Israel's wealthiest are moving out of the city

Caesarea

From beach homes near Nahariya, to country estates in farming villages and homes in pastoral Ein Kerem, Covid-19 has pushed up demand for Israeli houses.

"Leaving the city for a house, as a second home, not the main residence, was something that very much developed over many years and was slowing down, because it involves a lot, such as maintenance and employing workers," says real estate agent Noam Dzialdow of the Neot Shiran agency for luxury homes. "People would say why do I need this headache? Coronavirus reshuffled the deck within a month. People began buying even when movement was restricted."

The past year, it seems, has changed behavior in all areas of life and in the high-end housing market there is an additional trend: leaving the city for spacious homes on farming villages (moshavim) and sometimes even relatively distant from Tel Aviv, to gain maximum privacy during the lockdowns, with a large swimming pool, fitness room and relaxing view.

Dzialdow says, "At the start of coronavirus, everything ground to a halt. After one month, major interest in short-term rentals of houses began, until the situation became clearer, so as not to be trapped at home during Passover. People might live in the most beautiful apartments available but for months they were surrounded by neighbors and unable to go out. These are people used to being on the move, flying, doing sport, and everything stopped. They wanted an immediate alternative and these are people who can allow themselves to rent a property for tens of thousands of shekels, or dollars per month."

"In the following months, after we began to understand that this thing was going to be with us for a long time, people became interested in taking out a one or two year lease, mainly for quality, furnished houses. Around August-September, there was already a lot of people wanting to buy a second home for normal times and weekends, religious holidays and vacations, and if there would be additional lockdowns that would be the home where they would spend most of their time, with the tools for remote work."

Rapid purchases

"The sought-after houses had to be ready for immediate occupancy, or houses that did not require major renovation. The amount of time needed to complete the deal had very major significance in the process. They wanted to get out of their apartment in the city. Many sellers with houses on large amounts of land, on the market for a long time, 'on the shelf,' took advantage of the demand and sold their houses despite the inconvenience of the need to leave quickly. In some distant neighborhoods like Caesarea, Savion, Arsuf and farming villages located more than one hour's travel from Tel Aviv, many deals were completed at a much more rapid pace than before coronavirus."

Ramat Hasharon-based high-end real estate agent Miri Ofek said, "People living in penthouses were scared to get into the elevator. I had enquiries about an additional home, a house with a garden and large amount of land where they could host the children and grandchildren. Others sought penthouse apartments on lower floors and in smaller buildings with fewer apartments, which would allow them to walk out of the building, with less tenants around and less friction."

"I have customers who have lived in a very spacious apartment for decades and they asked me to find them a house with a swimming pool, which could be quickly occupied, which would be a second home, without selling their property. Within a month they bought a house for NIS 13 million in west Ramat Hasharon. It was a 450 square meter house built 14 years ago, with two floors and a basement and a private elevator on a 500 square meter lot. I had a customer fly in from the US and within a day buy a house for NIS 16 million."

With space for a wine cellar and sports field

According to Dzialdow, the second homes that had the highest demand were naturally properties close to the beach and areas close to nature reserves. "When they saw that things were going to last more than a month or two, they understood that they wanted and needed to buy. And so began the interest in buying. Suddenly people had the time to take an interest. They sought houses ready to buy for between NIS 20 million and NIS 40 million. We accompanied people looking for deals as far away as Shavei Zion near Nahariya, the only place with a genuine 'beach house' in Israel."

"NIS 10 million for 1,000 square meters of land and to be close to the sea in Nahariya may have sounded very expensive before coronavirus but since then it has become a reasonable amount because of demand. The perception of distance from Tel Aviv has changed. These are houses that are now not only being used for weekend getaways. When you go into a long period of lockdown, another hour on the road has less significance compared with normal times, when looking for a property one hour's travel from home."

Three lots overlooking the seafront were sold in Shavei Zion with direct access to the beach. 850 square meter lots with prices of NIS 8.5 million to NIS 10 million per lot. This is the price for an empty lot before the cost of building.

In Beit Yannai north of Netanya, on a cliff directly overlooking the sea, an old house due for demolition on a 1,000 square meter lot was sold for NIS 15 million. In Caesarea, a 400 square meter house built 25 years ago, on a 1,250 square meter lot, was sold for NIS 12.5 million. Another relatively new and completely furnished 600 square meter house in Caesarea, on a 1,000 square meter lot, overlooking the golf course, was sold for NIS 15 million. In Caesarea's number 4 neighborhood, a 1,000 square meter house built to very high standards, with a swimming pool, sauna and fitness room, on a 1,500 square meter lot was sold for NIS 22 million. All these properties in Caesarea had been on the market for some time but were snapped up over the past year, for quick or immediate occupancy.

