When housing prices are rising by a double-digit percentage amount annually, land prices are never far behind, and often indicate future trends. While apartment prices can vary according to technical specifications, height of the building and much more, land is a more straightforward matter. In particular, land prices have risen sharply for individual and semi-detached housing, although for the most part such land is only available in lower demand, outlying regions.
Karmit neighborhood Meitar: NIS 1.4 million for a lot
Meitar in the Negev is one of the most exclusive small towns in the Beersheva region. Karmit is a neighborhood in the west of the settlement near to Road 6. The market has been waiting a long time for the land tenders at Karmit and buyers have been surprised by how expensive the land is. Last August a tender for 297 lots ranging between 360-560 square meters was issued and in October the results were published. The happy winners must pay NIS 1-1.2 million for land and development.
3,100 people participated in the tender, which was held using the "highest price" method. In other words, whoever made the highest bid can choose the lot that they want and the other 296 winners can choose their lot, going down in order according to the amount of their bid.
The tender results reflected a significant jump in land prices. Prior to the tender, the lots were valued at NIS 850,000-950,000.
Land appraiser Ohad Vertesh said, "Today second hand deals for lots are already being completed for NIS 1.3 - 1.4 million. That shows how much people were prepared 'to put their lives on the line.' But ultimately the prices have to hold water because you are going to put a house on the lot that has to be sold. If the price of house reaches NIS 3 million or a little more, then that's still fine."
Indeed new 235 square meter houses have been sold at Meitar in the past few months for price levels of about NIS 3-3.1 million. In one exceptional deal a much larger house of 350 square meters was sold for NIS 3.45 million.
If we add the cost of building and real estate taxes, then house prices on Meitar should be in about this range but with the price of building inputs rising sharply over the past year, the overall costs could end up being higher than the price of the house, unless of course prices of houses in Meitar also continue to rise.
Kibbutz Neve Yam: a lot for NIS 2.55 million
On Kibbutz Neve Yam near Atlit, the prices of land rise nearly every month. In May last year a 350 square meter lot was sold for NIS 2.3 million. In July-August three lots were sold for an average price of NIS 2.45 million and two weeks ago a more expensive deal was done for NIS 2.55 million.
Appraiser Assaf Gastfreund said, "The lots purchases in an Israel Land Administration tender in 2017 was at prices of about NIS 750,000-900,000m and with additions for development and VAT that came to NIS 1.5-1.6 million. The prices achieved in the past few months have been NIS 2.4-2.55 million, which represents a rise of 60% and that speaks for itself."
On the prices of houses at Neve Yam, Gastfreund added, "The recent deals on the free market are for houses for NIS 4 million and more and this a price that Atlit and Neve Yam have not previously known and I'm already not including the linkage to building inputs that whoever is building houses will need to pay in another two years when they begin to build them, and we know that the prices of apartments are going up." "All the time people are talking about Neve Yam, which is 'close to the sea.' That's true in geographical terms but the house owners there won't feel this except when they walk to the sea, because this is not Nitza Boulevard in Netanya, and they won't see the sea."
People who do have the sea are in a row of houses north of Atlit, alongside the salts ponds of the salt factory. These houses have been sold recently for NIS 4.1-5 million, although these are exceptional cases.
The real estate of Atlit and Neve Yam can be divided up between homes east of the railway tracks, and that is most of Atlit, and those to the west of the tracks. The houses to the east are usually cheaper than those to the west. Most of the houses with price tags of more than NIS 3.5 million are to the west but even here prices rarely go above NIS 4 million.
Hashahar neighborhood Dimona: Prices are rising despite the enormous amount of construction
Dimona is swamped with construction of new houses but prices have been rising, especially since the Covid pandemic began. Dimona is a city of less than 40,000 people but the government aims to double the population in the near future. But while the government has been unable to sell many of the new apartments built, lots of 500-600 square meters for new houses in the Hashahar neighborhood east of the city have been snapped up by both local residents and investors. Some great deals have been done.
A lot sold in December 2019 for NIS 550,000 was sold for NIS 600,000 in October 2021 - a return of 9% in less than two years. A lot sold for NIS 490,000 in April 2019 was sold for NIS 550,000 in November 2020 - 12% return in 18 months. In November 2017 another lot was bought for NIS 410,000 and sold in January 2021 for NIS 520,000 - 27% in three years, and finally the record deal - a lot was bought in March 2020 for NIS 460,000 and sold in June 2021 for 640,000, almost 40% in 15 months.
Vertesh said that Dimona is not unique and that something similar has been happening in Yerucham, where there is also major construction of houses. "At the start of 2021 people were buying lots for NIS 300,000, which have been selling very recently for NIS 500,000," said Vertesh.
Achziv neighborhood Nahariya: Crossing the NIS 2 million threshold
A new and very interesting neighborhood is the Achziv neighborhood near Achziv Park in the south of the city. This is land that was formerly owned by the Delta Galil textile company, which drafted its original plans in the 1980s and were approved in 1990 but remained on paper for 30 years. Alongside the apartments, which are selling very well, there are 70, 400-550 square meter lots for houses. All the land is owned by Sela Construction and there are rights to build 200 square meter houses on each lot.
Towards the end of 2020, the first lots of 450-510 square meters were sold for NIS 1.6-1.7 million. In December 2020 there was an exceptional deal for NIS 1.95 million and by May 2021 lots were selling for more than NIS 2 million, and by last month a 510 square meter lot was sold for NIS 2.4 million, reflecting a price of about NIS 4 million for a house - very rare for this region.
Published by Globes, Israel business news - en.globes.co.il - on January 30, 2022.
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