New city, Harish, under development in North

The small community of Harish has recently appeared more distinctly on the map as housing fairgoers have seen garden apartments and duplexes being offered by builders at what seems bargain prices for Israel. On questioning, sales reps will tell you that this building project is in Harish, and hand you a boldly marked map since you likely don’t know where it is.

Harish was built in the 1990’s with the infrastructure and intent to prepare for a new city on the scale of Modi’in but a number factors put it on hold. Now the government has announced the full speed go ahead to build a new city.

According to Israel National News, the north-central Israeli community of Harish will be converted into a full-fledged city, Prime Minister Binyamin Netanyahu’s Cabinet voted Sunday, appropriating the project a 1 billion shekel budget.

Harish is accessible off of the toll Highway 6 to the North and is located 50 minutes northeast of Tel Aviv, 35 minutes from Haifa and 15 minutes from Hadera.

Harish is now a community of 300 households – but approximately 9,000 housing units are in stages of construction, having been sold on paper via builders in the last few years.

“About 2,000 additional housing units will be marketed as part of the ‘affordable housing’ campaign. In the first stage about 12,000 housing units will be built and in the following stages this will be expanded to approximately 24,000 units.”

In a statement to the Israeli Cabinet Netanyahu said, “A new city has not been established in many years,” he continued. “This will be a new city along the lines of Modi’in; it will be the beginnings of a city of 50,000 people. I believe that it will grow far beyond this in the future.”

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Tel Aviv moves out of Top 20 most expensive cities in 2013

Tel Aviv has dropped out of the top 20 of most expensive world cities, according to Business Insider. After 2011, the rankings for the most expensive cities in the world were in and Tel Aviv was 19. IMG_8713telavivfeb2014 Their estimates are based on those living in the city, not travelers coming in. Oslo ranked 1 on most lists, a few others named Tokyo. In 2012 it was Moscow.

Not that it has become much cheaper to live in Tel Aviv, but factors influencing the ranking could have pushed other cities ahead. Tel Aviv is still more expensive than Manhattan which is the highest US city ranked at #43 in the world.

Cost of living is based on several factors, affordability of housing in relationship to average incomes, cost of basic food items, a fast-food meal, costs of daily goods, services and public transportation.

In relationship to the cost of housing, statements coming out of business and government leaders and real estate professionals in Tel Aviv are at odds as to whether there is a bubble or not. At a recent Dun-Bradstreet forum all the economic experts except one, stated there was a bubble, that prices in Tel Aviv are 20% above the affordability index.
According to the Israeli business magazine ‘Globes’, Real Estate Appraisers Association in Israel chairman Ohad Danus. “Prices have risen because of building costs, VAT; developers’ profits are falling, and most of the rise is because of land, which is almost entirely sold by the government, which is the main beneficiary of the rising prices. Israel has failed in the past few years in creating supply in high demand areas which could stem the rise in prices.”

Outside investors, such as a British couple I helped purchase housing here, saw large Israeli cities as an investment they could afford, and simply chose to continue renting and working in London, the price of purchase being out of their reach there.

Tel Aviv still remains highly attractive, with its beaches, urban sophistication and ease of transport and atmosphere of freedom and social life. Young couples are choosing to buy outside and commute, or purchase an investment outside of Tel Aviv and rent in the city.

Two Scandinavian Banks Boycott, threaten Israeli Banks

According to the popular Walla Hebrew news site the Swedish Nordea Bank, which is the largest bank in Scandinavia, and the Norwegian Danske Bank, have announced that they will boycott Bank Hapoalim for funding projects in what they call “occupied territory”.

The Nordea Bank also demanded that Bank Mizrahi Tefahot and Bank Leumi immediately make public their financing operations over the green line. The most familiar areas where building continues to be financed and flourish are the formerly outside the green line Jerusalem neighborhoods of Arnona, Pisgat Zeev, and Har Homa.

