Executive Summary
The Jerusalem real estate market exhibited notable strength during the first half of 2025, with transaction volumes increasing by 9.3% year-over-year. The average property price rose by 8.7%, reaching ₪3,180,000.
As Israel’s capital and a city of immense historical, religious, and cultural significance, Jerusalem continues to attract strong domestic demand and robust international investment. Limited development capacity, particularly within historic districts, sustains upward pressure on property prices.
This report analyzes key market indicators, residential and commercial transaction trends, and emerging dynamics across Jerusalem’s diverse neighborhoods for Q1–Q2 2025.
Market Overview
Jerusalem’s real estate market is uniquely segmented, with significant price variations between ultra-premium historic neighborhoods, established residential areas, developing suburbs, and peripheral zones.
Strict preservation requirements and geographic constraints contribute to a supply-constrained environment in the city’s most desirable locations, reinforcing long-term price growth.
Key Market Statistics (Q1–Q2 2025)
- Total Transactions: 2,845 (↑9.3% YoY)
- Average Residential Sale Price: ₪3,180,000 (↑8.7% YoY)
- Average Price per Square Meter: ₪32,600 (↑10.2% YoY)
- Average Time on Market: 76 days (↓11 days YoY)
- Mortgage Volume: ₪8.63 billion (↑14.7% YoY)
Residential Real Estate Analysis
Transaction Volume by Property Type
| Property Type | Transactions | YoY Change | Avg. Price (₪) | YoY Price Change |
|---|---|---|---|---|
| Apartments | 2,347 | ↑8.6% | 2,850,000 | ↑7.9% |
| Penthouses | 128 | ↑12.3% | 7,950,000 | ↑14.2% |
| Townhouses | 183 | ↑10.9% | 5,450,000 | ↑9.8% |
| Historic Homes | 85 | ↑6.3% | 9,750,000 | ↑16.5% |
| Land Plots | 102 | ↑15.9% | 3,850,000 | ↑11.3% |
Price Trends by Neighborhood
| Neighborhood | Avg. Price (₪) | YoY Change | Avg. ₪/m² | Avg. Time on Market |
|---|---|---|---|---|
| Old City & Surroundings | 10,850,000 | ↑18.3% | 87,400 | 94 days |
| Rehavia | 6,950,000 | ↑12.6% | 62,500 | 63 days |
| German Colony | 6,380,000 | ↑11.8% | 57,200 | 68 days |
| Talbieh | 6,750,000 | ↑12.4% | 60,800 | 65 days |
| Baka | 5,250,000 | ↑9.6% | 47,800 | 72 days |
| Katamon | 4,850,000 | ↑8.9% | 43,500 | 74 days |
| French Hill | 3,250,000 | ↑6.5% | 28,600 | 82 days |
| Pisgat Ze’ev | 2,380,000 | ↑5.3% | 21,500 | 89 days |
| Gilo | 2,150,000 | ↑4.8% | 19,200 | 93 days |
| Ramot | 2,450,000 | ↑5.7% | 22,300 | 87 days |
| Har Homa | 2,180,000 | ↑5.2% | 19,600 | 91 days |
| Arnona | 3,750,000 | ↑7.4% | 33,800 | 78 days |
| City Center | 4,250,000 | ↑9.2% | 39,600 | 69 days |
| Nachlaot | 4,950,000 | ↑10.7% | 45,300 | 71 days |
New Residential Development Projects
- Jerusalem Gateway Residences: 312 luxury apartments, 74% sold, average ₪42,500/m²
- Waldorf Astoria Residences: 87 ultra-premium units, 82% sold, average ₪98,600/m²
- Park Eight Jerusalem: 194 high-end apartments, 68% sold, average ₪56,800/m²
- Arnona Heights: 256 mid-range apartments, 71% sold, average ₪36,400/m²
- German Colony Gardens: 62 luxury units, 85% sold, average ₪59,700/m²
- Ramot Valley View: 328 apartments, 63% sold, average ₪24,300/m²
- Jerusalem Hills Complex: 175 terraced apartments, 59% sold, average ₪29,800/m²
- Har Homa Expansion: 412 affordable units, 92% sold, average ₪19,800/m²
Urban Renewal and Historic Preservation
- Pinui-Binui (Evacuation-Reconstruction): 11 active projects, creating 870 new units from 342 old buildings.
- TAMA 38: 27 projects reinforcing and upgrading 572 older buildings while adding 216 new units.
- Historic Preservation Projects: 8 initiatives converting landmark buildings into 53 luxury residences.
