A wave of popularity

Over 60 percent of those who buy high-end seafront apartments in Tel Aviv are foreign owners

By JOHN BENZAQUEN
David Promenade Residences 521 (photo credit: Courtesy of Neot Shiran)
David Promenade Residences 521
(photo credit: Courtesy of Neot Shiran)
Ask most Israelis where they would like to reside, and many of them would say Tel Aviv.
Ask them where in Tel Aviv, and most would say a seafront apartment.
But most Israelis cannot afford to live in the White City, let alone on the sea front. Real estate on the western edge of Tel Aviv is measured in the millions of dollars and can easily fetch over 10 times the price of a fair-sized apartment in one of the metropolis’s southern neighborhoods.
As in all cities located on the shores of the Mediterranean Sea, real estate on the Tel Aviv shoreline is the most in demand. In real estate, location is the most important element when determining prices, and apartments by the sea are expensive because demand outstrips supply. The amount of land available for building purposes in the coastal strip, from the Yarkon River estuary in the north to Jaffa in the south, is strictly limited, so new building projects are scarce.
“The coastal strip of land that includes Hayarkon Street and the Herbert Samuel esplanade, together with the coastal streets in Jaffa, are among the most expensive in Israel,” Noam Dzialdow, one of the proprietors of Neot Shiran – a brokerage that specializes in expensive real estate – told Metro.
“There are many reasons for this state of affairs,” he continued. “The coastal strip is relatively short, and furthermore, it is very difficult to obtain building permits, which further complicates matters.”
In the area of Tel Aviv-Jaffa that borders the sea, there is no available land. The only exception is the southern part of Hayarkon Street near the entrance to Jaffa, where there are a number of empty plots that will in all probability be used to build either high-rise residential tower blocks or hotels.
The alternatives are to tear down old, dilapidated buildings to make land available, or to restore old buildings by strengthening the existing foundations and adding additional floors adapted to the buildings’ architectural styles.
One of the problems that developers wishing to build luxury apartments face is competition with the tourist industry for the available land. Since the beach is an important element in modern tourism, many of Israel’s luxury hotels are located on the Tel Aviv coastal strip.
As such, tearing down or restoring existing apartment buildings are the developers’ best options, since these structures are built on relatively little land and these plots are too small for building luxury hotels – a fact that significantly reduces competition with the tourism industry.
A case in point is 96 Hayarkon Street, a super-luxury residential apartment block developed by Faire Fund real-estate developers. The fund bought a beautiful but run-down Bauhaus-type building and completely restored it, retaining the shell of the outer walls, adding five floors to the original four and building luxury flats that are fetching premium prices.
“We have sold many of the apartments, but some are still available,” Oved Zangi, Faire Fund’s international sales manager, told Metro. “The penthouse on the two top floors is being offered for NIS 120 million.
It has a floor area of 740 square meters, plus 300 sq.m. of terrace. The two penthouses on the fourth floor are being offered for NIS 18m. or $5m.; they have a builtup area of 180 sq.m. and 195 sq.m. of terraces.”
There are also a few other high-end high-rise projects under construction in Tel Aviv.
In the Sea 1 project, for instance, two apartments have been sold for hefty prices. The top floor, measuring 1,000 sq.m., went for NIS 130m., which works out to $37m., while an identical floor lower down sold for NIS 110m., or $31m. The buyers were wealthy families from Russia.
Herbert Samuel 10 is another project in the process of construction. Apartments of 250 sq.m. are going for NIS 15m. to NIS 18m., approximately $4m.-$5m.
Yet another project, David Promenade Residences, which Dzialdow’s company is marketing, will consist of two side-by-side 25-story towers when it is finished.
“One is residential, while the other will house the Kempinski Hotel,” he said, adding, “Residents will be able to receive hotel services from the Kempinski.”
According to Dzialdow, the apartments will have a floor area of 90 sq.m. to 1,500 sq.m. on two floors.
Prices in this project are in euros, from 1 million to 50 million, depending on size and location.
The high seafront prices attract a special type of client. Over 60 percent of those who buy these apartments are foreigners with deep pockets; the remainder are wealthy Israelis. Many of the latter are middleaged couples whose offspring have left the nest, and who are now moving back to the city after selling their expensive single-family homes.
Recent real-estate transactions
• A 200-square-meter seafront penthouse with a 100-sq.m. terrace in a recently renovated building is being offered for $5 million (about NIS 19m.).
• A 250-sq.m. seafront apartment on a high floor sold for $5.5m. (about NIS 20.9m.).