The action taken by the banks is the first bank to bank boycott. An Israeli authority highlighted that these are not decisions by the governments of Denmark and Sweden, but of private companies, making it impossible to for Israeli political leaders to protest.

Billboard for Bank Tefahot In Arnona, Jerusalem

Billboard for Bank Tefahot In Arnona, Jerusalem

Dubious Honor

Israel was recently revealed in a Goldman Sachs study released in the beginning of November to have the dubious honor of being the nation that has seen the highest jump in real estate prices. Prices have soared 40% since 2009 and 72% since 2007. Israel is followed by the nations of Norway and Switzerland that have seen significant rises in the costs of housing but income to housing ratio is more affordable than Israel’s that has seen the greatest gains.
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The pent up demand for housing after the slow years of the intifada created a demand for housing that remains unmet. In 2010 the Israeli government took steps that took effect in 2011 hoping to suppress what it too late perceived as a “housing bubble”. The Bank of Israel put into effect down payments restrictions to 40% down minimum and tried to release those holding on to investment apartments by lightening taxes on their sales in hopes of suppressing buyers while releasing more inventory into the market place.

Prices have come down as a result of these actions, but almost as much from the perceptions of buyers that now would not be the “time to buy” in expectation of prices coming down. coinciding with these hopeful perceptions of prices coming down, sellers are still anticipating the expected gains in their prices so that only the desperate who must sell are willing to lower their prices to meet the current market.

New housing coming into the market finds little competition with existing with prices just as high while offering more amenities such as elevators and underground parking but have shrinking rooms for the net meter amounts.

Real Estate pruchases drop in Jerusalem and Tel Aviv, Haifa enjoys growth

Haifa is enjoying an increase in housing sales and prices while the other two major cities of Israel, Tel Aviv and Jerusalem are still seeing falling transactions and softening prices. The high tech industry overall in Israel is experiencing a 2.8% gain which could be reflective of the moving trend towards Haifa, one of the countries high-tech centers.

The second quarter in Haifa was marked by a 8% increase in housing prices while Jerusalem and Tel Aviv saw 2-1% drops according to the interdisciplinary center in Herzliyah.

The Finance Ministry “red lights” reports a nearly 15% drop in sales transactions in Jerusalem since a year ago in the traditionally active real estate months of July and August. Overall figures for real estate transactions countrywide can be deceptive as Haifa and Beersheva have regulated the overall statistics with positive numbers.

Treasury economists report the over all economic numbers for unemployment and consumer confidence are stable. The most significant drop in real estate purchasers are young couples and first time buyers who dropped by 30% since last year. It is this author’s contention that high prices, high down payments and sellers unwilling to accept reality and lower prices are the cause for the drop in ready and available buyers.

Ashton Kutcher property hunting in Israel

Café on Tel Aviv's Rothschild Blvd.

Café on Tel Aviv’s Rothschild Blvd.

Ashton Kutcher, who is a serious Tora student, according to co-star from “No Strings Attached” Natalie Portman, was not in Israel for religious study recently, but is looking into investing in property on Tel Aviv’s Rothschild Blvd.

The actor is business partner with Guy Oseary, a producer in the US music industry who have invested together in a number of social media companies. The partners looked into the project at 22 Rothschild Blvd which is slated to rent for $35-41 a sq. meter. They are seeking a location for an office locally from which to run a center in Israel for high tech start-ups focusing on social media.

Kutcher has expanded his personal fortune with early investments in social media start-ups, including Twitter. He also heavily invested in Yoav Shoham’s Katango, Israeli professor at Stanford University, which was sold to Google for tens of millions of dollars about two years ago.

Military releases Tel Aviv lands

view to Sde Dov, northern coastal area to be developed

view to Sde Dov, northern coastal area to be developed

The famous Kiryah base in Tel Aviv, where inductees countrywide first arrive for their military service is releasing their 47 acre campus for development for housing and commercial real estate. It has been a city landmark for generations in the heart of central Tel Aviv.

