The decline in activity in the diamond trading sector is also reaching the buildings in the Ramat Gan Diamond Exchange. The Diamond Exchange's management, led by president Yoram Dvash, has announced that for the first time since 1969, offices in the Maccabi and Shimshon Diamond Exchange buildings at 1-3 Jabotinski Street will also be leased to providers of services to diamond traders, such as insurance agencies, accountants, travel agencies, software and hardware companies, and even jewelers, not just to diamond traders.
It is believed that rents in the building will average NIS 60 per square meter, plus NIS 40 per square meter in management fees, as is the practice in the Diamond Exchange buildings.
Diamond traders have been leaving the buildings, following the crisis in the sector and the desire to have the available space occupied. The space is unsuitable for businesses doing only a small proportion of their business with diamond traders, because the other customers of these businesses will have to undergo exacting security checks when they enter the building.
The Diamond Exchange's management has decided that service providers allowed to rent offices in the Diamond Exchange will have to undergo the usual securities checks in the sector, and prove the existence of business ties between them and the Diamond Exchange members. It is believed that the decision resulted from a drop in activity in the diamond trading sector, which also freed up space in the building. Up until now, only diamond traders who were members of the Diamond Exchange were entitled rent offices there.
In early 2017, the Ministry of the Economy and Industry reported that exports of polished diamonds fell from $4.9 billion in 2015 to $4.6 billion in 2016, a 6.4% drop, following a 20% plunge in 2015, compared with 2014. Diamond exports totaled $7.1 billion in 2007.
A plan is being pushed to triple construction rights in the existing buildings. Given the situation in the diamond industry and the supply of available space in the existing buildings, the chances of the Diamond Exchange's management exercising any rights gaining final approval are low. The current decision to allow renters who are not diamond traders to rent space in the buildings may pave the way for the Diamond Exchange to exercise these construction rights in the future.
"We made this decision above all in order to make a significant improvement in the day-to-day life of the Diamond Exchange members, so that they would not have to run around looking for the services they buy all over the Greater Tel Aviv region," Dvash explains. "This is a business opportunity for companies and concerns that provide services to the Diamond exchange members. It ties in with the Diamond Exchange's overall strategy, which is designed to utilize Israeli technological innovation to improve the global competitiveness of Israeli diamonds. As part of this, an innovation center will be founded in the Diamond Exchange for startups utilizing various technologies related to the diamond industry. The plan is to leave these technologies within the walls of the Diamond Exchange, and provide the Diamond Exchange members with maximum access to the companies providing those technologies."
Published by Globes [online], Israel Business News - www.globes-online.com - on September 5, 2017
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