The Marker,Hadar Horesh, 05.11.2020

Ten stations, this is the entire distance that is expected to separate the central Balfour Street in Bat Yam and the prestigious Neve Tzedek neighborhood in Tel Aviv, on the day the light rail will finally be inaugurated - probably during 2022. But when it comes to real estate, Bat Yam is no longer waiting at the station. This fog has already ignited fire in apartment prices along the light rail route, which jumped in 2019 by 10% -15%.

This year it seems that the price increase has moderated - perhaps due to the corona, or because some believe that the city does not justify further price increases. But even today, the players in the real estate market in Bat Yam indicate that about half of the buyers of apartments, mainly in the sought-after areas, are investors.

In the past, the investors in Bat Yam were mainly older people who accumulated little savings and saw renting an apartment as a kind of pension savings, which preserves its value and provides a fixed and solid income. But in recent years, a new type of investor has entered the market: young people who have equity - which is not enough to buy a residential apartment for them in the location they want.

Many of them prefer to invest the amount they own in a cheaper apartment, the rent from which will allow them to finance the rent in which they live, usually in a more sought-after area - hoping that one day the value of the property will skyrocket and they can sell it and buy a better apartment for themselves.

Ben Eshuel is an investor of the new kind. Eshuel, 32, lives with his partner Bishmat and their toddler son in the "nursery" project in north Tel Aviv. Eshoel is involved in music and his partner is an English teacher, and the two do not need help buying an apartment - the apartment they had sold, and instead bought an investment apartment in the new residential building Lighthouse, which is currently being built on Bat Yam beach by YBOX.

The apartment was purchased two years ago on paper, for NIS 2.6 million. It has three rooms and its area is 88 square meters, on the 30th floor out of 46. A similar apartment in a tower on the beach in Tel Aviv, only 5 km north, a double canal and more.

Sami Kanfo, Anglo-Saxon franchisee in Bat Yam: "The main demand is for 2-2.5 room apartments. Their price has risen in recent years at a rate of 6% -7% per year."

Already today, similar apartments in the Lighthouse project are being sold for NIS 2.8 million. In six months I will receive the key, but the couple have no plans to move at this stage: they estimate that renting the apartment will yield them at least NIS 7,700 per month, more than the rent they currently pay for a similar-sized apartment in North Tel Aviv - NIS 6,000 per month.

"This is an amazing area, close to the train station and facing the sea, and very close to Tel Aviv." Says Eshuel. "It is a good investment, but I think we will stay to live in Tel Aviv. If Bat Yam continues to develop, we will consider moving to live there."

Bat Yam. Independence Avenue Photo: Tomer Applebaum

"It's all a matter of branding"

Sami Kanfo, an Anglo-Saxon franchisee in Bat Yam, says that the main demand in the city is for 2-5.5-room apartments at an average price of NIS 1.2 million. "In recent years. The prices of these apartments have risen at a rate of 6% -7% per year, and together with their rent it is possible to reach a net return of about 10% per year, which is already a very nice return that does not fall short of investing in an apartment abroad."

"Investors are not only buying the old apartments, where you can enjoy an increase in value following urban renewal projects, but also new apartments. In the Park Hayam neighborhood in the city, about half of the buyers are investors. Everyone expects prices to rise because of the great potential. The next change will be When the young people discover the city.

"Already now there is a strong population coming to the new apartments, not just investors. An apartment by the sea, which costs NIS 5 million and more in Tel Aviv, can be bought in Bat Yam for half price. It's all a matter of branding," says Knafo.

Yaron Shamir of Remax Avenue Holon Bat Yam Agency specializes in marketing apartments to investors, and he also estimates that they are half of the buyers of apartments in the city. "The preference of investors in Bat Yam is for large apartments that can be divided and low floors. The preference for a low floor is due to the fact that most old buildings are without elevators and therefore easier to rent or sell an apartment on a low floor. ".

Shamir believes that the cause of the halt in price increases in 2020 is the corona plague, which affected the entire industry. "One of the reasons for the high demand for apartments was the possibility of renting them out to tourists in the short term, in the format of Airbnb. In Bat Yam there are very few hotels, and the short-term apartments were in great demand - until the plague broke out." However, Shamir believes that the price increases due to the progress of the light rail have not yet exhausted themselves. "When the train starts operating and people see how close we are to Tel Aviv's entertainment centers, prices here will rise by at least 10%," he estimates.

Ben Eshuel and his partner sold their apartment and bought an apartment on paper in a tower on Bat Yam beach. Its rental is expected to yield NIS 7,700 a month and finance their residence in North Tel Aviv

According to Yavin Gil Moore, CEO of the Yad2 website, in recent months there has been an increase in interest from investors, “following the establishment of the red line of the light rail and the significant potential for urban renewal. "Since the move to reduce the purchase tax for investors, the number of searches on the site for properties up to NIS 1.5 million in Bat Yam has increased by tens of percent."

Tal Ben EshuelPhoto: Tal Ben Eshuel

Apartment in Bat Yam, Kiryat Shmona and Cincinnati

Like the Eshuel couple, Uri Beck, vice president of engineering at a high-tech company, prefers to continue living in rented accommodation and try to make money from the real estate fever and expectations of continued price increases. Beck, 48, is married to an EL AL flight attendant in Chalat and they have three children.