The Tel Hashomer base is located in what has become some of the priciest real estate in the country, the land itself worth an estimated $14 billion. The military will move its central operations to new mega-bases in the Negev.

The move is an attempt to alleviate the severe housing shortage in Tel Aviv. Sde Dov Airport will also be shut down to release its land for residential development along Tel Aviv’s northern “gold coast”.

30,000 military families will be moved from Tel Aviv to Beer Sheva which will create a real estate and jobs boom in the Negev. Citigroup and Morgan-Stanley have shown interest in financing the military projects.

Taxes = Revenue vs. Taxes = Slowed Growth, or Au Revoir Arak, or ‘let them drink Cognac’

I usually write about matters relating to real estate, and since real estate is intimately tied with economic growth and downturns I sometimes address economic issues.

The current administration in the United States is in process to drastically increase taxation, even in anticipation of the perceived actions of the Obama administration, businesses pulled back on hiring and expansion in fear at the beginning of his first term. Conservatives argue that taxation inhibits growth which would naturally increase revenue if taxes were affordable and incentivized to small businesses. Liberals argue that social programs need to benefit the poor and elderly so the rich and luxury should be taxed.

A small demonstration of this principle occurred here in Israel which is an everyman concern. Arak, especially the Israeli version of the middle-eastern anise flavored drink, has sometime in the last forty years in Israel become the national drink of Israel. There are many nearby countries producing the drink, but the most popular by far is the Israel brand based in Haifa, Elit and Aluf HaArak.

Unnoticed by myself, since too much Arak (two shots) can give me a headache, I decided to buy some while in the Jerusalem shuk Mahaneh Yehuda market. I love the drink, but its not one of my everyday favorites. I was shocked to find out that in recent days the price had doubled from 35-39 NIS a bottle to 70-80, if you could even find it on the shelves. On the contrary, the pricey liquors such as Grey Goose or Ketel One, were dropped by about 25-30%, but still prohibitive. The public outcry, after the informed cleared the shelves before the price hike, has been to put pressure on new Finance Minister Yair Lapid, who is blaming the previous administration FM Steinetz for preparing the hike.

Essentially the nearly double price on a drink as popular as beer has even my local grocer telling me to “boycott”. The tragedy is that this will hurt the most popular Israeli companies who are producing the most purchased brands. In the end the artificial rise in cost of locally produced goods only harms local industry thus ultimately reducing the revenue gained on popular products as consumption will decrease naturally.

Consumer Attraction

One of those undeniable truths of life is that if I suddenly am attracted by a fashion that I was formerly indifferent to, that somehow marketing, desire and scarcity have coincided to create a demand for a product.

Suddenly my own desires for apartment living have leaned toward the dream of either a garden unit or a penthouse with a large terrace space and view. I am joined in this dream with consumers around the country who are wanting the same, and now there is a shortage of penthouses in the coastal region as well as garden apartments and the moving trend is out of the city.

Penthouses in Tel Aviv have also reached demand exceding supply with even Donald Trump’s enterprises pushing for the project on Rothschild Blvd. to fulfill the complaint that “there is not a single nice penthouse in Tel Aviv”, quotes Ynet news.

There has been a trend in the last decade or slightly more to build buildings that include an outside space or balcony, to not have one now is considered a deficit to a property, like living on a high floor without an elevator.  Along with this trend there has been an increasing demand for pastoral spaces, the American Dream, a house with a yard.

The balconies were not that difficult to change the face of newer construction in Israel, but the demand for apartments with gardens has escalated along with the desire for a house with a yard.

This has caused a certain flight from the urban areas to more spacious areas that make a yard possible. Jerusalem in particular was noted in Ynet news.

 

Tel Aviv to add 70 floor building to skyline

The entrance of the community of Givatayim to Tel Aviv is about to get the largest skyscraper on the skyline. Permission was granted this week to Eurocom to build the structure.
Construction will begin in a few weeks. Upon completion the structure will be linked with light rail and pedestrian and bike pathways.
The tower is going to house primarily commercial interests.