Real Estate in Tel Aviv
By: Amir Yarkoni
Tel Aviv is Israel's economic, commercial and culture capital. As such, real estate prices are usually higher and also may yield higher returns than other places.
Roughly speaking, the northern you go in Tel Aviv, the higher property prices get.
Factors Affecting Real Estate Prices in Tel Aviv
Real estate prices, as any other commodity, are affected by supply and demand. Supply of new housing in Tel Aviv is quite slim, as Tel Aviv is virtually built up. The main three potential sources of new home supply in Tel Aviv are:
|Supply of new housing in Tel Aviv is quite slim, as Tel Aviv is virtually built up.
- New building in open spaces
- Replacing older low-style buildings with high residential towers
- Relocation of the large military installation in the heart of Tel Aviv known as the "Kirya" outside Tel Aviv, leaving the area free for civil construction.
The major open spaces in the Tel Aviv area:
- Park Hayarkon in the north, a very large park and recreation area spanning the 2 banks of Yarkon River all along its Tel Aviv route to the sea (the park area actually starts before Tel Aviv, in neighboring Ramat Gan). This area is known as the "green lung" of Gush Dan, the metropolitan block centered around Tel Aviv. This urban retreat, packed most of the weekdays and crowded on weekends is used for all kind of sports, picnicking, sailing, music concerts and so on. Park Hayarkon is not intended for housing development and there is an ongoing bitter conflict between the current mayor of Tel Aviv who wants to extend commercial (non-residential) construction by 50% for restaurants and other facilities with various local and environmental groups in opposition of those plans. The planning and construction committee also opposes further urban build-up in the park. Any development plans or initiatives shall probably face fierce resistance and will not go through, quite rightfully from my point of view….as they will leave Gush Dan with no substantial green get away.
- Sde Dov and Tel Baruch area. This area, stretching along the water line from the small Sde Dov airfield and north about 10 KM(6 miles) up to the Mandarin hotel at the Hertzlia border. Sde Dov is currently a military and civil domestic airport and is planned for evacuation. When? Nobody knows…..Israeli bureaucracy is moving slowly and various issues are involved. Most of the stretch is usually within 500 meters from the waterline and has a value as a gate away and small nature and birding hangouts in the city. A new law forbids construction within 300 meters from the waterline, which will affect construction efforts. Already some massive construction is under way or almost complete at some points along the 10KM stretch, offering great sea views and almost private beach access for residents while preventing it from the rest of the public. This has attracted serious public criticism and a fierce struggle is expected for new building and development initiatives along that stretch, although it is not clear for how long or how much it will hold back the building entrepreneurs and the powerful politicians backing them. The building style of that area is mostly 10-15 story, high-standard buildings.
- Pi-Glilot. This area in the far north of Tel Aviv at its border with Ramat Hasharon was used until recently as the largest gas storage farm in Israel. This has prevented any construction at the vicinity, but now that the gas farm has been moved out, this area is a candidate for development. Plans and quarrels circulating between the Tel Aviv and Ramat Hasharon cities talk about building an underground commercial park and a "green" park on the surface.
- South Tel Aviv has one major open space with real estate potential. This area known as Park Ayalon and it is under battle between real estate sharks and planners and activists advocating turning it into a "green" park serving south Tel Aviv, and connecting it to park Hayarkon to create a "green" continuity.
The area is 8000 dunam large, located at the southernmost part of Tel Aviv, on the border with road 20 from Yaffo to Azur to the south, road 44 (Ayalon south) to the west, Mesubim road in the north and Geha road to the east. The area stands against the large open fields of Mikwe Israel, a spread out, veteran agriculture institution, dating back more than 120 years and even boasts a visit of Hertzel, The forefather of the state of Israel. The future of this area is still unknown.
- Another minor open area is "Kikar hamedina" (The square of the state). This area, in the north of Tel Aviv at the cross of Jabotinski and Weitzman streets, is a very large square, now an open space and public garden, a meeting and mingling point of dogs and their owners and the many elderly well-to-do residents of the "Kikar hamedina" area.
Entrepreneurs have been coveting this precious land for construction for long years, but resident resistance and ownership issues (part of the land is private held and part city owned) have halted construction efforts thus far. I still wouldn't bet that 20 years from now, the place will still be an attraction spot for dog owners……
- Old Tel Aviv port. A re-build is planned for the rundown parts and old rusty hangers of the old port area. Small portion of it is intended for residential use and the rest for commercial purposes.
Building High in Tel Aviv
Another source of home supply is high residential towers with large homes capacity, built on open lots or in place of old, demolished buildings. Examples of such are the tower in Basel Street, the newly built tower of Neve tzedek and the twin towers of Pinkas St. The luxury residential/hotel units "City tower" in the Ramat Gan diamond market quarter bordering central Tel Aviv, offers prestigious accommodation for the short and long term with apartments available for rent and sale.
There are many other, smaller 8-12 story buildings that have risen in recent years in the place of old rundown 1-2 story homes. Those provide more living/investing options in Tel Aviv and are usually a local entrepreneurship of a constructor or a Construction Company. Empty lots or rundown low-built homes might present a real estate opportunity but beware that many buildings/homes, especially in south Tel Aviv, are structures of architectural value and destined for reconstruction/preservation. This means that they cannot be demolished/built up.
Building skyscrapers in the middle of low-built neighborhoods presents architectural and practical problems for those neighborhoods. Naturally it draws opposition from residents and planning bodies. It is a constant struggle between big money and interests against public opinion and local organizations.
The Kyria is the centeral command base of the Israeli Defense Forces (IDF), and a large military base. It has been there since the inception of Israel and the founding of the IDF and is one of Israel's most mythological institutions.
The Kirya is located in the heart of Tel Aviv bordering Kaplan st. on the south, King Shaul on the west and Namir road on the east.
The area is priceless from a real estate point of view.
In recent years, many begun to question the necessity of having such a large military installation in the very heart of Tel Aviv, on such valuable land and various proposals have emerged to relocate the base outside of Tel Aviv. Adding to that is the constant need to reduce the military budget, stressing the army's budget. Selling the land can yield a serious return for the army as well as long term savings on maintenance which are much lower in other locations.
It is still unclear if and when this plan will take place but it will surely introduce an influx of real estate opportunities and initiatives.