French Investor Buys Two-Room Tel Aviv Apartment for NIS 3.3 Million
A French resident purchased a 52-sqm apartment on Ben Yehuda Street for short-term rental. The transaction reflects price stability in Tel Aviv's historic Rova 3 district despite the lack of parking.
A French resident has purchased a two-room, 52-square-meter apartment on the sixth floor of a residential building at 220 Ben Yehuda Street in Tel Aviv for NIS 3.3 million. The buyer intends to utilize the property as a short-term vacation rental via Airbnb.
District Context and Project Details
The property is located in Rova 3, a premium section of Tel Aviv's Old North, bounded by Ben Zion, Marmorek, and Bograshov streets to the south, the Yarkon River to the north, the Mediterranean coastline to the west, and Ibn Gabirol Street to the east. Spanning approximately 2,400 dunams, the area was designed under the historic 1932 Geddes Plan.
In 2016, the Tel Aviv Local Planning and Building Committee approved the Rova 3 master plan, enabling the seismic retrofitting and expansion of older buildings under the national TMA 38 framework. Because many plots in the district are smaller than half a dunam, developers primarily implement TMA 38/1 (reinforcement and expansion) rather than the demolition and reconstruction (TMA 38/2) more common in the adjacent Rova 4.
New apartment prices in Rova 3 average approximately NIS 70,000 per square meter, with a typical range of NIS 50,000 to NIS 80,000 depending on specific property characteristics.
The building at 220 Ben Yehuda is a TMA 38/1 project involving the reinforcement of a structure originally built in 1957 and the addition of 2.5 floors. The building permit was issued in March last year. Upon completion, the building will feature 22 apartments, including 10 original units and 12 newly constructed ones.
According to Israel Tax Authority records, several new 50–56 sqm units in the project have sold for NIS 3.16 million to NIS 3.7 million, averaging roughly NIS 64,000 per square meter. The four-room penthouse with a 70-sqm terrace was sold for NIS 9.85 million.
While nominal prices in the building run about 10% below the district average, this discount is attributed to two factors: the lack of balconies and the absence of designated parking spaces, which can cost upwards of NIS 500,000 in this area. Adjusted for these omissions, the project represents a premium pricing tier.
Transaction Analysis and Regulatory Risks
The transaction reflects a price of approximately NIS 63,000 per square meter, which is considered high given the lack of parking and outdoor space. However, the high floor and unobstructed views offset these limitations.
Nevertheless, operating a short-term rental in Tel Aviv carries regulatory risks. While enforcement remains challenging, tax authorities are increasingly targeting short-term rentals, which can be classified as commercial businesses subject to standard income tax rates rather than the exemptions granted to long-term residential leases. Additionally, the municipality may levy higher commercial property taxes (arnona) if the unit is deemed to have a hospitality use. Neighbors and condominium associations also retain the legal right to challenge short-term rental operations in court.
Roy Kanner, CEO of Montefiore Real Estate Group, which markets the project, stated:
"We are seeing increased interest from both domestic and foreign investors in small apartments in prime Tel Aviv locations, particularly properties that can serve as both vacation homes and income-generating assets. The project is situated near the beaches, Dizengoff Street, local dining, and the light rail."
According to marketing projections, the apartment could generate up to NIS 15,000 per month during peak season, representing a potential gross annual yield of 5.5% before management fees, taxes, and vacancy adjustments.
Appraiser's Assessment
According to real estate appraiser Erez Cohen, this transaction represents the final unit sold on the sixth floor of the development. The sale indicates price stability and a slight upward trend compared to a March transaction on the same floor, where a similar west-facing unit sold for NIS 61,300 per square meter, compared to NIS 63,500 in the current deal.
Cohen noted:
"These price levels were achieved despite the lack of parking and balconies in a TMA 38/1 project. For an investor targeting the short-term rental market, the lack of parking is less critical than it would be for an owner-occupier, and the proximity to the beach will continue to drive tenant demand."
