The Marker, Adi Cohen, 09.11.2020
In about a decade from now, about 145 kilometers underground, a revolution will take place in Israel. The national metro project , which is currently being accelerated by planning institutions, will cross 24 cities and expand the mass transportation network in the Tel Aviv metropolitan area to the surrounding suburbs, in an estimate that will save about 50% of the time residents spend daily on roads.
But the impact of the national infrastructure project - which is estimated to cost about NIS 150 billion - is not only in improving the quality of life of residents: a survey conducted by real estate consulting firm Paz Economics and Engineering, which accompanies the metro project, first reveals the huge real estate potential The future, and its expected impact on property prices in the center of the country.
The review, whose data are now being revealed for the first time, is mainly based on international comparisons that examined the impact of the metro on its environment in various destinations around the world - including London, Singapore, Hong Kong and San Francisco. The review divides the estimates of the increase in the value of the properties and the expected development trends around them according to three main factors: their distance from the train station, their purpose, and their distance from the "core" of the metropolis - the city of Tel Aviv.
According to the survey, a significant part of the metro's impact will naturally be concentrated in the immediate vicinity of the 109 stations that will be built within its framework - up to a distance of one kilometer from each station. The highest levels of impact are expected in the range of the first 300-500 meters, where international comparisons indicate expected increases in value of about 20% on average in real estate value - both in offices and commerce, and in residences. In addition, differences are expected between the various metro stations. The highest value increases are expected to occur in the vicinity of stations where there are intersections of lines or a combination of other means of mass transportation, such as the light rail, such as in Glilot, Kfar Ganim in Petah Tikva, Yoseftal in Holon, and Arlozorov stations. Peace and defense in Tel Aviv.
Intensive development around the stations
However, according to the review, those who will benefit from the highest value increases in these ranges are the offices and commercial areas - who will benefit from the increase in property value, increased scope of building rights, and transport accessibility with many economic implications. Therefore, and as can also be seen in the various destinations in the world, it can be expected that the future development trends of real estate for these uses will also be concentrated mainly in these areas.
For example, the survey shows that in San Francisco and Hong Kong - hundreds of meters away from subway stations - about 75% of real estate is used for offices. In Washington and Vancouver, the rate of offices in these ranges even reaches 88%. Thus, as Daniela Paz Erez, founder and owner of Paz Economics and Engineering, explains, it is possible that there will be a significant reduction and decline of other commercial and employment areas, far from the planned stations.
"Unlike the rest of the world, where the metro gradually developed along with the development of those countries and cities, here the metro project came to reduce a gap of a hundred years within one decade - and it entered into an existing reality," explains Paz Erez. "The retirement of future employment centers and real estate development will be defined by the national outline plan of the metro - NAP 70 - but the general trend is intensive development around stations, which will justify the need for them. Therefore, in places far from the metro, "There is now a high probability that these plans will not materialize. Even in street shops and commercial areas that are more than 500 meters away from metro stations - which will not have other accessibility of the mass transit system - significant damage and decline may be seen."
In residential real estate, as the survey shows, the highest increases in value are expected far from the city of Tel Aviv - which is the constant winner over the high price of housing prices in Israel - and even from the adjacent circle of cities. Beer Yaakov, Givat Shmuel, Rishon Lezion, Rehovot, Ramla, Lod, Ness Ziona, Hod Hasharon, Petah Tikva and other cities.
"In these areas, we expect that the effect of the metro will be the greatest and that we will see greater price increases there - even more than in Tel Aviv," says Paz Erez. "In cities like Ramla, Lod and Beer Yaakov, for example - which were not previously connected by public transportation - we expect an increase in the value of the assets by 24% or more, and this is also true for other cities in this strip.
"The rationale behind this is that once the metro starts operating, and probably earlier with the expectation of it, people will be willing to move away from the core of Tel Aviv and its immediate surroundings, because accessibility will be more convenient and travel time will be much shorter. In these areas - which is also expected to lead to increases in the value of real estate. I think that whoever wants to invest in an apartment that will improve itself, it is better for him to buy in these areas and not in Tel Aviv. "
The uncertainty is holding back price increases
Until we decide the metro passes under our feet and enjoys shortening the commute time, at least a decade is likely to pass, but the real estate effects of the huge project may be seen much earlier. "This impact, as we have seen, begins not only on the day when the metro is already running, but also from the moment the project is announced - when even then you can see the beginning of the upward trend." .
One of the topical illustrations of this lies in the "Crossrale" project in London, or as it is known among residents of the United Kingdom - Elizabeth Line - which was inaugurated in December last year. This is a new metro line that connects Heathrow Airport and the city of Reading, west of London, to the easternmost neighborhoods in the British capital, and is about 117 kilometers long.
Similar to the Israeli metro project, here too it is a complex infrastructure project built and assimilated into an existing reality, and has not developed gradually with the city, unlike the England subway and the other destinations examined in the review. The plan for the construction of the crossrail was first announced by the English in 2007 - when the project was approved.
Shortly afterwards, it began to register its impact on real estate in London. Data published by the London CrossRale management show that in the field of offices, already in 2012-2016 - even before the train was inaugurated - the value of employment assets located about a kilometer from the future CrossRail stations About 14% on average. In residential real estate, the early impact was even more dramatic - an increase of about 29% in the value of properties located near the railway. According to the project managers, by 2026, residential real estate in central London will rise to as much as 35%.
In Israel, on the other hand, it seems that despite the advanced design of the railway, the impact of the huge project on prices is still not felt. TheMarker survey with brokers in some of the major metro routes - where the most significant increases in value are expected - indicates the beginning of a dialogue and interest in the future project among investors, but mainly a lack of confidence among residents in promises of the huge project, and public uncertainty or awareness.
Daniela Paz Erez, Paz Economics and EngineeringPhoto: Dror Nahum
"Investors who come here to take an interest in the apartments sometimes ask about the light rail and the metro, because it is clear to them that it will increase the value of the apartments, but it is completely on the margins," says Shabi Schneerson, Anglo-Saxon franchisee in Lod. "From the sellers' point of view, the issue of the metro does not seem to fit into their set of considerations at all, and does not affect the pricing of the apartments on their part. It will happen, or for them it is simply future and distant planning. "
These things are also joined by Molly Arbel, a Remax franchisee in Ramla, Lod and Beer Yaakov. "We see more distrust or raising of eyebrows about the metro project among the public and property owners in Ramla Lod, who make seventy promises, but investors who come from outside - and perhaps come with a broader understanding of the real estate world - are less skeptical," he says. Understand that a project of this magnitude is something that takes time, but that in the end its impact is tremendous. I think that of the cities in the area, the expectation of the metro is already felt, especially in Be'er Ya'akov - where it is already part of the discourse in transactions.
"While this expectation is not yet reflected in prices, I think we are beginning to understand that this will still make all these cities - which are now peripheral cities - standard central cities, and that this will affect prices."