A new villa advertised (asking price $2,500,000)

The financial turmoil from Wall Street to Tokyo is all over the Israeli media. Fears are in the air about the Israeli economy, the tourism industry, and appropriately the building industry. I met up with Ariel a builder of single family homes, on the high end of the scale, in Caesarea. This town about 45 minutes north of Tel Aviv has been a mix of high end of the scale homes, small hotels, and an industiral zone (the first big golf course and club is here too). Single family homes in Caesarea start at $1,000,000 and go up to about $3,000,000. This would be equivalent to a top tier penthouse apartment in Tel Aviv. The attraction in Caesarea is the quiet location, proximity to a pristine  beach, and the land. Here you can still buy an architect designed home built to your desires. The ownership and building of homes in Caesarea is divided between foreigners who can afford a second home and Israelis who can afford to buy or build their own home.

 In this price range the owner/builder is not just careful about the market, they are certain about their investment. The building of a multi-million dollar home in Israel is not just a luxury, it is an investment. As far as the market for high end homes and apartments, investors need to be careful. But Caesarea and the Tel Aviv Real Estate market is growing. There is still some building and there is inventory. Most builders and Realtors believe that the financial crisis around the world will slow down the market but not for long. The new homes in Israel are built to very high standards. The locations are desirable, specially in Tel Aviv and surrounding areas. And, there is the retiring baby boom generation from the US, Europe, and Israel. All these factors, plus the relatively good Israeli economy, which makes the time just right. But there are still people who worry, Ariel the builder thinks that they will miss great opportunities as far as land, financing, and availability of architects and builders. When the market slows down there is a slack in the work, this makes the very best resources available to people who would not be able to afford these people when the market was hot.

Roman inspired inner pool in a new $6,000,000 villa - Caesarea

If you are in the market for a really nice home than take a look at Caesarea. Besides what you see available in the market there are still lots in good locations not far from the sea with views that anyone around the Mediterranean would envy. Now that the financial world is slowing down, architects and builders in Israel would be happy to spend a little extra time to build you a mansion fit for Caesar!

The Marker article actually gives two sides of the story. The headline quotes a Real Estate marketer ( Jacki Mokomel from M.A.N. Investments) are skewed towards the “frozen market” scenario. On the other side of the opinion scale, Israel Discount Mortgage Bank Ltd., general manager Eti Langerman is on the optimistic side. She says that contrary to the people in the financial sector the investors and individuals see Real Estate and especially their primary residence as the most solid investment. No buyer contracts or deal in the making have been cancelled. She also thinks that Real Estate investments will be considered a “better alternative” to the equity investment sector. This makes sense logically and in Israel this has been the case in the past. While the country suffered from economic and security problems the building sector did not lose much value. This was specially true in the long period of the first intifada (87-93).

New building in north Tel Aviv, very little land is left so prices are up.

The article also touches on the state of prices in today’s market. The pessimistic (everything is on hold ‘in the bunker’) view is prices falling or buyers are staying on the sidelines until they do. The other view from builders is that prices stay are as they are. Whatever is built will stay at the current prices with a 5% discount which is the normal acceptable pricing policy. Overall there is an estimate that in Israel as a whole prices may drop by as much as 20% once the financial markets stabilized. The opinion of the reporter (Arik Mirovski) is that in the central region, specially in Tel Aviv prices, will drop very little or not at all. In the rest of Israel (referred to as the ‘periphery’) prices will fall 20% or even more. So overall this is what a small glimpse at the market looks like from the eyes of Israel’s business newspaper.

