In the case of properties being offered for lease, prices are quoted in terms of dollars per meter per month, for example, a 200 meter office in downtown Tel Aviv might rent for $20 per meter, or $4,000 per month.
Lease payments are generally linked to the Israeli rate of inflation, which is published on a monthly basis by the Central Bureau of Statistics. It is sometimes possible to negotiate a lease linked to the dollar exchange rate, or to the dollar plus the U.S. Consumer Price Index.
In addition to the rent, a tenant pays city taxes, building maintenance fees for care of the common areas, all utilities and VAT.
Most leases are executed for periods of up to ten years, the lease being divided into an initial period and option periods thereafter, which the tenant can exercise with advance notice. Rents are generally paid on a monthly or quarterly basis, and tenants are often required to post a guarantee in the form of a cash deposit or bank guarantee equivalent to 3-6 months rental obligation.
Most commercial leases of office space include landlord executed or subsidized tenant improvements. Most deals of this nature are for a minimum of five years as the landlord invests $250 - $350 per square meter for tenant improvements. Property leased as a shell will rent for $3 - $4 per square meter less than finished space, but will require a significant investment by the tenant.
Real estate has historically been one of the best avenues of investment in Israel, due to the country's rapid rate of growth and relative scarcity of available product. Investors have profited from steady increases in value, and from returns from rentals, which as of this writing, range from 8-10% per year on commercial properties.
Many commercial properties are sold while under construction, and the purchaser pays for the acquisition in staged payments, according to the progress of construction, the final payments executed upon physical transfer of the property and formal registration of ownership. Buyers should receive a bank guarantee for all payments until receiving physical possession and registration in the land registry.
The apartment sales law requires all developers to provide special bank guarantee for payments received before delivery. This also applies to none residential deals. The cost of receiving this bank guarantee is usually born by the buyer in commercial deals, though the law obligates the contractor to provide the bank guarantee. The guarantee can cost up to 1% per annum against the value of each payment.