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.”
Tel Aviv’s landmark Azrieli towers
Azrieli Group will build a new green park near the site of its Tel Aviv landmark 3 buildings, the square, triangular and circular tower. Work is beginning on the fourth elliptical tower. The elliptical tower will also contain hundreds of housing units in its 80 floors.
The new tower will be on the site of the former Yediot Aharonot building (where I once worked) where the neighboring area will also be reclaimed with other new projects.
There is also a projected ‘green park’ and which Azrieli will build in exchange for the tower complex which will cover a section of the Ayalon Highway to create an urban park. The portion of the Ayalon freeway which is slated to be covered with a dome is bordered by Yitzhak Sadeh Street in the south and Arlozorov Street in the north. It will comprise about 15 dunams.
The new park area will be encompassed by dozens of new towers and will include cafes and sports complexes will likely be built in the park. The inspiration for the establishment of a green park over the Ayalon came to the steering committee from similar projects abroad such as Park Avenue, the High Line Park in New York, Miami Beach Park, the Big Dig project in Boston and the London highway covering project.
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.
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.
Several months ago the transaction of the large parcel IDF (Israeli Defense Forces) owned land was sold for development for housing to help relieve the housing shortage in the Israel’s largest and fastest growing city, Tel Aviv.
Plans have been released for the 2 new 80 story towers which will be in the central location on the corner of Shaul Hamelech and Weisman streets. The complex will include the office towers and three other apartment towers which will provide 770 new housing units. The new complex is affectionately known as the “toblerone tower” for its triangular shape and resemblance to the famous Swiss candy bar. The project itself is called the “Rockefeller of the Unstoppable (or city that doesn’t sleep) City”. The units will be small, two and three room apartments all measuring 65 and 83 meters.
The eight acre parcel will also includes park areas and bike paths as well as underground parking. The new project will also be serviced by a planned underground tube which is known as the “green line”. The metro will run on the Ibn Gvirol route.
Tel Aviv, along with Ramat Gan and Bat Yam continues rapid growth becoming as I have coined it, the Singapore of the Middle East in the “start-up nation”.
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.
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.
The Central Bureau of statistics reflects what realtors around the country know, demand is down for housing both in the rental and sales markets. Compared to Q1 last January, 2012, apartments sold or built reflect a drop of about 20%, since the prior quarter, demand is down 6%. This drop affects mainly the markets of Tel Aviv and environs and the southern sector.
Demands were slightly better in Haifa and Jerusalem. Many are asking what exactly is the cause of this drop in both the rental and sales markets. Chairman of the Real Estate Appraisors Association, Ohad Danus, claims the drop is a direct result of intentional government sanctions and austerity measures in the marketplace instituted in 2011. He stated, “the developing trend is extremely troubling, because while the natural growth in Israel cannot be suppressed and should even be encouraged, the housing market can be suppressed – and this is what the government has been doing successfully in the past year.”
The recent trauma of rocket attacks last fall as well as the significant drop in foreign currencies such as the US $ and the Euro as well as the British pound are factors in this author’s opinion that cannot be overlooked. Even if foreigners are not entering the marketplace with their currencies, many Israelis have their capitol invested in foreign currency savings accounts. Foreigners entering the Jerusalem market has long been a significant factor and with their currencies down and fears of war heightened fewer foreigners are entering that marketplace.
The good news is for those who have the capital to invest the contrarian view is that 2013 is the year to purchase while prices decline. Experts predict 2013 spring and summer months may see increase in activity but no change for the better in prices for sellers and landlords. There is still plenty of inventory in the major cities but only sellers with realistic goals and who need to sell will be willing to drop their prices to a real market value.
Young Jerusalem residents founded a group called “New Spirit” with a goal of reclaiming the identity of Jerusalem as a multi-identity city to help tip the balance of the city’s cultural personality. Their goal is to attract young families to build their lives in Jerusalem who are secular and to resist what is known as the “haredization” of the city’s neighborhoods.
In partnership with builders, “new Spirit” has claimed 30 apartments in the New Talpiot development on Beit Lehem Road to be sold at a 15% discount. Buyers need to meet a number of criteria: that at least one of the couple is under age 41; that the partners work at least a combined 125% job; and at least one partner is a college graduate. Guidelines can be altered and will be judged on an individual basis.
Prices will compete very closely with new construction the relatively new but religiously mixed community of Har Homa. A three-bedroom apartment (105 square meters) starts at NIS 1.475 million ($390,000); and a 121-square meter four-bedroom apartment starts at NIS 1.685 million ($440,000). Prices for existing homes in Har Homa are slightly lower.
The contractors are Balilus Group, M. Aviv, and the Rosenzweig and Baruch families, state the idea is based from a social outlook to a sector they perceive as desirable purchasers. THey voice concern over the high and prohibitive cost of buying in Jerusalem for two-income young families.
The action group with the builders hopes that their actions however small will influence perceptions to provoke a shift in the Jerusalem population and the appeal of the city. THis is their third housing group purchase.
Elisheva Mazia, director-general of New Spirit, stated, “Each time, it’s exciting to see how we open the door for young couples to buy an apartment in Jerusalem at a discount and make a life in the city.”
The recent crisis in the European econmoy that has sent Euro holders reeling has brought a rise in interest in local property purchase. In France a recent Israeli apartment expo brought a record attendance of more than 5000. Reasons for the record attendance not only reflect fears of a failing euro and lost values there, but rising anit-semitism after the recent shootings in a French day school.
Many fairgoers are young couples looking to make aliyah and seeking upscale areas where they can attain a similar standad to France, such as Hadera and other coastal cities less expensive than Tel Aviv. Older attendees looked at Netanya and Jerusalem to be closer to their religious communities and friends already living here.
The intifada years of 2000-2004 were not only marked by recession, unemployment and business losses, but a significant drop in the real estate market. In the years following, 2005-2010 as the country entered into greater stability due to increased intelligence and security measures, the property market entered the boom that doubled values almost overnight for those who did buy in the earlier half of the decade.
During the intifada many agents exagerrated the role of the French buyer who enjoyed strong property value in France and saw local real estate as a bargain. There came a significant influx of French buyers into the local property market. French fears of future anti-semitism caused buyers to invest in a pied-a-terre here that would be an investment of assurance.
Many of the French property owners did not make aliyah, however, but became landlords or simply came to visit leaving their apartments here empty. In the ensuing years a percentage saw that France seemd economically more opportune along with rise in their Israel property values so some even sold their holdings here for profit.
The results of this recent fair attendance and poling there showed that there is a shift in attitude with buyers looking more seriously at making Israel their home.
Although the government continues to admit to a housing shortage which is driving prices of the existing market up, housing starts rose 10% over the first 3/4’s of 2010. 66,800 apartments were under construction in 2010.
After a visit to a recent housing fair where prospective buyers have the opportunity to compare building contractor’s latest offerings, prices for on-paper purchase were shockingly higher than previous years. This author believes this will continue to drive the cost of the existing market up.
With stats like these it is doubtful there will be a housing bubble with demand still exceeding supply.