People renting in Tel Aviv are moving away from the city and looking for apartments in cheaper locations in an attempt to cope with economic hardships being caused by the coronavirus crisis. According to WeCheck, which provides property owners financial risk management reports about apartment tenants, the most popular, the most popular places for renting apartments are Petah Tikva, Hadera and Haifa.
WeCheck found that the cities with peak demand had undergone a major and swift change, especially in Tel Aviv. Last month there was a 40% fall in interest in renting in Tel Aviv compared with the two months before that. In neighboring Ramat Gan, there was a 35% fall. On the other hand, in P etah Tikva, where rents are cheaper, there was a 100% rise in interest in March, compared with January and February. In Haifa, there was a 50% increase in interest in March, compared with January and February.
WeCheck, owned by Yad2 and Isracard, also checked out supply of apartments to rent. As expected supply is outstripping low demand for apartments to rent in Tel Aviv and surrounding cities like Rishon Lezion and Ramat Gan.
WeCheck CEO Rami Ronen said, "At the moment tenants are choosing to rent cheaper apartments and they aren't in Tel Aviv."
Another popular city for renting is currently Hadera. The figures show a 16% reduction in available apartments in March and a 66% rise in interest compared with January and February.
Ronen explains that normally January and February are quiet months on the rental market with the lowest supply with supply growing from March onwards and peaking in July and August. Now the situation is reverse with a fall in supply in March compared with January and February. He said, "If we normally begin March with more than 4,300 apartments, we can expect to offer 4,500-4,700 apartments by the end of the month. But this year by the end of March there were only 3,000 apartments. This was a sharp and exceptional fall."
Ronen explains, "These figures tell us several things. Firstly, that the lockdown is making it difficult for tenants and landlords to conduct regular business. Secondly property owners prefer to try and extend leases to their current tenants. We spoke with property owners and many of them decided that at this stage they want to freeze everything. There are people whose apartment is empty and they are paying mortgages on it but they have decided to freeze the mortgage repayments and suffer less damage. We found that the ability to freeze mortgage repayments influences people's decision not to rent out an apartment."
But the most dramatic finding by WeCheck was the situation in Tel Aviv where there is a sharp rise in the number of apartments remaining open to offers on the market. This was the most dynamic market before the coronavirus crisis with many short term rentals, mainly for tourists. This market completely collapsed with property owners putting their apartments on the regular market. But prices are still high and landlords are struggling to find tenants.
Published by Globes, Israel business news - www.globes-online.com - on April 7, 2020
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