Apartment prices down but not out in Tel Aviv's Florentin

Florentin credit: Shlomi Yosef
Florentin credit: Shlomi Yosef

Real estate agents tell "Globes" that apartments are hard to sell in the hipster south Tel Aviv neighborhood.

Florentin, once the darling of Tel Aviv residential real estate investors, has been in a slowdown since interest rates began rising in April 2022 and which has continued with the outbreak of the war. Owners of second-hand apartments are paying the heaviest price if they wish to sell their properties.

One of the causes of the difficulty in the market are the many new projects that are currently being marketed in the neighborhood with favorable payment terms for buyers, without interest and linkage. Buyers can close a deal with very little equity and pay the balance in a few years. Consequently apartments are for sale for long periods and most of the purchases reported on the Israel Tax Authority website are for new apartments. Developers have also been forced to cut prices compared with the market boom in 2022.

RE/MAX-Advantage real estate agency owner Talya Koren Bar Natan says, "There is a dramatic decrease in deals in general and second hand deals in particular in Florentine. Those who are interested in the neighborhood tell us that the apartments are small and the price is relatively high for them. As a result, many investors have become interested in other neighborhoods such as Kfar Shalem, Neve Ofer or Jaffa near the light rail. So Florentine has fallen between two stalls."

Hipster Florentine is just south of central Tel Aviv and east of Jaffa between Ha'aliyah Street in the east, Elifelet Street in the west, Derekh Yafo in the north and Shalma Street in the south. The Levinsky market, which made the area into a lively leisure and entertainment neighborhood is in the eastern part of Florentine. According to data from Madlan, 60 apartments were sold in Florentin in 2023 at an average price of NIS 55,900 per square meter and NIS 3.72 million per apartment. There are currently 136 apartments up for sale in the neighborhood with the average monthly rent NIS 7,000.

Koren Bar Natan says that apartments, which once sold as soon as they came onto the market, are now standing empty for a long time, even at prices significantly lower than the average in the neighborhood. "What is happening right now in Florentine is very interesting. Prices have moderated and deals are still not being signed. For example, there is a stunning three-room apartment on Herzl Street, in a new building with an elevator, and it is not being sold. There is absolutely no traffic. People are telling our agents that the price is high, NIS 3 million which is about bout NIS 47,000 per square meter, and the apartment has been empty for four months. At a price of NIS 52,000 per square meter, it would have been snapped up two years ago."

Deals of NIS 70,000 per square meter in 2022

Anglo-Saxon Tel Aviv real estate agent Roman Shapiro says that the prices fetched in 2022 are no longer being seen in the neighborhood. "This fall in deals in the neighborhood has been felt for a long time. It's like a faucet has been turned off, just like that. Now there is a slight resumption of telephone inquiries. These are mainly those who were interested in apartments a year or six months ago and are now interested again in buying at a lower price. The war has not changed anything in the market. What had an effect was the interest rate hikes that led to the slowdown. Now people realize that it is time to buy and I showing places to several such clients. Today you can buy second-hand apartments for NIS 3.5 million that were sold for NIS 4 million in 2022, and as a buyer I would not pay more.

"In 2022 we saw deals of NIS 70,000 per square meter, for example in Wolfson Street in a building for preservation, but now there are no such deals and no one would sell at that price. It's a buyer's market, but not all owners agree to come down. I had negotiations now that didn't close because of a difference in price. The problem is that there are no inquiries at the moment and people are not looking."

Are the new projects and convenient terms of financing creating a situation in which property owners interested in selling their apartments cannot compete?

Shapiro: The developers are simply more flexible and there is the financing factor and the possibility of cutting the price. There is also the matter of luxury. Acro Real Estate's project in Florentin is in demand and very expensive because of the high level of finishing. Ceilings 2.9 meters high and double-glazing in the project of Yuvalim Hazanovitch in the neighborhood. This is the finishing itself in the project and not an extra."

"It's a buyers' market and the sellers haven't realized"

Koren simply explains that the apartments aren't sold because the owners aren't prepared to drop the price because just two years ago, these apartments would have been snapped up in a flash at much higher prices. She says, "We are currently trying to sell an apartment in the area of Shach Street in Florentin, which has been on the market for over four months. We are in talks with the seller who is not willing to lower the price and this is an excellent and spacious apartment with a balcony in a well-kept building. At first, they wanted NIS 3.7 million for a 72 square meter apartment, now they have agreed to drop to NIS 3.6 million and it is still on the market at a price of about NIS 50,000 per square meter. In 2022 this apartment would have been snapped up and sold very quickly, and in 2021 it would have already been sold within a day. In 2024, the price should very much be adjusted to the area in which the apartment is located and, of course, to the sentiments of buyers. Today it's a buyer's market - but the sellers haven't realized it yet."

Maayan Perry, who deals in real estate marketing in Tel Aviv's southern neighborhoods that everyone is looking for a future position and doesn't want to pay now with the high interest rates. Therefore, the properties are sold in projects by contractors and not from the property owners. She says, "In second-hand apartments, until a week ago you could say that the apartments were empty. However, as the security situation improves, we see that the real estate market is going up. There are more buyers walking around and bids.

"Deals are being seen in new apartments with contractors. Buyers think strategically ahead and if there is a project that will be delivered to them in three to four years, they will want to reserve a position today in a prime area, in a fluctuating market, so that they will receive the apartment in three to four years, in a prime location in a boom market. You have to understand that it is easier to sell apartments on paper and at a higher price because of favorable payment terms, such as 20/80. The price already embodies the future improvement, because properties whose value will increase most are new apartments."

Published by Globes, Israel business news - en.globes.co.il - on March 6, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Florentin credit: Shlomi Yosef
Florentin credit: Shlomi Yosef
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