Last week "Globes" exclusively reported that Russian-Israeli oligarch Roman Abramovich had bought a Herzliya Pituah home from British hedge fund dealer Alan Howard for NIS 226 million - a record amount paid for an Israeli home. The property comprises two buildings totaling 3,000 square meters on 9,500 square meters of land, designed by Israeli architect Orly Shrem. The home includes a 1,000 square meter separate guest house, tennis courts, a swimming pool on a removable hydraulic platform to make way for an outside events area and more.
Such a real estate deal raises the question, what makes a property so valuable?
Eyal Oren CEO of pre-construction planners Ornil, who managed the construction of the home purchased by Abramovich is unable to talk specifically about the project but describes the general extras that make such homes so expensive: six meter high windows from floor to ceiling in the salon, hydraulic ramps for the swimming pool, heated swimming pool in the garden and in the basement, spa area, tennis courts, smart electricity system including communications, audio, smoke detectors, smart security systems, art storage areas, ponds and other water elements in the garden.
Those who can afford to allow themselves a budget of NIS 100 million for construction, Oren says, are mainly foreign residents, rich people from the Jewish communities in North America and Europe that build a home in Israel for vacations and the Jewish holidays. Such homes are rare in Israel partly because they require so much land. "Oren explains, "A home that costs more than NIS 100 million needs 3,000 square meters of land or more and there are not many lots on which you can build such large houses."
According to Oren, the average cost of such construction in the luxury neighborhoods of Herzliya Pituah and Kfar Shmaryahu where lots are typically 1,000 square meters in size is NIS 30,000-40,000 per square meter not including 17% VAT. But properties like the Abramovich/Howard home incur far higher costs.
"Globes" spoke to some of Israel's top architects who design these most expensive homes to discover what is involved.
Construction: New materials, uncompromising specifications
The architect Tehila Shelef is currently one of the red hot names in the field of luxury private homes. She zealously protects the privacy of her clients and declines to disclose any of their names or any slither of detail that might help identify them. But she does reveal that she designed the most expensive house in Israel for which its owner received an offer of NIS 500 million but he turned it down. She tells "Globes" that it is important to distinguish between the cost of building a home and the sale price of the home.
Why does it cost NIS 80 million to build a house?
Shelef, "What makes a house luxurious is the complexity of its systems (electricity, communications, lighting, air-conditioning etc) and the aesthetic solutions that make them invisible so that it looks as if there is nothing there. The second thing is work with the materials - the design and implementation are of a sort you don't see in standard building."
She adds, "In genuine luxury construction, we invest many hours in merging the materials into the components with lots of fine details. The degree of detail hugely influences the price. Our clients have seen and experienced things out in the big world. They stay in the most-crazy elegant hotels, and so we are always looking for something new. We are working with new materials from the car and aircraft manufacturing world and metals that haven't previously been seen in the home construction sector - titanium, brass, copper and zinc. The threshold for enthralling has risen and we are pushing out the borders all the time on what we have been doing up until now. We are always looking for the next thing. In every project we reinvent ourselves."
When I try to understand from her if the homes that she designs sell for more money, she is evasive. "To my mind it's the chicken and the egg. An architect who works to a certain standard and is used to designing at the highest level essentially means that the professionals will be the best. It's clear that the cost of building a house will be a certain amount and its value will be even higher. This branding is not always the true value of the house. Not every architect writes out a check for true luxury."
The architect Ramy Gill teaches at Tel Aviv University's School of Architecture and designs public buildings as well as luxury homes. It was only recently published that he worked together with the acclaimed UK architect John Pawson on The Jaffa luxury hotel in Jaffa. They converted the 19th century former French Hospital into a boutique hotel and added another building with 30 luxury apartments. The penthouse in the building is being offered for sale for $60 million.
It is important for Gill to emphasize that what makes homes very expensive, beyond the location and the land component, is related to the ingenuity of the architectural design. "Everything depends on the sophistication of the construction. Sophisticated projects are characterized by uncompromising specifications, in other words when a material interfaces with another material there is no way that it can be improved or concealed. Construction that includes materials, which conceal nothing, such as materials in their natural state like exposed concrete, are much more complex and expensive. From the very first moment you must be very rigorous in the production.
"Merging together these materials requires skilled craftspeople, for example, with 12-meter glass showcases on every corner with minimum profiles and it's the same with the stone facing in the bath with requires precise calibration, expensive conveyance and skilled work. On top of all that there is major depreciation."
"Good craftspeople are fast disappearing - cabinet makers, metal workers, people that know how to compose music on a building site. In other words, the more sophisticated that a building is and the more artistically ambitious, that's what makes high-end expensive."
The designer Vered Baltman designs huge houses in a minimalist but sophisticated style on moshavim (farm cooperative villages) in the Hasharon region north of Tel Aviv. "The location is important and the size is important and the finishing has significance but it would be impossible not to mention that an expensive house has a holistic perspective. I mean in selecting the items within the home, which should be like a collection. I work with the top craftspeople and I am very careful to integrate furnishings from leading firms, mainly European, like Poltrona Frau, Paola Lenti, and B&B Italia. Every furniture accessory in my homes is a piece and each is adapted to complement the other. Dressing up the house is like a kind of treasure.
