Haifa: A breath of fresh air

Haifa is a vibrant, forward-looking developing city. But it was not always so.

Downtown Haifa (photo credit: ZVI ROGER/WIKIMEDIA COMMONS)
Downtown Haifa
Haifa is one of the most beautiful cities in Israel. Located on a verdant wooded mountain, the of scenic beauty and hilltop residences has made Haifa a city where demand for real estate is high. People want to live in Haifa and consequently purchase housing. In addition, there is a great demand for rented housing. There are many families and individuals who prefer to rent rather than buy, and there is demand from a large number of students as well. Haifa is a university town with three large institutions of higher learning -- the Technion, the Israel Institute of Technology; the University of Haifa; and the Haifa Port Campus -- with a total student body of nearly 35,000. For a city with a population of 280,000, this is a lot and the impact on rental real estate is substitutional.
Haifa is a vibrant, forward-looking developing city. But it was not always so. During the 30 years of the British Mandate in Palestine in the 1920s, ’30s and ’40s, Jerusalem was the seat of government, while Haifa was the economic, military, industrial, commercial and, most important for Britain, maritime capital. It was the country’s largest seaport, a naval base at the eastern end of the Mediterranean Sea. In addition, it was the Mediterranean terminal of the Mosul Haifa Pipeline of the British-owned Iraq Petroleum C omp any.
The nearly 1,000-kilometer pipeline and the Haifa refineries were strategically important for the British government. During WW II, they provided much of the fuel needed by the British and American forces in the Mediterranean arena. Due to its importance to British imperial interests Haifa was surrounded by important military bases, workshops and industries that supplied the needs of the large garrison in British Palestine. But when the Mandate period ended and the last British soldier had boarded the last troop ship to Egypt, Haifa began a relative decline that continued for more than 60 years, during which time the industrial, commercial and economic center of gravity shifted southward toward Tel Aviv. The decline in the economic fortunes of Haifa had a direct bearing on real estate. Demand for housing was less than in other parts of Israel, and the increase in real prices was negligible.
But during the past years things have changed, and they are affecting the real estate scene in this beautiful seaside metropolis of the North. One of the reasons for the change is the city’s mayor, Yona Yahav, who is the driving force behind the rejuvenation of Haifa.
In a talk with The Jerusalem Post , Yahav says, “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, and that includes real estate. We are upgrading the infrastructure of the city and creating the right environment to generate economic growth.” He adds that the city plan is to “reconnect the city to the sea, which is Haifa’s greatest asset.”
The activities of the past five years are bearing fruit. One of the indicators of the change is the fact that the number of annual building permits has doubled compared to five years ago because the rejuvenation of the city has increased investor demand for real estate. One of the reasons for this renewed demand was the low price of real estate in Haifa. In the past, the real estate prices lagged behind the average national trend, and this was doubly so in regard to prices in Tel Aviv and Jerusalem, which experienced dramatic price rises.
In Haifa, geography has a dominant effect on real estate prices. Haifa is built atop historical Mount Carmel. The least expensive housing is at the foot of the mountain, while the most expensive is at the top. The price differential among the various areas in the city is very marked. It is greater than in the country’s other major cities. From its inception nearly 15 years ago, the current municipal administration decided to invest in the least favored areas of town, namely the lower town and the Hadar neighborhood which stands in the middle, between the upper neighborhoods atop Mount Carmel and the lower city. This included the development of the Haifa Port Campus, a complex of lecture rooms and student living units. The Haifa Port Campus is one of the most important developments in Haifa. Formerly an area of rundown houses and warehouses, it has been converted into a bustling place of learning.
The cost of housing in Haifa
Real estate prices in Haifa rose dramatically during the past decade. In some areas, especially in the lower city, prices doubled and more. That was in the past. Currently, prices in Haifa are holding steady in tandem with real estate prices in Israel as a whole.
Dror Aloni, the owner/manager of the Anglo-Saxon Real Estate branch in Haifa, says, “Real estate prices in Haifa are steady, and the halt in their rise is greatly influenced by the government’s negative policy toward investment demand for residential real estate. In the not so distant past, there was a great amount of investor demand for residential real estate. Because of the high number of students relative to the population, there is substantial demand for rental accommodation. For these investors, it was relatively easy to rent their property and receive a nice monthly income. At present, investor demand for residential real estate is practically nonexistent.”
Despite the fact that residential real estate prices in Haifa during the last decade underwent dramatic rises, residential real estate prices in the city are lower than corresponding real estate in Tel Aviv and Jerusalem.
An average four-room 100 sq. m. apartment in the Hadar neighborhood costs NIS 750,000 (approximately $197,000). In the German Colony in the lower city, it will cost NIS 1 million ($263,000). While in the posh Ahuza district atop Mount Carmel, it will cost NIS1,750,000 (approximately $461,0000).
In the Dania district, a verdant area of single-family homes on the southern slopes of Mount Carmel, a home on a 750 sq. m. plot can cost NIS 5 million (approximately $1,320,000). Dania is much less in demand than it was in past years. Many of the original residents who moved in some 30 years ago are now well above middle age and are moving to luxury high-rise apartments in the city center. This is by no means a local Haifa trend because it is happening all over the world.
Haifa is unique among the seaside cities in Israel in that the residential areas adjacent to the sea are the least expensive in regard to real estate