Recent residential real estate deals in the Neve Tzedek neighborhood of Tel Aviv demonstrate that prices there have gone beyond the regular definitions of appraisers. While real estate prices are usually fixed according to market value, alongside value-in-use and special value, in Neve Tzedek this does not reflect the situation. Properties there are outside the regular appraisal/economic rationale and can be deemed as priceless, rare properties, with restricted supply with psychological and emotional elements, meaning that they can be marketed with no ceiling in terms of value.
Recent deals demonstrate this. In September 2021, French-Israeli telecoms businessman Patrick Drahi sold the Rabbi Kook lot in Neve Tzedek for NIS 200 million plus VAT. The site is slated for 26 apartments and 700 square meters of commercial space - this reflects a price of NIS 40,000 per square meter for construction and likely NIS 120,000 per square meter including VAT when it comes to selling the apartments.
In another deal, a 1,100 square meter lot including a house and two outbuildings covering 900 square meters and a 600 square meter swimming pool, and additional building rights, was sold for NIS 105 million to Assaf Tuchmeir, one of the owners of Israel Canada. That deal reflects NIS 115,000 per square meter - an inconceivable amount for 900 square meters of construction. In addition there is a cost of NIS 40,000 per square meter for the building rights.
But both these deals could be easily surpassed by Check Point cofounder Marius Nacht who is offering Beit Chelouche for sale for $100 million. Beit Chelouche at 32 Chelouche Street was built by Aharon Chelouche who immigrated to Israel from Algeria in 1840. He bought land two years later, on which to build the first Jewish neighborhood outside of Jaffa. The lot owned by Nacht is 2,600 square meters in size including a 550 square meter house and building rights for 2,500 square meters. By regular appraisal of market values, the real estate should be worth NIS 150 million, about half of what is being asked.
Shmulik Cohen is an appraiser and owner of SK Real Estate Appraisal
Published by Globes, Israel business news - en.globes.co.il - on February 23, 2022.
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