A serious crisis is hitting the Eilat real estate market. Prices of cottages and apartments have slumped by 20 - 25%, and it’s difficult to find buyers. Activity in the income-producing real estate field is nearly nil. Nachman Schechter, Chairman of the Eilat Real Estate Realtors Association and member of the Realtors Council, told "Globes" that the reason for the crisis is the sharp decline in tourism in the city, which has severely affected the demand for freehold and leasehold apartments for hotel employees, as well as commercial plots and stores. According to Schechter, the situation in the city has never been so bad.
A house on centrally-located Sheshet Hayamim Street, was put up for sale two months ago for $270,000, once considered a reasonable price. Now the owners are closing a deal to sell at $202,000, 25% less than the initial asking price. The price of a four room apartment in the "west 7" district was initially $170,000, but will be sold for $140,000, a drop of 18%. Schechter told "Globes" that the price of many other apartments in the city has dropped by at least 20% during the last year. Private developers, who bought plots of land for villas in the new Shachmon neighborhood, have either frozen their building plans, or have started and then stopped construction work.
In the rental apartments market there is currently a supply, instead of a demand surplus which was the situation two years ago. There are hundreds of vacant leasehold apartments in the city. For example, an industrial factory is offering for rent a 32-apartment building, but there are no takers. Other entrepreneurs are offering for rent buildings containing 74, 30 and 25 apartments.
Three months ago the Israel brothers company rented out 81 apartments in the Shachmon district to the Isrotel hotel chain, at $550 monthly per apartment, dollar-linked, under a five year contract with an option for another five years. This deal provided residences for hundreds of the chain’s workers, and reduced the demand for other buildings in the city.
Schechter also said that there were nearly no deals recently in commercial and stores property. But occupancy in the "Mul Hayam" shopping mall is still full.
According to Schechter, a crisis is also hanging over the industrial building market. Around 30 buildings, each 100 - 200 sq. m., located in the industrial zone have closed down, and there is nearly no demand for vacated areas. Demand for plots of land has severely declined, and the Israel Lands Authority - owner of almost all the land in Eilat, has hardly sold any plots during this past year.
Published by Israel's Business Arena May 17, 1998