Herzliya overtakes Netanya

Tens of thousands of apartments will be built in Herzliya over the next decade. 5,000 of them will be built in the Kibbutz Glil-Yam area as part of a “price-per-set” arrangement. This quantity of new construction points to impressive housing starts statistics in the city.
Glil-Yam project Photo Credit: Izaki Group Investments PR

Glil-Yam: remember the name. In the next few years, the lands of nostalgic Kibbutz Glil-Yam, a stone’s throw from the Rav Kuk Street kiosk in Herzliya, will welcome 5,000 new families.

The agricultural lands of the kibbutz will in practice concentrate large quantities of government housing in one place: 5,000 apartments, for 1,500 of which tenders have already been issued on a price-per-set (final price to the buyer) basis; 294 for Herzliya residents; and 273 for long-term lease. To all this will be added a business and commercial center covering 90,000m², three elementary schools, a middle school, a high school and a large park of more than 200,000m².

The Glil-Yam neighborhood is one of several that will define the character of Herzliya in the coming years. Partly because of the development, the city has produced impressive housing starts data over the last year, a possible harbinger of things to come. According to Central Bureau of Statistics data, from January-September 2016, 887 units began construction, compared to 825 in all of 2015 and a mere 380 for the same period in 2014.

“The next number of years will see a continued increase in housing starts in Herzliya, primarily because of the huge Glil-Yam project,” explained Asaf Kahaner, President of the Ewave Nadlan Marketing Division. “In our estimate, Herzliya will occupy third place in housing starts for the whole country and might even displace Netanya, where housing starts have declined this year.”

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In Herzliya, other plans are advancing to increase the housing supply. Another large urban renewal project is expected to add 7,000 apartments; a further 3,000 will be sold in the Appolonia area near the Nof Yam neighborhood in western Herzliya; about 1,600 will be built in Kiryat Shehakim, near the Seven Stars highway and train tracks; and another 11,500 apartments are planned for a huge development at Tekhelet Beach.

“Falling prices? Not in the Sharon”

What will all that construction do to Herzliya? Is this the project that will effect lower prices in the coastal city at the southern end of the Sharon region? A look at Herzliya’s neighbor Ra’anana reveals a similar process: thousands of apartments built over the last several years, plus other projects aimed at producing cheaper housing through price-per-set contracts and rental housing.

According to property assessor and economist Gal Tzruya, the Herzliya projects, including Glil-Yam, will not affect housing prices in the city. He contends that even the claims of lower prices in Ra’anana are fundamentally flawed.

“I don’t see the price increases stopping – neither in Herzliya nor in Ra’anana,” he predicted. “At the end of the day, it’s all a function of demand. There’s a lot of demand in the Sharon and even if they build thousands of apartments at once, it won’t meet the demand. That’s not even taking into account that fact that some of the projects won’t even begin for another ten or more years.”

Salvation will not come from price-per-set projects

The price-per-set project in Glil-Yam is expected to include 1,500 reduced-price new homes in six compounds. The prices of these homes will be capped such that the highest possible price for a three-room apartment of 85m² with a balcony, parking spot, and storage room will be set at 1.65 million NIS. The maximum price for a four-room covering 100m² will be 2 million NIS. These prices are 700,000 NIS less than for market-value new apartments.

Despite the substantial gap in prices between price-per-set apartments and market-value properties, the former will evidently not cause a price decrease.

Tzruya also noted that in the Glil-Yam area there are new projects priced at 26-28,000 NIS per m², i.e. 2.7-2.8 million NIS for an average four-room, 100m² apartment. Apartments for sale under the price-per-set arrangement, notes Kahaner, sell for 1.9 million NIS, i.e. 19,000 NIS per m². Accordingly, despite the massive quantity of new housing - 3,500 price-per-set apartments – market forces are far stronger.

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