Israeli styles blend to create new international look
The side of Tel Aviv you never knewTel Aviv’s southern neighborhoods, long considered the unkempt backyard of the city, are changing. The young residents who have moved in, the high prices in the city’s north, and the coalescing plans for urban renewal are transforming southern Tel Aviv into the hottest real estate ticket in town; Einat Zakaria of E-Wave Nadlan invites investors to open their eyes to places that at first glance would make them look away.
Just a few kilometers separate Rothschild Boulevard in Tel Aviv from the Old Central Bus Station, a seven-minute walk. In other terms, however, the distance might as well be galactic. The former is the showcase window of Tel Aviv, a global business center, whereas the latter is seen as the city’s messy back yard, a run-down, old urban center populated by African migrants, Chinese workers, prostitutes and drug addicts.
But over the last few years, there’s an air of change about the place – an urban renewal program discussed for years has suddenly gained momentum and is becoming a neighborhood-altering reality. Indeed, under the public interest radar, concealed in a fog of stigma and prejudice, southern Tel Aviv is becoming a flowering real estate market, attracting a growing number of investors.
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The numbers speak for themselves. A quick check of the Madlan website, which uses Tax Authority filings, shows a phenomenal price increase in that section of the city. In the Neve Shaanan neighborhood, considered one of the toughest, grittiest neighborhoods, the average price of a 2-room apartment in 2007 was 333,000 NIS but grew to 1.337 million NIS – a 320% increase in eight years. The average price of a 3-room went from 437,000 NIS to 1.5 million NIS over the same period, a 245% rise.
“Southern Tel Aviv is at a crossroads where powerful forces are changing the area from one extreme to the other,” explains Einat Zakaria, President of the Promised Land company, a member of the E-Wave Nadlan group. She specializes in launching and marketing projects to foreign residents and investors. “Young people are flocking to there from all over the country. It’s a mix of low costs compared to the northern part of the city and the special atmosphere of that area. The municipality has also invested huge sums in upgrading old infrastructure and has opened the area to developers for urban renewal proposals that have been stuck for years.”
Without a doubt, 2015 was a critical year for area development. Large entities came in with huge investments, such as the Meshullam Levenstein Group and Shikkun Uvinnui, which bought the old bus station compound for 400 million NIS; smaller investors banded together to put up new buildings; construction of 1,000 new apartments was advanced, plus 180,000m² of work, commercial, and leisure space; the Aliyah Market development project was approved, which includes a new 147-apartment residential project.
One example of the tremendous change taking place in the area is visible in the demolition of a notorious building at 1 Pinn St., at the heart of the old bus station complex. For years, the building functioned as a main hot spot for drugs and prostitution in Tel Aviv; it was torn down as part of the municipality’s renewal projects.
From the same perspective, one can also look at the change in housing prices in the neighborhood. Whereas at the start of the decade the per-square-meter price for an apartment stood at 15,000 NIS, today’s price is estimated at 30,000 NIS in new projects, a 100% increase in less than seven years.
It must be noted that the Yad2 Index brought to light an interesting datum, according to which the highest rate of return on investment in the last year for both purchase and lease of an apartment was recorded in southern Tel Aviv: 21.5%. This area registered an 18% increase in apartment purchases, while revenue from rentals reached 3.8% in 2016. Current lease revenue might not be impressive compared to other cities, but compared to Tel Aviv itself, at 3%, it is a respectable figure.
Zakaria speaks from experience. E-Wave Nadlan has prowled southern Tel Aviv over the last decade. The company has consulted on and initiated many real estate projects covering hundreds of residences, more than ten of which sit in southern Tel Aviv.
“The Neve Shaanan neighborhood is undergoing serious positive change and that process has been significantly accelerated in the last year,” she said. “Dozens of buildings have already been rebuilt and populated by native Israelis – young people, students, and young couples; almost every street corner has fences marking lots slated for imminent construction work, or a sign announcing such. The Tel Aviv municipality has joined the fun by investing heavily in upgraded infrastructure and streets in the neighborhood.”
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