Commercial Real Estate Analysis
Commercial Transactions by Type
| Property Type | Transactions | YoY Change | Avg. Price (₪) | YoY Price Change | Avg. ₪/m² |
|---|---|---|---|---|---|
| Office Space | 142 | ↑8.4% | 4,950,000 | ↑7.8% | 29,600 |
| Retail Space | 186 | ↑6.9% | 5,850,000 | ↑9.2% | 35,300 |
| Mixed-Use | 47 | ↑12.5% | 7,250,000 | ↑11.3% | 38,700 |
| Hospitality | 28 | ↑24.3% | 12,850,000 | ↑16.8% | 45,200 |
| Industrial | 34 | ↓2.8% | 3,650,000 | ↑4.6% | 12,400 |
Major Commercial Developments
- Jerusalem Business District: 42,000m² of new office space, 81% leased.
- Mamilla Commercial Extension: 12,500m² of premium retail, 94% pre-leased.
- Tech Quarter Jerusalem: 28,000m² innovation campus, 76% occupancy.
- King David Hotel Expansion: 6,300m² luxury hospitality project, opening Q2 2026.
- Jerusalem Gateway Hub: 38,000m² mixed-use complex, 70% leased.
Investment Analysis
Return on Investment (ROI)
| Asset Type | Avg. Annual Rental Yield | Capital Appreciation (H1 2025) | Total ROI (Annualized) |
|---|---|---|---|
| Apartments | 3.1% | 7.9% | 11.0% |
| Historic Homes | 2.3% | 16.5% | 18.8% |
| Office Space | 4.6% | 7.8% | 12.4% |
| Retail Space | 5.3% | 9.2% | 14.5% |
| Hospitality | 6.2% | 16.8% | 23.0% |
Foreign Investment Trends
Foreign buyers represented 28% of all transactions:
- North America: 49%
- France: 22%
- United Kingdom: 11%
- Australia: 8%
- Other: 10%
Religious and Cultural Market Segments
- Jewish Diaspora: 62% of foreign buyers cited religious/cultural ties. 35% use properties for part-year residency; paid a 12.5% premium on average.
- Christian Quarter: 28% growth in investment transactions; strong focus on hospitality assets.
- Muslim Quarter: Limited volume but 24% price growth driven by heritage preservation initiatives.
Market Drivers and Challenges
Positive Drivers
- Full recovery of religious tourism (+17% vs. 2019)
- Expansion of government institutions and technology sector
- Light rail network expansion boosting property values
- Strong international branding as a cultural and religious center
Challenges
- Political sensitivities impacting some districts
- Affordability gap (housing costs 13.2× average salary)
- Complex preservation regulations in historic areas
- Community-specific housing demand creating segmented buyer pools
- Limited new construction due to geographic constraints
Market Outlook
Q3–Q4 2025 Forecast
- Projected price growth: 7–9%
- Transaction volume increase: 8–10%
- New development focus along major transportation corridors
- Rental rate growth: 9–11% expected
Longer-Term Projections (2026–2030)
- Major infrastructure projects completion
- Continued foreign investment in heritage real estate
- Technology sector creating new buyer demographics
- Rising property values in periphery and satellite neighborhoods
Luxury Market Spotlight
- 164 ultra-luxury transactions (₪8M+) (↑18.8% YoY)
- Average price: ₪12.4 million (↑15.7% YoY)
- 61% of buyers were foreign nationals
- Historic property premiums: 35–45% compared to new construction
Rental Market Analysis
- Average Monthly Rent: ₪8,250 (↑11.2% YoY)
- Rental Yield: 3.1% (slightly declining)
- Vacancy Rate: 2.1% (↓0.6% YoY)
- Lease Duration: 24 months (↑3 months YoY)
- Highest Average Rent: Mamilla neighborhood at ₪16,500/month
- Student Housing Demand: +9.5% YoY, particularly around Hebrew University campuses
Methodology
Sources:
- Israel Land Authority transaction records
- Jerusalem Municipality Planning Department
- Aggregated data from major real estate agencies
- Mortgage lender statistics
- Israel Central Bureau of Statistics housing data
Data Collection Period: January 1, 2025 – April 26, 2025
Sample Size: 2,845 residential and 437 commercial transactions
About the Author
This report was prepared by offplanisrael, Israel’s leading real estate market analysis firm specializing in residential, luxury, and commercial property trends.
For customized market research or advisory services, please contact [email protected].
Disclaimer: This report is provided for informational purposes only and does not constitute financial or investment advice. Market conditions are subject to rapid change, and past performance does not guarantee future results.
