In several recent deals, the luxury housing market in Tel Aviv has seen a steep decline in prices, but the city still leads the high-end market in Israel, and by a long way. "NIS 10 million homes in Tel Aviv are not necessarily apartments in prestige towers; they can also be garden apartments in TAMA 38 projects," says real estate appraiser Shmulik Cohen of SK Real Estate Appraisal, referring to the Urban Building Plan 38 for urban renewal. "The sharp fall may perhaps indicate the effect of the crisis in the high-tech market as one of the reasons for the decline in sales of luxury apartments. In recent months we have not seen huge deals as in the past few years. The most expensive deals are in the NIS 25-35 million range, and most of them are in one project in Hayarkon Street in Tel Aviv.
NIS 20.14 million: Impression of 2 Hayarkon Street, Tel Aviv (Mandarin Oriental project). 139 square meter apartment on seventh of 25 floors. (Viewpoint)
The project that Cohen refers to is The Residences, Mandarin Oriental at number 2 Hayarkon Street, next to the Dolphinarium. The project is led by Hertzel Habas, the developer of the Yoo and the 1 Rothschild Boulevard towers, together with Orit Freedman Weissman, formerly CEO of Goldman Sachs Israel. The investors are private equity firm Apax Partners founder Sir Ronald Cohen, Colmobil Group chairperson and controlling shareholder Shmuel Harlap, and the Bronfman family’s Claridge fund. The project is at the shell stage. Occupation is schedule for early 2025.
So far, 63 transactions in the project have been registered on the Israel Tax Authority’s website, carried out over the past two and a half years. Five of them were in the first six months of 2022. The latest deals indicate a normal price range of NIS 130,000-140,000 per square meter, although some exceed this.
A 139 square meter apartment on the seventh of the project’s 25 floors was sold for NIS 20.14 million - NIS 145,000 per square meter; a 245 square meter apartment on the seventeenth floor was sold for NIS 34.3 million - NIS 140,000 per square meter; and a similar apartment on the eighteenth floor was sold for NIS 31.4 million - NIS 128,000 per square meter. The price differentials may be because of different design or direction and view.
Herzliya: 11 deals versus 48
The highest value deal of the first half of 2022 was in Ha’eshel Street in Herzliya Pituah, one of the most expensive streets in this mega-prestigious neighborhood. This deal, however, in which a house on 2.2 dunams was sold for NIS 63 million, is only in sixth place among the deals carried out in the neighborhood since 2019. The remaining high-end deals in the city in the first half of this year range from NIS 10 million to NIS 15 million, prices that have become routine there.
NIS 63 million: House on 2.2 dunam plot on Ha’eshel Street, Herzliya Pituah. (Eyal Izhar)
Only eleven luxury deals took place in Herzliya in the first half year, versus 48 registered with the Tax Authority last year, 33 in 2020, and 25 in 2019. The number of high-end deals so far this year is 50% down in the same period last year.
Appraiser Israel Yaakov, who specializes in financial consulting, says, "When it comes to the luxury market in Herzliya, you have to distinguish between expensive neighborhoods and homes with gardens in Herzliya Pituah. There, after years in which property owners in this area took a long time to sell, in the past year or two the trend changed and prices jumped by tens of percentage points immediately after the first lockdown. Today, the buyers of the luxury homes in this area are newly rich people from the technology industry, the capital market, and a few people who were resident overseas and returning to Israel.
"A house with a garden that during the pandemic was offered for sale at NIS 6 million was recently sold for NIS 8.3 million. Plots for building in the middle of Herzliya Pituah have risen in value by at least NIS 2 million. In the most expensive streets in Herzliya Pituah, such as Ha’eshel, Galei Techelet, Havatzelet Hasharon, Ma’apilim, prices of plots have risen by 50-100%. At the moment there are properties for which any asking price is accepted by the market."
According to Yaakov, the rate of deals in Herzliya Pituah can be misleading, since in any case there aren’t many properties there, and certainly not many plots. Nevertheless, it does look as though the decline in deal numbers in Israel’s most prestigious neighborhood is not coincidental.
Jerusalem: Joining apartments together
Whereas the Tel Aviv luxury market rests mainly on local demand, with foreign residents representing the tip of the pyramid and buying the most expensive properties, in Jerusalem, buyers of homes costing NIS 10 million and upwards are almost entirely foreigners.
