real estate biz 88 298.
(photo credit: Courtesy)
As Israel's sizzling real estate market has attracted world-renowned developers and vacation-home buyers over the last few years, the budget needed for successfully marketing new residential projects has gone up threefold, reported the Dara real estate marketing firm
"If five years ago you could market a residential project at a cost of one percent to 1.5% of sales, today marketing costs have risen to between 4.5% to 5% of the total sales of the project," said Dror Ohev Zion, managing director of Dara. "The expenditure for marketing a project has increased significantly over the past five years as a result of a number of factors including a rise in standards in terms of presentation and demonstration to the client, fierce competition in the marketing of residential projects and the increased need to venture out to foreign markets."
According to the real estate marketing survey carried out by Dara, which currently markets 2000 residential units in 10 projects across the country, the significant rise in marketing costs of residential projects is seen mainly in the center of the country and in Jerusalem. Dara reported that marketing budgets today start at between 2.5% to 3% of the total sales of the project and rise to 4.5% to 5% for luxury home projects. Included in the marketing budget are items such as the commission for real estate marketing companies and sales people, advertising, signposting, apartment models and participation in real estate fairs in Israel and abroad.
"The weak dollar has been attracting potential apartment buyers to go for second hand homes and therefore developers of new homes need to be much more aggressive in their marketing strategy to be able to compete and reach their target audience," said Levy Itzhak, editor of Property Magazine, a publication which lists apartment prices. "Over the last months, the relation between first hand and second hand homes sales was 8% and 92% respectively."
Itzhak added that developers today have to be more aggressive to attract potential buyers by commissioning external marketing companies, sending marketing representatives abroad to exhibitions and investing higher volumes into apartment models.
From downtown Tel Aviv to the heart of Jerusalem, foreigners searching for second homes, especially Americans and the French, have been redefining Israel's high-end real estate market and the marketing standards required to meet their demands.
"For the Nof Zion project - a private luxurious gated neighborhood - which is tailored to foreign residents and locally strong communities, we allocated a marketing budget twice as high as the average budget for projects built in Israel," said Dror Kaveh, CEO of Digal Investments & Holdings, the company behind the Nof Zion luxury apartment neighborhood project in Jerusalem.
"Marketing and advertising of the project is carried out in Hebrew, English and French," he said, pointing out that other marketing means included "project model illustration before construction start, an internet site in two languages, participation in fairs abroad- mainly in the US and France and investment into expensive advertising."
"There is no doubt that marketing budgets are growing year by year," said Sharon Hasid, deputy marketing manager at Hassid Brothers Construction, developers of the Ganei Zion luxury home tower in Jerusalem. "If five years ago, the company invested 2% of the construction volume into marketing including advertising, we are now talking about over 4% - depending on the target audience."
Other developers agreed however, that while marketing trends have changed to a more diversified real estate market, marketing budgets have not necessarily gone up.
"I wouldn't say that we invest more financially into the marketing of projects," said Haim Kakon, marketing manager at Bonei Hatichon. "Today we need to be to more professional and more specified about our marketing strategy. There is a change in how we market and advertise projects. If before we advertised projects mainly in the print media, today we put ads in the online media. Furthermore all of our sales people are in-house and we put more emphasis on building up a relationship with the client."