"Tel Aviv prices are more expensive than Champs-Elysees"

Tel Aviv's Gat Rimon project credit: PR
Tel Aviv's Gat Rimon project credit: PR

YBOX CEO Yossi Turgeman says 10 out of the 11 buyers so far in Tel Aviv's Gat Rimon project are foreign residents, paying more per square meter than along Paris's prestigious avenue.

"Out of the eleven apartments sold in presale for the Gat Rimon project on Tel Aviv's Park Mesila (between Neve Tzedek and Levinsky market), ten of the buyers are foreign residents. There are Australians, English and French. Some bought to live there and some as vacation apartments," YBOX CEO Yossi Turgeman tells "Globes."

YBOX (TASE: YBOX), which is engaged in real estate development, urban renewal and income-producing property is traded on the Tel Aviv Stock Exchange with a market cap of NIS 404 million. In the third quarter of 2024, 37 housing units were sold in its various projects in Tel Aviv.

The company's chairman is Yehuda Gorsd, and businessman Yitzhak Tshuva and his son are parties-at-interest in YBOX (through a company they control) after buying a 10% stake for NIS 20 million at the start of 2024. The two men have an option to buy an additional 4.3% stake for NIS 10 million. Fattal Holdings (1998) (TASE: FTAL) is also a party-at-interest with a 8% stake.

How did you interest Tshuva in a deal?

"We have a project called the Scottish House, a beautiful building to be preserved in Jaffa that will be turned into a boutique hotel. Tshuva's grandson, Shir Elroy Tshuva, has a hotel called Pereh in the Golan Heights, and we met when I was there. A connection was made and we agreed that they would manage the hotel in Jaffa. That's how Yitzhak Tshuva heard about YBOX, the connection was made and he decided to invest in the company."

How do you see the market situation in Tel Aviv?

"We have many projects in Tel Aviv, including quite a few urban renewal projects in Yad Eliyahu. We have delivered some of the buildings, some are under construction and some are in planning. In Yad Eliyahu, prices are in the range of NIS 37,000-45,000 per square meter. There was a good revival in the last quarter of last year, and I hope that the beginning of this year will continue the trend."

In June 2022, the company purchased the Romano House in Tel Aviv for NIS 378 million. In August 2023, the Tel Aviv Municipality decided to preserve this cultural gem and turn the place into a municipally owned building for public use. In exchange, 27,000 square meters of building rights will be transferred to other YBOX projects: the Gat Rimon project adjacent to Romano House, and the Beit Brin and Hassan Arafe projects. According to the company's presentation, the value of the rights transferred to the three projects is about NIS 725 million, almost double the purchase price of Romano House. In order to transfer the rights, approval from the Tel Aviv District Committee is required, which, according to the company, is expected to be received in April 2025.

"Half of the money raised went to recycle debts"

The company's main project is Gat Rimon, which is in presale. "It is by Mesila (Railway) Park off Herzl and Nahalat Binyamin Streets," says Turgeman. "These are two beautiful 40-floor towers with 380 apartments in total, designed by architect Moshe Tzur.

"The first tower also has a 200-room hotel in partnership with Fattal, who bought 50% of the hotel. The first tower will be ready in five years and is currently being sold through internal methods, without massive marketing. We started the presale at a price of NIS 85,000 per square meter. We hired an Italian architect to design the interior and the standard is completely different. This is the crème de la crème."

There was a boom in apartment sales in the summer, and now the Bank of Israel is putting pressure on financing operators who pay very little at the signing (10%) and the rest at occupancy (90%). Could it be that the party is over?

"We don't have 10%/90%. In the Gat Rimon project, the payment terms are 20% upon receipt of the permit, 20% upon completion of the shell, and 60% on delivery. We will soon finish excavation and earthworks there, and the rest is expected in the next six months. The buyers paid 7% of the 20%. The project is being supported by Bank Leumi in cooperation with Mercantile Discount Bank."

"I am proud of the Florentin Quartet"

The company recently completed raising a NIS 130 million bond, with demand of approximately NIS 344 million.

What will you do with the money you raised?

"Half of the capital raised went to debt repayment, and the rest to promote the project and ongoing activities. There are large urban renewal projects. For example, we have a project of 400 existing apartments and 1,400 new apartments in Bat Yam, and we are currently in the very early stages and in negotiations with the municipality on the master plan. We have 50% of owners' signatures there. There are new projects in Holon, Rishon LeZion, and Lod.

"We, like other real estate companies, understood that land reserves are limited and that for large projects we need to spread our wings and go out, even outside of Tel Aviv. In the past, we built in Hadera and Netanya, and in Bat Yam we built the Golden Tower - 47 residential floors. In recent years, we have focused on Tel Aviv, and in the past two years we have begun to strongly drive the construction of large projects."

What do you think about the freezing TAMA 38 in Tel Aviv?

"It all stems from considerations about betterment levies and we will have to find a solution for that. This has put a brake on the entire process until the new plan. We did manage to open permit files for TAMA 38 projects in Tel Aviv.

"I think the entrepreneurial spirit in the country is pushing the entire industry forward. There are development companies here with crazy ambitions. When you try to stop with laws and with all the new decrees that are imposed from every direction, whether it's a property betterment levy from the authorities and the state and all the regulation up to building permits - in the end it impacts the price per square meter of an apartment.

"This takes me back to the beginning of our interview when I told you that apartments are being marketed at NIS 85,000 per square meter, which is a really crazy price. The prices on the Champs-Elysees in Paris are lower."

The price is high, but the sales volume is small. It's not like the sales that were there when you established the Florentin Quartet.

"I'm proud of the Quartet. Instead of the garages that were there, we brought an iconic project to the area. Then we built a close-knit construction project next to them, and we are in the permit stages for another project right next door, on Abarbanel Street, corner of Gvulot. It's a 200-unit project designed by Gidi Bar Orian Architects. We haven't left the area since the Quartet."

According to reports, your gross profit is relatively low. What is the reason for this?

"In accounting, revenue is recognized according to the rate of progress. We are in a period when most projects are currently in their early stages and most of the company's profitability has not yet been recognized. The company's expected profit is a billion shekels in existing projects over the next five years."

Published by Globes, Israel business news - en.globes.co.il - on January 14, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.

Tel Aviv's Gat Rimon project credit: PR
Tel Aviv's Gat Rimon project credit: PR
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