Typical moving company web page - looks can be deceiving

Everyone knows that moving is not exactly a great experience. If you live where you like and you have everything set-up as you like, moving is something you can forget about. Well, this was not an option for me, so I found a new apartment, got a mover… than the fun started. In Tel Aviv the moving, house repair, even Real Estate brokering could be a slightly unexpected experience. This specially true if you come from the US or western Europe. The service quality is usually fine, and if you ask enough questions you will know what you get. But price is a whole different thing. It seems like in the world of Real Estate you will always end up paying a little more than you plan. Why? Because usually “things come up” as my mover tried to explain to me. A big bear of a Russian guy with all the techno-gadgets you can imagine (blue-tooth earphone, 3 cell phones, GPS in the truck). He started out by saying “you have lots of stuff” (read, this is more than you describe on the phone). Than he said, “you have lots of ‘small stuff’ – we don’t like this it takes lots of going back and forth, up-and-down, no elevator, you should have gotten big boxes to put the ‘small stuff’ into it”. This is the beginning of the bargaining session. Russian bear is walking around from room to room, little guy moving chasing him (I knew right away this is not going to end well). He says “small stuff” and I say “how much?” Eventually we get down to the money talk. The ‘Russian bear’ is doing lots of hand waving and his voice is getting lower and quieter. “You can ask anyone, all this ‘small stuff’ cost extra to move” just ask any mover. (like I have three moving trucks lined up right behind him?) Well, this is not going anywhere, he wants a few hundred shekels more and I am at the top of my ‘budget’. Oh, I forgot to tell you that there is no real ‘budget’ in Tel Aviv.

Well, this is not to say that all is lost. Actually, it went OK in the end. I paid about 1/2 of what he wanted, which was about 50% more than he quoted. I was told by a neighbor that for a first timer I “did great!” But I really didn’t feel that “great”. I was assured the feeling will change and I will be happy once the Tel Aviv living situation settled down. OK, so what did I learn?

• Budget a little more than the first price offer. Some items will cost 15% to 25% more so plan ahead.
• Get as many quotes as you can, phone quotes are good but “in person” are better. “See for yourself!”
• Don’t be afraid to send someone away if he doubles the price or gives inferior service. “Be ready to walk away!”
• Make sure you understand what you are getting. Ask for samples, understand what quality level and the exact service you are getting. This is important to make sure there are no surprises down the line.

If you are getting the feeling that things are grim in Tel Aviv Real Estate and building industry, it is not! Actually the level of workmanship, quality of products, and professionality of the workers is amazing. It is certainly better than what I was getting in the US. Overall the Israeli consumer likes good quality and is willing to pay for it. Because Israel is situated between Europe, Africa, and Asia there is a selection of materials, products, and services like no where else in the world. There is a workforce from Asia that you will not see even in Europe (I will write about the foreign workers in another article). There are handicrafts from Africa that cost many times more in Europe and America. Some you will not see anywhere except in Africa. Today, Israel is seeing an influx of immigrants from France and England like this country has never seen before, they seem to be happy with the quality of housing. Immigrants from other countries are also demanding things that no Israeli would imagine. The suppliers are responding and things are changing, and in this little country, things change quickly. Well, I hoped this got you some unbiased real life experience. Please comment if you have questions or suggestions. I will answer back with more articles.

Renovated Bauhaus at Ben Yehuda and Ben Gurion

Happy new year from Tel Aviv. The Jewish new year is two days from now. So we are getting a head start on an idea to present investors with investments in Tel Aviv Real Estate. Israel and especially Tel Aviv is going through a Real Estate boom. Essentially the Israeli economy is “out of step” with the American and European one. The details we can give later, but basically after almost a decade of slow economy and Real Estate, Tel Aviv is building again. While the world economy has some influence, basically less money is expected from large investors and institutions, for the small investor this is not the case at all.

We are going to cover all type of Real Estate facts in Tel Aviv. Some of the stories are about actual buildings and investment opportunities. Some are going to be about live in Tel Aviv. And some are about how to go about buying, renting, and investing into the Tel Aviv Real Estate market. If you are from outside Israel, once you find out what Tel Aviv is all about, I would encourage you to come and visit. If you have been here and want to know more, just ask questions as the articles roll out, or ask us directly to cover a topic of interest.

Well, welcome — as we say here: SHALOM, BRUCHIM HA’BAIM…