A plot in the agricultural village of Moshav Bnei Zion was once the most expensive real estate in Israel. Billionaires converged on the community, located near Highway 4 near Ra'anana north of Tel Aviv, looking for houses on large plots. First to buy was Shari Arison in the second half of the 1990s, followed by Liora Ofer, Noam Lanir, and others. The boom was so big that a lot bought in 2000 for NIS 8.3 million was sold nine years later for NIS 18.6 million, even before the big Israeli real estate boom.
The wealth very quickly spread to other agricultural villages (moshavim) in the area. Prices skyrocketed, and the Israeli dream of a large home and even larger garden came true in the Sharon area villages. High-priced real estate deals took place in rural areas, such as Batzra, Udim, Sde Warburg, and Herut.
Those days are long gone, however. Deals for more than NIS 10 million can no longer be found, and even those are rare.
The trend in rural real estate has changed. After a while, it turned out that a large proportion of the wealthy people who bought lots and built luxury homes on them never lived in them. The reason may be that the traffic jams on the road to Tel Aviv were the same for all, rich and poor. It was tough to get from those luxury houses to the office. Or maybe the reason was that luxury high-rises began sprouting like mushrooms in Tel Aviv 15 years ago, making it possible to enjoy luxury and privacy without leaving the city.
Which is the real reason? TH Properties real estate broker Tomer Horn and appraiser Saar Peled, who work in the area, believe that neither one is right. "There were always towers in Tel Aviv, and the market for them was always different," Horn says. "I think that people simply stopped paying excessive prices for plots and farms. Deals today don't go above NIS 10 million, and many of those who bought farms at the time and sold them admitted that they were sorry about those deals, because they weren't worthwhile, and the farms weren't liquid properties. It takes time, sometimes two or three years, to sell them."
The time needed to sell these properties can be even longer. The houses belonging to Liora Ofer and Shari Arison were offered for sale a number of years ago at prices of over NIS 20 million, but found no takers.
"Everything has a price. If people can spend NIS 20 million on a lot, they will probably choose to buy it without a building and build a home according to their tastes and needs," Peled says. "I don't think there's a connection between these two luxury markets, which offer their owners different advantages."
"Globes": Who buys in the agricultural villages now?
Horn: "Today's buyers are mainly move-up buyers and high-tech people who can spend these sums on their homes. People see a penthouse in Kfar Saba is already soaring to NIS 4 million, add a little mortgage, and buy a house. Most of the residential deals now for rural properties in the Sharon area are in the NIS 4-7 million range."
Agricultural land speculation
Another prominent feature in land deals in the Sharon area is the large number of speculative deals for agricultural land. "You see a lot of it, not necessarily in the Sharon area, but there, too. People think that if they buy agricultural land next to a built-up community, there's a good chance that the land may one day have building potential. It isn't necessarily true; proximity to urban areas doesn't mean that the land bordering it will be rezoned," Peled adds. In recent years, quite a few deals of this type took place, a large proportion of which can be described as dubious.
The schematic economic formula for the Sharon area is still valid: the most expensive properties are from Highway 2 westward (near the seafront). The medium prices are for properties between Highway 2 and Highway 4, and the least expensive (there are no cheap properties here) are properties between Highway 4 and Highway 6. The area east of Highway 6 is not part of the Sharon area, and the prices there are much lower than for the villages in the Sharon area.
Something new: Lots can be split to build homes for children
Most of the deals for a house are for up to NIS 8 million. A house was purchased for NIS 5.8 million on Hakalanit Street in the new section of Udim, which overlooks Nahal Poleg and the coastal road. In the Arsuf Cliffs project, which is actually located on Kibbutz Ga'ash, a 300-square meter house was sold for NIS 6.65 million and three-room apartments were sold for NIS 3-4.5 million. A house on Harimon Street in Kfar Netter, a moshav next to Even Yehuda, was sold for NIS 6.7 million. An old house in need of renovation on a one-dunam (0.25-acre) lot in Gan Haim was sold for NIS 6.7 million. Peled believes renovations will bring the buyer's total cost to NIS 8 million.
There are also some old-style deals, however. In August 2018, a four-dunam (one-acre) lot on Harimonim Street in Bnei Zion with a house built in the 1950s was sold for NIS 14.8 million. A house on Kibbutz Galuyot Street in Batzra was purchased for NIS 10 million.
The main innovation in lots today is the option of splitting them to build residences for the owners' children in exchange for paying purchase fees to Israel Land Administration, in contrast to the situation with unregulated lots, for which high consent fees must be paid when they are sold. This option gives landowners greater control over the residential construction options, which increases the value.
Published by Globes, Israel business news - en.globes.co.il - on March 3, 2019
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