The family lived for many years in a nice duplex apartment in Nahariya, and about two years ago decided to move to the central area, after Shabek was released from permanent service and began moving to a high-tech company whose offices are located in Ramat Gan. The family eventually settled in the streets, but after selling their apartment in Nahariya at a loss, they decided not to buy a new apartment to live in.

"We decided that instead of buying an apartment, we would live in a rental - and we would invest the proceeds from the sale of the duplex in Nahariya where the yields are good," says Beck. They bought a 57-room apartment of 57 square meters in housing on Ben Zion Boulevard in Bat Yam for NIS 1.17 million. Since the family no longer owned the apartment in Nahariya at the time of the purchase, the apartment in Bat Yam was considered a "first apartment" Of 70%.

Bat Yam Beach Photo: Moti Milrod

The investment was made through YG, a company that specializes in advising and guiding investors in income-producing real estate, which focuses on the cities of Bat Yam and Kiryat Shmona. Israelis.

"I can't estimate yet how profitable it is. The tenants in the apartment in Bat Yam have just moved in and are paying NIS 3,700 a month, which means a gross yield of 3.8%. In Cincinnati, the yield is higher and can amount to 7-8%," says Beck. "In Israel, I am building mainly on the expected increase in value in Bat Yam, mainly because of the railway and urban renewal projects. I do not see this apartment as a long-term investment and hope to realize the profit within a maximum of 4 years," he adds.

Tzachi Levy, 29, is a native of Bat Yam who has been living in Panama City, the capital of Panama, for the past few years. He came to a country in Central America during the trip after his release from the IDF, went into business and settled there. Levy realized that his hometown has become an investment center in recent years and decided to join the celebration. , He says.

Levy made a leveraged purchase of two apartments in the city using a mortgage of 50% of the value of the apartment - a 2.5-room apartment with an area of ​​60 square meters and a 2-room apartment with an area of ​​53 square meters. Each of the apartments earns him a rent of NIS 3,500 a month. The purchase was made by YG, which also manages the rental of apartments for Levy.

"My main considerations were the proximity to Tel Aviv, the light rail line and urban renewal," says Levy. "In the building where one of the apartments is located, tenants have already been signed for evacuation-construction. This will surely increase the value of the apartments."

Excessive optimism

Even in the face of rising prices, the assumption that Shabbat Yam will reduce the gap between it and Tel Aviv is not bound by reality. Price differences between nearby cities are related to the branding and quality of life they offer residents.

Despite the great development efforts in Bat Yam, which are concentrated in the area of ​​the promenade and the beach, and with all due respect to the light rail - Bat Yam is not close to Tel Aviv. Its beachfront is great, but business around the boardwalk is faltering even before the corona and closures . Opposite the promenade, in the areas where leisure and fast food businesses were supposed to conduct fierce competition, one can find real estate agencies that enjoy the low rental prices at such a central point.

For many years, Bat Yam has neglected its tourist potential as a coastal city. Development efforts amounted mainly to the historic Marina Hotel, which failed and closed long ago. Today, the only modern hotel in the city is Leonardo - a relatively small hotel belonging to the business hotels of the Fattal chain. In recent years, the South Beach Hotel has been slowly built, which will be managed by the international Accor chain.

Uptown project on Nissenbaum Street, Bat Yam Photo: Ofer Vaknin

Meanwhile, in the commercial complex adjacent to the hotel, joint work spaces belonging to the Greendesk company, which operates in New York and Israel, and is connected to the hotel's entrepreneurs, have been opened. Today it is possible to rent a desk there for NIS 1,500 per month, with a sea view. Manager Zami Gutman reports 90% occupancy, and in some rooms you can see surfboards that some of the tenants brought with them for hours outside of work. However, many of the young people who rent workplaces in Grindsk are not city residents. Young people of the Shabbat Yam type may be looking to buy apartments in the city - but not necessarily to live in them.

Bat Yam also suffers from a large shortage of employment, leisure and commercial centers, which are a center of attraction for a young population with high earning potential. The shortage also hurts the municipality's income from property taxes for businesses, and in an attempt to bridge the gaps, the municipality is forced to charge high rates on residential property taxes. Meanwhile, it seems that the city's old industrial area froze in time and did not develop into modern employment towers like in other cities.

The appraiser Shmulik Cohen sees Bat Yam's weaknesses as a source of hope and growth: "The municipality plans to mix uses of employment, commerce and housing in the old industrial area, in an area of ​​800 dunams." "The district includes the planning of 30-40-story towers, near the light rail station, and land prices are still low. This is an opportunity," he said.

Tombstone Square, Bat Yam Photo: Ofer Vaknin

Cohen says that in the Park Hayam neighborhood, where new high-rise projects are being set up, some of them above commercial areas, 4-room apartments are being marketed at a price of NIS 3–3.5 million, reflecting a price of NIS 30,000-35,000 per square meter. The prices of new 4-room apartments by about 25% - compared with an increase of about 12% throughout the country;

Cohen also points to an expected change in the tourism arena: "Along with a mix of residential, commercial and hotel uses in the park district, a plan for seven hotels is being promoted."

Appraiser Haim Mesilati, chairman of the Bureau of Real Estate Appraisers, believes in a rosy future for Bat Yam - but also warns that transportation planning could create difficulties for investors in the city: Apartments for short-term rent.

"However, to thoroughly examine the investment with professionals. The metro plan, for example, stopped several projects in the city just before obtaining a building permit - due to the decision to build stations in the same locations. Entrepreneurs have found that their plan has been frozen. Wanted and make sure it does not embody too high a potential. "