We all know that a busy road lowers a property’s value, but what about cemeteries or synagogues? While a sea view clearly boosts property value, the degree of improvement varies greatly depending on the location. Even desert views have unique effects. With input from experts and developers, Nadlan Center explored how different surroundings impact property values.
By Dror Nir Castel, Nadlan Center
It’s widely accepted that busy roads decrease property value. An open view of green spaces or the sea can, without question, boost it. But how do schools, parks, or even cemeteries affect property prices? Are they assets or liabilities, and to what extent? The Real Estate Center consulted with real estate appraisers and professionals to assess how various environmental factors impact apartment values.
Appraiser Moran Zaid Zinner of Moti Zaid Real Estate Appraisers explains, “The value of an apartment is determined based on various factors, including location, size, condition, and age. In addition to these physical parameters, environmental factors like proximity to commercial or entertainment hubs can increase value—provided they don’t cause noise or traffic congestion. The increase in value can range from 5% to 10%, depending on the proximity without direct exposure.”
Zinner notes that residential apartments located above commercial centers can also be affected. “Apartments above older commercial spaces generally have lower values than those in modern mixed-use buildings where commercial and residential areas are separated, which can preserve or even boost property value.”
A study found that properties near the sea are, on average, 8.7% more valuable than those further inland. For example, a first-row apartment with a full sea view in Netanya is worth approximately 26% more than a property without a view. In Haifa, apartments in the Carmel neighborhood are 6.2% more valuable, while those in Bat Galim are 10.5% more expensive.
Zinner emphasizes that the effect of views can be significant: “Properties facing open spaces, like parks or the sea, can command much higher prices than those facing other buildings or lacking any view. This is especially true for luxury apartments. For example, an apartment on the first line to the sea may be worth up to 20% more.”
“In secular areas, being near a synagogue can reduce value by about 5%, while in religious neighborhoods, it could be a neutral factor or even slightly increase value.”
Appraiser Moran Zaid Zinner, Moti Zaid Real Estate Appraisers
In contrast, Zinner estimates that apartments directly facing busy roads can lose up to 10% of their value. However, high floors or acoustic insulation can minimize the impact. As for proximity to synagogues, the effect depends on the neighborhood’s population. “In secular areas, being near a synagogue can reduce value by about 5%, while in religious neighborhoods, it could be a neutral factor or even slightly increase value.”
The sea’s varying impact across cities
Real estate appraiser Yariv Drori, Chairman of the Market Data Research Committee at the Appraisers’ Bureau, offers valuable insights. “It’s well understood that when residential areas border other types of land use, this can positively or negatively impact property values. However, when assessing whether the effect is positive or negative and the degree of its influence, it’s essential to remain objective, as the market ultimately reflects this impact; for instance, a family with two young children may see proximity to a kindergarten as a positive factor, thereby increasing the property’s perceived value. However, this is a subjective view.”
“However, in the broader market, a kindergarten can also bring drawbacks, such as traffic congestion during drop-off and pick-up times and daytime noise, which can be particularly disruptive for those working from home. As a result, from an objective standpoint, proximity to a kindergarten tends to impact the value of residential property negatively.”
The Israel Real Estate Appraisers Bureau conducts a Delphi study (a real estate valuation method) every few years to address critical issues in real estate appraisal and determine adjustment coefficients where information is incomplete. The most recent study from 2020 found an average 8% reduction in value for residential properties facing public buildings, such as schools and kindergartens. The same study showed that a detached house facing a cemetery loses about 12% of its value, while an apartment in a high-density area near a bus stop sees an average reduction of 5%. Detached homes adjacent to shopping centers experience an average decrease of 8%.
Zinner reiterates that proximity to synagogues is highly dependent on neighborhood demographics. “In secular areas, synagogues may lower property value by about 5%, but in religious areas, they can either have no effect or slightly increase value.”
Drori adds that the impact of proximity to main roads is a well-documented topic in valuation assessments. “The reduction in value can vary based on factors like road usage, the apartment’s floor, and distance from the road, with reductions sometimes reaching around 10%. On the other hand, certain characteristics, like sea views, can lead to significant increases in property value—often by tens of percent.”
A 2006 study by the Land Assessment Division (part of the Land Research and Information Department at the Ministry of Justice) revealed that apartments near the sea are valued, on average, 8.7% higher than those further away. In Netanya, apartments in the first row of houses with a full sea view can command up to 26% more than those without a view. In Haifa, apartments in the Carmel neighborhood with a sea view are priced around 6.2% higher, while in Bat Galim, that premium rises to 10.5%. An intriguing contrast was noted in Beer Sheva, where apartments facing the desert are valued at 9% lower than those without a desert view.
It is important to note that the review provided here is general, and each case must be assessed based on its specific circumstances. Additionally, the nature and extent of an effect on property value can shift over time. For instance, an apartment in an older housing complex in the northern region with a public shelter in the courtyard may typically experience a decrease in value due to the noise and congestion caused by public use of the shelter. However, in times of conflict or war, such as the current situation, a shelter in a building without private safe rooms could enhance the apartment’s value, as it becomes a crucial safety asset.
Between 3% and 5% premium for lake proximity
Several ongoing projects exemplify the application of appraisal principles in real estate. One such example is the “Nitzanei Nahal Park” project in the Nofey Ben Shemen neighborhood, where proximity to a lake within the park has resulted in sale prices exceeding the neighborhood average. Ahmad Amla, CEO and owner of Nitzanei Mevaseret, states, “Proximity to water and parks can increase prices by 3% to 5%.”
Tzachi Sufrin, Vice Chairman of the Sufrin Group and one of its controlling shareholders is collaborating with the Weiss Group and the Vitkin Peri Group on a Tama 38/2 project featuring 27 apartments in the Bavli neighborhood, conveniently located near Yarkon Park. He notes that the public is willing to pay a premium for this proximity to the park. “We made the park a central theme in our advertising; being just a few steps away significantly impacts both price and demand. If there weren’t high demand, prices wouldn’t be so elevated. Currently, prices range from NIS 60,000 to NIS 76,000 per square meter. I estimate that prices could be lower in areas less close to the park.”
