Price Increases in the Central Region Act as a Catalyst for Property Development in the Periphery
Just yesterday (Sunday) the Chief Government Appraiser in the Justice Ministry, Tal Aldroti, reported on continued increases in housing prices. Based on the data, the average price of a four-room apartment (according to Channel 2 News) increased in the third quarter of 2015 by approximately 1.4% in comparison to the previous quarter and approximately 6% in comparison to the same quarter last year.
The prices that are continuing to rise in the cities in the center of the country are also causing the value of the land to increase and skyrocket. This phenomenon is leading companies – that in the past would not deal with projects beyond the central region of the country – to take on projects in the periphery as well.
An example of such a development can be seen in Nahariya, where Electra Residences and Zemach Hammerman recently began to market a project in the western part of the city, a project that is located close to the Achziv shore. Yaron Sorek, CEO of Electra Residences, personally testifies to the fact that there is a change in trend, “This is the first project that Electra Residences is building outside of the central region of the country, but it will not be the last.” Sorek also said, “We participated in the Achziv project together with Zemach Hammerman because we believe in the region.”
The CEO of Zemach Hammerman, Chaim Feiglin, added to the words of Sorek and said, “In accordance with price increases of apartments in the Center, the demand for large cities in the north of the country will increase. And there will be a higher level of interest in cities which are more accessible in terms of transportation. We already identified the potential in the north of the country several years ago. Today, we see more large companies in the field that have identified this trend, that are going beyond the borders of Chadera and Gedera and are locating the areas where the demand is expected to be concentrated in the coming years. As the Chairman of the Organization for Contractors in Haifa and the North, I can say that we have observed this in the recent years with the entry of major contractors into the city of Haifa, and now we see this also in additional northern cities such as Nahariya.”
We should point out that the companies recently embarked on marketing the project that includes just 1,000 residential units, of which 745 units are multi-level. As of today, the first part of the project that includes 288 residential units in 12 buildings is being marketed at prices beginning at NIS 1.09 million for a four-room apartment and starts at NIS 1.28 million for a five-room apartment. The project is being planned by the Office of Roni Zis Architects in cooperation with the Office of Pik Architects.
In parallel, one can find additional examples of companies that began to be active in Nahariya after a long period of activity mainly in the areas of demand in the Center. As an example, Kardan Real Estate won the tender in the first quarter of this year in the Center for building 112 residential units in the city. Another large company that we are used to seeing mainly in the areas of higher demand, Azorim, is also currently moving forward with a project in Nahariya after winning a tender in the northeast of the city, for 230 residential units.