The design: A home with cultural value, a work of art
The architect Ami Szmelcman was recently chosen to design a house in the community being developed by the British billionaire and Raven Property Group owner Anton Bilton on the Balearic islands in Ibiza, Spain. The choice of Szmelcman should not be underestimated when taking into account that he works out of a small office in Jaffa, in a king of shared co-working space.
His colleagues in designing the other houses are mega-architects, and international brands. The house he designed in Ibiza was put for sale at €14 million. Szmelcman, born in Paris, founded the GS ARCH architectural firm with Asaf Gottesman, which in the 1990s was the 'in' thing in designing luxury homes for Israel's wealthiest but since then has channeled most of its activities to Europe.
Szmelcman claims that above and beyond factors like location and size, the value of a home stems from design: "The materials do not have to be rare and expensive. They can be basic but carefully designed and the level of their application makes the difference. At these levels of projects, we are challenged because they expect that we will create very unique homes. Our clients want homes with a story, with content. These houses have a cultural, even an intellectual value and the home is a work of art. It is not just a large, beautiful and expensive house."
The distinguishing factor: "Not expensive but of value"
The architect Pitsou Kedem has reservations about being defined as a star but there is no doubt that in the past 10 years he has become a celebrity architect and not only in Israel. Articles about his buildings have been published in professional magazines abroad and his creations have even featured in a Netflix series about unique homes.
"When you ask what makes homes expensive, I think it is a matter of the distinguishing factor," Kedem explains. "It is clear that this distinguishing factor begins with their being a bigger budget but a budget does not always create a better quality house."
He adds, "The culture of the architectural process begin in researching the location, the context, the environment. In Israel there isn't anything for us to draw from. Everything here is new. The next stage is the dialogue with the client and the quality of the design. These things then make the home, not expensive but of value. When we move onto the design, we look for a language. I call this the fingerprint that is intertwined with the design process. This is not capricious. The concept interwoven into homes makes them more collectible and more compact.
Do you think that clients know how to value this? "Private building is personal. I believe that in the dialogue with our clients, we can raise the level of discussions. And yes, people know how to value the huge effort that we make. We genuinely believe that we are creating works of art. Only to distinguish between works of art being exhibited in museums, we have a dimension of responsibility. Quality homes, which are also very expensive, have a thought process in them. Architecture that is assembled, and reasoned, is more valued and sold for higher sums.
The lighting: "Strengthening architectural elements"
Lighting designer Hila Meir has been involved in designing a large number of house over 1,000 square meters in size including designing the lighting for Alan Howard's house in Herzliya Pituah. "In expensive homes we offer a range of solutions."
"We have come a long way from the solution of one fitting in the center of the room - that was the solution that most of us grew up with. We are now talking about a multiplicity of unique elements some of which are built especially for the project itself: light fitting sunken into the wall, with attachment between the wall and the ceiling, with handles, upright lights, light stands, suspended lights. This is more flexible to use but makes it significantly more expensive. That means we can make a different statement for an intimate evening, evening with guests, with the children at home and so on."
"The lighting strengthens the architectural element, focuses the attention on art exhibits, and can be decorative but also creates and enhances the atmosphere. This multiplicity makes the house more exclusive and also expensive. Added to this are the control system - new systems that are being designed now allow us to enter the house and with the touch of a switch set the sensor that takes in all the many different types of lighting.
And how much does it all cost?
"The sky is the limit
The location: An exceptional piece of land
The architect Yoav Anderman that when talking about the price of a house, the architect is secondary. "Architects really like to think that their brilliant design, or wonderful planning will make a house unique but for the most part that's not what happens. The location is first and foremost what influences the price."
"If you analyze expensive real estate you will see that it always begins with the piece of land. If you look at the most expensive deals they are always on an exceptional piece of land. Where we are talking about the Herbert Samuel (seafront) promenade in Tel Aviv or a cliff at Beit Yanai, or Galei Tachelet Street in Herzliya Pituah. Whoever wants to live in Shikun Haktzinim in Tel Aviv needs to pay for the fact that there are the last houses available in Tel Aviv."
The brand: Homeowners are buying status
Orly Robinson has published dozens of books over the past 20 years about interior design and architecture and has established herself as the undisputed authority in the field. "I really don't think that the price is connected to the cost of the creation. There is here something different that causes the product to rise tenfold. Like jeans for NIS 2,400. These homeowners are buying status, headlines, a brand. People that have unlimited amounts of money are prepared to pay hundreds of millions of shekels so that it will appear in a newspaper and they will be talked about. It is important to them that it is clear that they have a lot of money."
Published by Globes, Israel business news - en.globes.co.il - on June 11, 2020
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