Haifa’s rejuvenation

Upgrading the city’s infrastructure, has generated economic growth – and a consequent rise in real-estate prices.

By JOHN BENZAQUEN
Haifa plans520 (photo credit: Tzahi Wazana)
Haifa plans520
(photo credit: Tzahi Wazana)
During the past two years, real-estate prices in Haifa have risen sharply – in certain areas by as much as 40 percent. Investors had heretofore been able to buy inexpensive apartments for a few hundred thousand shekels, obtaining annual yields of 10% and more.
But today Haifa is undergoing a rejuvenation, and a reversal of its former decline.
During the 30-odd years of the British Mandate in Palestine, Jerusalem was the official capital and seat of government; but Haifa was the economic, military, industrial, commercial and – what for Britain was the most important – maritime capital. It was the country’s largest seaport, base for the Royal Navy and, last but not least, the Mediterranean terminal of the Iraqi pipeline.
Around Haifa were important military bases, workshops and civilian industries supplying the needs of the large garrison in Mandatory Palestine.
But when the Mandate ended and the last British soldier had boarded the last troop ship for Egypt, Haifa started a relative decline that continued for over 60 years. As the industrial center of gravity shifted toward the metropolis of Tel Aviv, the deterioration in the city’s economic fortunes had a direct bearing on real estate, with less demand for housing than in other parts of Israel. Any rise in real estate prices was negligible.
Why are things now changing, and how will the changes affect Haifa’s real-estate scene? Haifa Mayor Yona Yahav is the driving force in the city’s rejuvenation.
Talking with Metro, he explained: “You ask me how the current developments in Haifa can affect real estate in the city. The answer is simple: Economic growth creates consumer demand, which includes real estate. What we are doing is upgrading the infrastructure of the city – among other things, opening the Carmel Tunnels – and creating the right environment to generate economic growth.”
Yahav added that the city’s plan is to “reconnect it to the sea, which is the Haifa’s greatest asset.”
The activities of the past two years have borne fruit: The business magazine Monocle nominated Haifa one of today’s most interesting business opportunities.
Another sign of change is the fact that building permits have nearly doubled.
Dror Aloni, manager-proprietor of the Anglo Saxon real estate brokerage in Haifa, agrees that things are moving in the right direction.
“In the past two years, prices for residential real estate have risen by 30% on average. During that time, there was considerable investment demand, which pushed prices up.
“One of the reasons for this renewed demand was the low price of real estate in Haifa, lagging over 10 years behind the average national trend; doubly the case in regard to prices in Tel Aviv and Jerusalem, where prices rose sharply. (Prices have steadied, because demand has declined.) “The average price of a secondhand, four-room, 100-square-meter apartment in the Carmel area is from NIS 1.1 million to NIS 1.2m.; a three-room, average apartment of 75 sq. m. costs from NIS 800,000 to NIS 900,000. New apartments in the area cost from NIS 18,000 to NIS 20,000 per square meter.”
HAIFA IS built on a mountain, and the least expensive housing is at the foot of Mount Carmel, the most expensive at the top. The difference in price between the different areas is very marked, greater than that between different quarters in Israel’s other large cities.
In Hadar and the lower town, prices are still very inviting, and this is where investors tend to buy properties.
They can buy two- and three-room apartments for as little as NIS 300,000. The most these investors are wiling to pay is NIS 500,000 to NIS 550,000.
If demand remains at its current level, prices are set to rise because there is no available land for building purposes.
Today, demand for housing in Haifa is on the low side. But according to figures published by the Finance Ministry in the fourth quarter of 2010, demand for real estate in Haifa was greater than in any other city in Israel. During those three months, 3,395 secondhand apartments were sold in Haifa, compared to 2,124 in Tel Aviv, 2,854 in Beersheba and 2,271 in Jerusalem.
Not only that, Haifa attracted the biggest number of investors. Investors bought 1,411 apartments there, compared to 1,373 in Beersheba, 1,353 in Tel Aviv and only 845 in Jerusalem.
There are not many residential building projects in Haifa, but Ramat Hanassi is a vast building project: a closed neighborhood covering a 60-dunam plot comprising 18 residential tower blocks of from nine to 22 stories.
Mayor Yahav: “This project is intended to house staff employed in the science-oriented companies in south Haifa’s Matam hi-tech industrial park. Many of these people, as well as staff at the Technion and the university, do not currently live in Haifa. We believe that this new quality housing in a social environment agreeable to highly educated people will be a very persuasive reason to live in Haifa.”