for NIS 1.43 million – 278% above the average price rise for an apartment over the same period in Tel Aviv.

In another example an apartment at 132 Jabotinsky Street in Ramat Gan was sold for NIS 1.51 million in 2008 and then again for NIS 1.65 million in 2013, a rise of just 9% over five years.

These two examples are just several of hundreds examined in research by real estate appraiser Ohad Danos, for a survey commissioned by NTA Metropolitan Mass Transit System, the government authority implementing construction of the Tel Aviv Metropolitan region light rail network and Metro.

The study analyzed 658 apartments, each of which had at least two deals between 2000 and 2024. These apartments are spread across 197 different lots in 40 blocks and five cities along the Red Line, and the study draws the unequivocal conclusion that there has been a dramatic improvement in the value of apartments along the light rail route: 91.5% of the apartments saw a real increase in prices, and in apartments near stations, the percentage of apartments in which a real increase was found grew to 94%.

How big was the increase? On this matter, differences were observed between the cities. The annual increase rate in Petah Tikva was 4%, in Bat Yam and Ramat Gan 6%, in Bnei Brak 8%, and in Tel Aviv 17%.

“The significant increase comes with operation”

Appraiser Ohad Danos explains that in the first phase of the study, a list was prepared of all the lots with apartments along the light rail route and stations in Tel Aviv, Bat Yam, Ramat Gan, Bnei Brak and Petah Tikva.

In the second phase, those housing units were selected in which more than one transaction was completed over a 24-year period, from before publication of the plan for the construction of the Red Line to after the start of operations of the light rail in August 2023.

Transactions that were included in the TAMA 38 plan, and unusual, and partial deals and transactions with missing information were all excluded from the study.

Danos explains the gap in value increases between cities in terms of the parking effect. “The value of the light rail probably increases in residential areas where there is a greater parking shortage.”

How can we explain the almost 9% of cases in which there was a decrease in value?

“I have no explanation. It’s random,” says Danos, “but you have to remember that the decrease does not include self-use during this period and rental income during the ownership period.”

The Green and Purple Lines are now being built in Gush Dan, and then the metro. Is there a stage where you see a significant increase? When would you recommend investors buy?

“The significant increase comes with the launch. We saw this in a similar study we did in Jerusalem. Here it is still not clear because the Red Line has been operating for a relatively short time and in war conditions. But it should be clear to any sensible investor today that not only is this the future, but that it really changes reality. Appraisers always talk about location – here they actually change your location without moving your apartment. You can get on a train at Jabotinsky and within 15-20 minutes you are in the center of Tel Aviv.

He says, “What still needs to be clear to investors is that this is currently one line, but in a few years there will be a network of light rail trains here and after that the metro. Each line that is built adds not twice the value but 4-5 times.”

Would you recommend buying now? Isn’t the market already pricing in the increase?

“It’s already pricing it in, but we’ve seen that there are extra increases in value and jumps that come at the end. All the surveys that are conducted have one flaw – they average out at the end. But we know that there are areas within a particular city that can jump and there are other areas that can fade.

“If you look at the Jabotinsky axis, it’s really like bypass surgery – you widen the artery and let the blood flow. And that’s an improvement in the standard of living not only at the national level but in the actual property, so the timing is now. You can use the negotiation of the works, the noise, the mess and the traffic changes to get a better deal.”

“Do you think that if the train was operating on Shabbat, it would have improved the value even more?

“Certainly. This would make a dramatic change for even more people and improve the living conditions along the route even more.”

“The public is realizing the benefits”

The study’s conclusions echo a previous study conducted around the operation of the Red Line in Jerusalem. The study followed a similar methodology, but there only 84 transaction clusters were identified over a 22-year period that were examined and also indicated a significant increase in value.

NTA VP land property Inbal Kanka tells “Globes,” “The survey results show most clearly, and the public has also realized the benefits of the light rail and metro near residential and business properties, especially on the first line.”

She adds, “These insights translate into an increase in property values due to the expectation of high demand. The increase in value indicates the deep understanding that the light rail network in Gush Dan and in the future the Metro project are the real solution to congestion and traffic jams, and they will bring about a significant improvement in the quality of life. We expect that just as on the Red Line, the increase in real estate values is already taking place and will occur even more strongly along the Green and Purple Lines when they open for operation. When the entire network operates together with the Metro, the increase in value will be exponential.”

“Commercial real estate abroad has increased by 10%-20%”

Paz Group has examined cases from around the world, and its CEO Daniela Paz Erez tells Globes that the Israeli case is not unique. “The most significant study is of Crossrail in London, the Elizabeth Line, which opened two years ago. There were surveys from the day the route was announced until close to its opening, which indicated a 20% increase in real estate values even before the opening, beyond the general increase in real estate values. We found that the value of real estate in the vicinity of the underground line, and especially commercial, is 10%-20% higher up to a distance of 500-600 meters.”

She says, “In Israel, we see the rise on Jaffa Road in Jerusalem, mainly in commerce. There was a decline during the construction period and then there was an increase in value. But we must remember that the increase in real estate value is only one aspect and there are other effects, such as less need for parking, which significantly reduces the cost of building underground parking garages.

“There is the possibility of mixed use building and this becomes more relevant, because there is accessibility during the day and these advantages also have economic significance: an increase in value because of the planning program that impacts the land.”

Published by Globes, Israel business news – en.globes.co.il – on March 6, 2025.

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