Ashkelon expansion gains momentum

Ashkelon seafront  / Photo: Shutterstock, Shutterstock.com

"Globes" charts how Ashkelon has been transformed from a sleepy coastal city into Israel's most dynamic real estate hot spot.

Ashkelon has been transformed over the past decade from a sleepy coastal city into one of Israel's most dynamic real estate hot spots. In 2020, it beat Tel Aviv, Jerusalem, and Beersheva to become the undisputed king of the country's real estate sector. One in 20 homes bought last year was in Ashkelon and one in 20 building starts in 2020 was in Ashkelon. The city has grown 25% over the past decade to house a population of nearly 150,000 and is set to grow even faster over the next decade.

Between 2017 and 2018 Jerusalem was the city with the largest number of real estate deals, according to the Central Bureau of Statistics with between 4,000 and 4,500 deals each year - 6% of all the real estate deals in Israel. In second place was Haifa, which also had a large number of homes bought for investment, with 5% of all deals. Tel Aviv accounted for 4.5% of all deals in fourth place and far down the list of Israel's 16 biggest cities, where real estate demand is at its highest, was Ashkelon with 3% of all deals.

But in 2020 the situation changed. Jerusalem, Tel Aviv, Haifa and Beersheva saw a fall in the number of deals, while the number of homes bought in Ashkelon jumped to 4,200, putting it in first place with 5% of all deals.

This demand was also reflected in price rises. While housing prices around the country rose 4.3% on average, according to the Central Bureau of Statistics, in Ashkelon prices rose 6%. But even after this steeper than average rise, the average price of an apartment in Ashkelon in the fourth quarter of 2020 was NIS 1.2 million, compared with the national average of NIS 1.6 million.

Historically, Ashkelon, a coastal city 50 kilometers south of Tel Aviv, was perceived negatively as a city with a relatively low socioeconomic status and far from the more prosperous center of the country.

That began to change about 20 years ago with the completion of the marina and the development of vacation homes, which enjoyed a certain demand from foreign residents, who were able to find better value homes than in resorts further north such as Herzliya, Netanya, and even Ashdod. Even so only hundreds of new homes were built each year before 2008.

But after the sharp rise in real estate prices in 2009-2010, the government began rezoning massive amounts of land to temper further rises. Ashkelon's huge advantage was that the municipality had vast amounts of land reserves owned by the state and the city became a focus of major construction projects. So from 2010, Ashkelon starting climbing up the real estate ladder in terms of real estate construction and housing deals. Overall between 2015 and 2020, Ashkelon was in fourth place nationwide in terms of the scale of new residential construction.

Ashkelon Building Contractors Association chairman David Rosner said, "The jump in construction in the city and the number of deals has been due to the government's buyers target price program. This is a beautiful and attractive coastal city, which is not far from the center and apartment prices here are low. Tel Aviv is a 30 minute train ride away."

In 2015, then Minister of Finance Moshe Kahlon signed the largest-ever umbrella agreement in Israel to build 31,000 new homes in seven new neighborhoods, most of which would be part of government incentivized programs. 12,000 of the homes were northeast of the city center in the Ir Ha'yayin neighborhoods and part of preferential programs.

2,300 homes in Ir Ha'yayin are already under construction. Another area of Ashkelon, which has seen major construction in recent years, is Barnea in the northwest of the city near the coast where 1,500 new homes are being built. In a third neighborhood, Agamim in the south of the city, 700 new homes are under construction.

As Rosner stressed, 7,000 homes in 150 projects have been included in the Buyers Fixed Target program, in which young couples can buy discount price homes, if their names are drawn out of the hat. Thousands of other homes have been built or are under construction on the free market with a 5-room apartment, typically costing about NIS 1.6 million, according to the Central Bureau of Statistics, one of the lowest average prices in Israel's biggest cities.

Ashkelon Mayor Tomer Glam says that the city appeals to families and young couples due to its natural attributes, such as being relatively close to the center of the country, its long coastline and beaches, and expansive green areas, and he stresses that Ashkelon is undergoing accelrated expansion in all areas of life.

He said, "In recent years we have implemented several projects that have made Ashkelon attractive. The new North Ashkelon Interchange, which we opened several months ago significantly shortens the journey to the center of the country and with the construction of the high-tech park, which is in its advance marketing phase, Ashkelon will become a main player in the advanced tech industry, and which will provide thousands of new jobs for the city's residents."

The city has also undergone a transformation in the city with Ashkelon becoming a candidate for the Education prize, Glam adds, while municipal tax for households is among the lowest in Israel. "We won first place in the beautiful flag competition of the Council for a Beautiful Israel and in the coming years the city will become one of Israel's important and main centers."

Surge in the number of residents

The acceleration in new construction has seen the size of the city's population grow 25% over the past decade to 144,000 in 2019. This has been a major challenge for Ashkelon's infrastructure and services as it is not a rich city. With thousands more new homes under construction, Rosner is concerned that municipal services will not be able to keep up. "We haven't yet reached the situation where garbage has to be collected from the new neighborhoods but the municipality must start getting ready for that day."

Glam insists that the construction has been taken into account with the new homes set to double the size of the city. "We are developing advanced transport infrastructures, creating quality jobs, the construction will be smarter and we are already undergoing a revolution on the coastline and seafront promenade. We will build shopping, entertainment and leisure centers, and invest more in sanitation, gardens and nurturing the environment."

Glam also promises a transformation on the topic of urban renewal. "Ashkelon's oldest neighborhoods, which have been left untouched for more than 50 years, will have a complete makeover with the promotion of demolition and rebuilding, and Tama 38 (earthquake retrofits) projects, which will implement genuine social justice for our veteran residents."

But such things require large budgets and government assistance. Glam says that he is working around the clock to secure additional government budgets. "Over the past year, we received about NIS 300 million after a campaign that I waged for assistance for Ashkelon."

In addition, Ashkelon was defined for the first time in its history as a national priority development area A for employment, industry and commerce. This will help in encouraging companies and leading entrepreneurs to locate in the city as part of the Law for the Encouragement of Capital Investments with equivalent incentives for those on offer to industrialists who set up in the Negev. Companies like Electra-Bosch and Siemens have already built plants in Ashkelon while other companies like Rav Bariach doors are expanding operations in the city.

Ashkelon would seem to be set for a dynamic future.

Published by Globes, Israel business news - en.globes.co.il - on April 8, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Ashkelon seafront  / Photo: Shutterstock, Shutterstock.com
Ashkelon seafront / Photo: Shutterstock, Shutterstock.com
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018