The Greek Colony area is the city’s longstanding prestige neighborhood, accounted for a substantial proportion of the luxury deals that took place in the first half of this year. The highest value deal in the city in recent months was actually in North Talpiot, in Caspi Street, where a home with a garden was sold for NIS 29.8 million, but Oren Cohen of Prime Real Estate stresses that this was a deal with a developer for the construction of twelve apartments. Not far from there, in Harakevet Street, an eight-room penthouse was sold for NIS 20.7 million.
NIS 29.8 million: Caspi Street, Jerusalem. Twelve apartments to be built. (Yossi Zamir)
"The decline in the city is less sharp than appears from the Tax Authority figures, because there are quite a few deals that involve joining apartments together, which appear in the Tax Authority numbers as several separate deals," Cohen says.
Indeed, it is possible to spot several cases in which a number of deals in the same project were done on the same day. For example, during the Passover holiday in April, more than ten deals were done in a few clusters, each on the same day, in a project on Malchei Yisrael Street in the Mekor Baruch neighborhood, while in Yirmiyahu Street two adjacent apartments in a new project were sold on the same day, one for NIS 11 million and the other for NIS 6.2 million.
It could therefore be that the number of luxury deals is actually higher than implied by the Tax Authority figures, but the method of buying two or more apartments at once and joining them together Is not new, and such transactions took place last year as well, so this argument cannot explain the declining trend.
Hadera breaks NIS 10 million barrier
Outside of Tel Aviv, Jerusalem, and Herzliya, prices are much lower. In Beersheva, in the first half of 2022, 82 apartments were sold at prices of NIS 2.5 million or more. In the whole of 2021, 99 apartments were sold at this price level. In the past year, two properties in the city were sold for over NIS 4 million, according to Israel Tax Authority data.
NIS 4.14 million: Nesher Street, Neve Ze’ev, Beersheva: 261 square meter house. (Diego Mitelburg)
In April, a 261 square meter five-room house in Nesher Street in the Neve Ze’ev neighborhood in the south of the city was sold for NIS 4.14 million. Last September, a house in Elyakim Street was sold for NIS 4 million. The house has nine rooms and is 242 square meters in area.
NIS 4.55 million: 370 square meter detached house at 12 Nahal Zohar Street, Lehavim. (Diego Mitelburg)
Looking northwards, in Nahariya, seven homes were sold for NIS 3 million or more in the first half of this year, which compares with twelve in all of last year.
In Haifa, by contrast, the number of transaction at NIS 5 million or more fell from 35 last year to just four in the first half of this year.
The most surprising luxury home deal was in Hadera. A 166 square meter penthouse on the twenty-fifth floor of the Asia Group’s White Bay project in the south west of Givat Olga was sold for NIS 10 million, according to the Tax Authority.
NIS 10 million: White Bay at 1 Baruch Bu’aron Boulevard, Hadera. 166 square meter penthouse. (Eyal Izhar)
Another penthouse apartment, 201 square meters in area, in the same project was sold last year for NIS 10.5 million. This is the first time that properties in the city have sold for over NIS 10 million.
"This is a unique project in Hadera, and there aren’t many like it in the country. It’s on the seafront, with an uninterrupted panoramic view, and quickly became the most prestigious project in the city. Regular five-room apartments in it can cost NIS 3.5-4.5 million, which is a very high price range for Hadera," says appraiser Avigdor Minas.
Two years ago, prices in the project were around NIS 25,000 per square meter, whereas today it’s around NIS 35,000, which is very high, not just for the Hadera market.
North of there, a 390 square meter detached house in Macini Street in the Denya neighborhood of Haifa was sold for NIS 11.4 million, and a penthouse in a TAMA 38 project in Benjamin Disraeli Street in the Ahuza area was sold for NIS 6.95 million.
NIS 11.4 million: 8 Macini Street, Haifa. Detached house, 390 square meters. (Paul Orliev)
The TAMA 38 urban renewal plan has produced many luxury apartments in Haifa, as for the first time in decades, high-standard new apartments are being constructed in the city’s oldest neighborhoods.
TAMA 38 has also produced some high-end deals in Nahariya, one of which was the most expensive in the Galilee region in the past half year: in Ha’aliya Street in the prestigious west of the city a 200 square meter penthouse with an open sea view was sold for NIS 5.15 million.
NIS 5.15 million: 200 square meter penthouse in Ha’aliya Street, Nahariya. (Paul Orliev)
Published by Globes, Israel business news - en.globes.co.il - on August 3, 2022.
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