Hassan Arafa: Tel Aviv's new city within a city

13 high-rise buildings are planned for the district and the number is likely to grow.

In recent weeks, two big real estate deals worth hundreds of millions of shekels in the Hassan Arafa neighborhood in Tel Aviv have refocused attention on this developing area between Hamasger Street and Menachem Begin Road.

Ziv Yakobi, one of the three owners of Acro Real Estate, which was involved in the two latest deals, and many of the other deals in the district in recent years, said, "If you look at Tel Aviv today you will see that there are new neighborhoods but there are no new districts of this size. In my eyes it’s a type of new city, both a business center and residential neighborhood, because of its scale and because of its location.

Acro has led the purchasing groups in Hassan Arafa and bought land either by itself, or together with partners. "Globes" research found that Acro has bought land in the district for more than NIS 1.2 billion, which makes them a prominent player in an area that was until recently one of Tel Aviv's most neglected neighborhoods.

As of now, 13 high-rise towers will be built and it is likely that the number will grow according to the planning and approvals granted by Tel Aviv Municipality. One way or another, the deals conducted by Acro mean that they are involved in building eight towers in the district. Construction of two of them has already begun. Acro Tower will have 32-floors and is located in the northeast corner of the district and will be one of the first buildings in the area to be occupied already in the coming months. This project is through a purchasing group led by Acro. Sources inform "Globes" that in recent weeks the three top floors in the tower were sold to a company dealing in investments, for an average price of NIS 15,000 per square meter.

In the southern part of the district, along a street temporarily named 1185 Street, Acro Group has led a buyers group for the Alfa Tower building, which will include apartments and a hotel, being developed by Acro itself. Yakobi is aware that now is a problematic time for some of the towers to find occupants, with so much other building work being conducted all around, including the large new Carlebach light railway station, which will be served by both the Red and Green lines. But he says that this bothers the buyers less. "This is a city and something dynamic. The development of the park in the center of the district will soon begin and its construction should be completed in another 18 months."

The struggle for the name of the district

The district covers just over 20 acres between four streets: Hamasger, Yitzhak Sadeh, Begin Road and 1185 Street. Originally agricultural land in the Tel Aviv of the British mandate, on the edge of Tel Aviv and the slopes of the Ayalon River, the name comes from a rich Arab from Jaffa who tended groves in the district. Many of the developers have been trying to rebrand the district, which long ago lost its agricultural character, as Yitzhak Sadeh.

After the War of Independence, many workshops began sprouting up in the area together with hastily built individual homes put up in an unplanned, haphazard way. Arrangements of land ownership were not made formal until 2005 and ten years ago Rubinstein, managed by Gil Rubinstein, bought land for two towers for NIS 110 million, in the northern part of the district. These two towers will be occupied soon and among tenants are the Herzog Fox Neeman law firm, which has leased 16 floors, and the software firm Monday.com, which has leased 15 floors.

A masterplan approved in 2016 allows floors to be added on for residential units in exchange for building public areas, affordable housing or preservation of buildings in the city center. As part of the plan, the overall amount of construction in the district will not exceed 600,000 square meters. For the sake of comparison, this is the equivalent of four times the space in the Azrieli Center and its square, circular and triangular towers. While most of the building rights in Hassan Arafa are for offices, 25% is for residential units and there will be some areas for hotels and commercial space.

Due to the mixed-purpose use and the massive scale of the construction, parking will be underground. Construction of the park and its maintenance will be the responsibility of a management company set up by the developers of the towers. At present five towers are under construction and the forecast is that an entire new central block of buildings will be completed within ten years.

Other development companies involved in Hassan Arafa include City Boy, The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), Yuvalim, Shabbat Moshe, Ybox and Sky as well as a galaxy of the country's top architects including Moore Yasky Sivan (MYS).

"I began investing there in 2007," said City Boy founder Ran Belinkis, who was also one of the founders of the city supermarket chain AM:PM. "The Tel Aviv Municipality deserves a medal for making a mixed-purpose district that is homogenous and right in a way that there is in no other place in Israel. If you live here in a tower you are within walking distance from Sarona or Rothschild Boulevard. I think that we are the Israeli version of Hudson Yards in New York. It's a district planned to be by the light railway together with the towers and access to the city. It's as if they have taken the Ramat Gan Diamond Exchange district and put it in the city center. It's also a high level in terms of the architects and the result here is that everything is planned and not too crowded.

Anglo-Saxon Tel Aviv real estate agency co-CEO Oren Glazer says that rental prices for offices in the area are on average between NIS 65-70 per square meter and for offices with finishing you need to add on average another Nis 20-25 per square meter.

Offices for sale in Hassan Arafa cost NIS 13,000 per square meter before VAT and two-three room apartments in the area cost on average around NIS 40,000 per square meter. Glazer predicts, "In another five years when the park is fully developed and the light rail is running and the towers will be an established fact, we expect prices would have risen by 20%."

Glazer says rental prices are similar to the towers in Yigal Alon Street on the eastern side of the Ayalon, such as the Alon and Electra towers and on the northern side of Begin Road, such as the Recital tower. But if Glazer's positive predictions are realized, rental prices could be higher in a couple of years and more similar to office towers like Azrieli Sarona, Azrieli Center and the ToHa tower.

Land appraiser Aryeh Kamil of the Kamil Treshanski Refeal real estate appraisers firm prefers not to predict prices but says that the district has a built-in advantage. "Its location in the center of the new rail transport system close to light railway and metro lines. The distance to the Hashalom and Haganah main line railway stations is less than a kilometer. In addition there is access on foot to Rothschild Boulevard and the courts just hundreds of meters away. That means that both the homes and the offices will enjoy the cultural and commercial services of the city. In my opinion this is the next serious district after Rothschild Boulevard.

CBRE real estate consultants chairman Jacky Mukmel presents a more cautious approach in his assessment. "The test in the results of this district will be when the market becomes active again. The question is whether prices will stabilize. There is at the moment a virtual meeting between a lack of demand and supply. The market is waiting to be tested. Whoever wants the city center, and there will be a lot of such people, mainly high-tech companies involved in marketing, will come to this district, just as they came to Azrieli Center and to Sarona."

Published by Globes, Israel business news - en.globes.co.il - on March 7, 2021

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

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