According to a ranking recently issued by the Economist, Tel Aviv is the world’s most expensive city, ahead of New York, Paris, and Berlin. There are many reasons for this, writes Gad Lior, but the most important is also the simplest:
Tel Aviv was not planned to be the heart of a metropolis, numbering almost five million people, from Netanya to Gedera. Tel Aviv itself is actually a small city, with only 400,000 inhabitants, whose land reserves are running out. So it is no wonder that a three-room apartment in Tel Aviv is rented out for 8,000 shekels, [about $2,500], and in Berlin, a similar apartment will be rented out for 600 euros [about $680]—and rent cannot be hiked up beyond a limited rate stipulated by law, while no such law exists in Israel.
Most of all, the most expensive city in the world suffers from an inaccessibility problem. There are no trains from some of the nearby cities, no subway, not even a light rail. So almost everyone commutes from morning to night in private vehicles to . . . Tel Aviv. And fuel costs money, and traffic jams too.
And since this is the leading city in Israel, the owner of a clothing store admitted that “in Tel Aviv, they will pay me for a suit exactly three times more than in Afula.” . . . For a larger selection, with more prestigious products, in a store that pays much more in property taxes than in Afula—the price will be much greater.
The huge tax burden that falls on the business sector causes some of the costs and it’s not going to get any better in the foreseeable future. Add to this the strengthening of the shekel against the dollar as it has become the world’s hottest currency in recent months.