The coronavirus pandemic that began two years ago led to long lockdowns. We all had to work from home, spending entire days between those four walls with our family members. The realization dawned that the home should be spacious enough to allow all the members of the family space for work, recreation, rest, and hosting. Consequently, the attractiveness of penthouses, garden apartments, duplexes, and detached houses with yards has grown in recent months.
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COVID did not cut down the cost of living, which continues to soar. Demand did not stop – on the contrary: data from the Central Bureau of Statistics, the Ministry of Finance, and the reports of publicly held companies show that the demand momentum is as strong as ever.
The lack of land for residential construction and the fall in housing starts has recently led to exorbitantly high bids on land tenders in the center and the periphery of the country – in some cases, hundreds of percentage points higher than the minimum prices. This situation portends a future rise in apartment prices.
The forecast that prices will rise significantly, coupled with the understanding that after COVID we're now living in a new reality where any day we may wake up to find we must again spend weeks or even months at home, is motivating buyers to search for bigger apartments.
But how does one find spacious apartments at still-sane prices? Today, such a product can be bought mostly outside Gush Dan and even beyond the region stretching from Gedera in the south to Hadera in the north. The day is not far off when even in locations far from the center of the country, prices will rise above the purchasing power of the average citizen.
This trend has led many to the periphery in search of the ultimate Israeli dream: a large house with a yard, a spacious penthouse with a mesmerizing view of a desert sunset or sunrise, or a magnificent, yet reasonably priced garden apartment. Indeed, in the north or south of the country you can still find special apartments at prices that will seem – to residents of Tel Aviv, at least – no less than fantastic.
Living the dream
Three of Israel's young and promising real estate developers – Ido and Nadav Barzilay and Gilad Mor, who at present are at work on a new project in Dimona – can realize the dream of many Israelis who sobered up during the pandemic. They're marketing properties in the Shahar neighborhood in Dimona, with garden apartments or 5-room penthouses selling at only NIS1.4 million.
"COVID created a need for large, well-furnished personal spaces," says Ido Barzilay. "Over the past two years, people were forced to spend a lot of time at home, and they want to be ready for the future knowing that their home, their castle, suits the new lifestyle. Following the last lockdowns, they rediscovered the need for a comfortable home environment for themselves and their families."
According to Nadav Barzilay, this change also impacts investors' decisions: "In the past, investors focused mostly on 2- or 3-room apartments to maximize their investment. Today, they understand that the special apartments are also in the loop, and they can get more for them."
Moving to Dimona
The project by the Barzilay Group and developer Gilad Mor in the Shahar neighborhood in Dimona will number 218 3- or 4-room apartments, as well as special properties. Two common spaces will be built for the tenants of the project only, including a gym, a work area, and a venue for private or communal events.
The project will include 10 buildings with 5 to 9 floors and a mixture of 3- or 4-room apartments, garden apartments, mini-penthouses, and penthouses. The different types of apartments feature a wide range of different-sized balconies and gardens, from a 14-sq.m. balcony for a typical apartment and up to 100-sq.m. balconies and 200-sq.m. gardens.
Barzilay adds: "The modifications we made in the project stemmed from the new needs in the residential field and the understanding that the house's comfort and size are very important. That's why we created apartments with especially large balconies or large yards."
The rise of the periphery
The high demand for any available apartment has resulted in unprecedented price tags in the luxury market in the periphery as well. In some of the quiet settlements in the north and the south, deals have been made at prices above the NIS2-2.5 million threshold for detached houses or penthouses.
Thus, a detached 5-room house sitting on half a dunam of land was recently sold in Kiryat Shmona for NIS2.8 million. The house is in the city's northwestern part, in the Bimat Tel Hai neighborhood, where prices for similar properties were, until now, around NIS2.35 million. Definitely a significant jump.
Less than a year ago, a 128-sq.m. detached house was sold in nearby Kibbutz HaGoshrim for NIS2.3 million. This was the largest deal ever made in the kibbutz.
In Netivot, 8 deals for detached houses were made over the past year at prices ranging between NIS2.5-3 million for 5- to 6-room houses on lots at least half a dunam in size.
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Gilad Mor: "We're already seeing prices in the periphery that the market isn't used to in some of the settlements, which are now experiencing a huge momentum of infrastructure building, employment, and real estate construction, such as Netivot or Ofakim. This also attests to the potential of nearby settlements, which are also beginning to gain momentum. Seizing the opportunity now would be a smart move, whether you're a long-term investor or a family hoping to realize the Israeli dream of a house with a yard or even a pool at sane prices."
Land appraiser Nehama Bogin had this to say about the new phenomenon: "What's happening in the center today is beginning to have an impact on the near periphery, and even on the far periphery, which is influenced by the huge demand, the runaway land prices, and the rise in property prices. Investors have entered the luxury market more than before, especially on the periphery, where of course the prices are lower. They've realized that special apartments have become much easier to rent out. Not yet as easy as 2- or 3-room apartments, but in terms of the expected returns, these investments definitely have a much better forecast than they used to."
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