According to Dzialdow, demand from Israel's wealthiest for houses with land of 1,000 square meters or more, where it is possible to realize everything regarding outdoor activities and hobbies, like a swimming pool, tennis courts, basketball courts, playgrounds for the children, an area to grow organic fruit and vegetables, stables and even wine cellars. "People had a lot more time on their hands during Covid-19 and were able to spend it doing what they love most outside of work."

Moving to the countryside is the reverse of the trend that prevailed in the 20th century, when people moved into city high-rises. Dziadlow said, "Covid-19, which brought the world to a standstill, created an immediate need for people who do business. These are people who do business because they want to, not because they can or can't. It's not a market built on mortgages and interest rates. As soon as the need arose, they began doing deals and the immediate need was the opposite in terms of what we had known."

Cutting purchase tax contributed to demand

The second wave of sales included deals by families who wanted to go back and live in houses the entire year. This can also be seen in the highest-end market but not only there. Those looking for a property for sale on a farming village (moshav) between Hadera and Gedera found that everything was taken and those that were on the market were sold, or leased for exorbitant prices.

The most outstanding of the properties that were sold included an estate on Bnei Zion, which was bought by tech entrepreneur Shlomo Kramer from former Emblaze CEO Shai Schiller for NIS 40 million. The estate is between those of businesswoman Shari Arison, on one side, and tech entrepreneur Noam Lanir, on the other. The estate spreads over more than three acres and includes a 600 square meter house, designed by architect Orly Shrem and with a 200 square meter guest house. The estate includes a large swimming pool, stables and a large garden. Another estate on Sde Warburg, with seven acres of farmland, including 1,000 square meters adjacent to the house, was sold for NIS 12.5 million. The property has two old houses for demolition, where one large new house can be built.

In the more modest real estate sector, in November 2020, a family from central Israel bought a 250 square meter house on a 900 square meter lot in the village of Migdal in the Galilee, with a swimming pool and view of the Kinneret for NIS 4.35 million.

Real estate agency Yokra Estate owner Yossi Mimran, which markets exclusive homes in high-demand areas throughout Israel, said, "Since May 2020, the trend of growing demand began for houses and gardens in the Gush Dan area and further afield. Owners of apartments in luxury towers prefer to leave the high-rises and the asphyxiation of multiple tenants, for pastoral regions, with a homely atmosphere and swimming pool. People are prepared to compromise on location, provided that they are able to buy a house."

"This combines with the fact that it is difficult to vacation abroad, so those who can afford to, buy a second home, mainly in the north, around the Kinneret, the Lower Galilee and Upper Galilee. This period has brought, above and beyond this demand, an overall rise in houses and gardens, which still hasn't ended, both because of local demand and also because of the desire of foreign residents to settle in Israel. The cut in purchase tax also contributes to this and encourages investors and also the fact that since the start of Covid-19, people have not been spending money on leisure and vacations, and their savings have grown."

Jerusalem's high-end market: "Everything in Ein Kerem has been sold"

Over the past year, the move towards houses has also been felt in the Jerusalem region. According to high-end market real estate agent Daniel Buzaglo of Zimuki Real Estate, in Ein Kerem alone five houses have been sold over the past year, compared with just one in a normal year. "There is huge demand for houses. In Ein Kerem houses have been sold to foreign residents as well as to local people, who may not necessarily want to live in Jerusalem like foreign residents, but are charmed by the Tuscany-like pastoral atmosphere. Everything on offer in the neighborhood is sold out."

Buzaglo acted in the sale of a 300 square meter house on 1,000 square meters of land for NIS 8.5 million. The house needs renovation, which will cost between NIS 2 and 2.5 million. The house is on Oren Street and belonged to Hebrew University biblical researcher Ora Lipschitz.

Buzaglo adds, "Jerusalem is a different story from what is happening in most of the country. It is a separate bubble. There is no justification to Jerusalem real estate, without foreign residents. The population is poor it's not Tel Aviv. Here houses can remain on the market for two years, it's not Tel Aviv where you can build a tower and sell 20 apartments in two weeks. Over the past year, we have seen movement and demand in the city from Americans, who are used to 400, 500 and 600 square meter houses, and they have bought large apartments, even online. Many of them were scared by the riots that took place in the US in 2020 and felt the ground shaking beneath their feet."

Published by Globes, Israel business news - en.globes.co.il - on May 6, 2021

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