Location, location, location. How true is it in Tel Aviv?

17 hours ago 6

ARTICLE AD BOX

"Globes" examines prices in residential towers in the city to see whether the old real estate adage applies to Tel Aviv.

Which residential high-rise in Tel Aviv is more expensive Akirov Towers in the Old North or Hashoftim Tower near the Tel Aviv Court building, or perhaps Gan Ha'Ir by Rabin Square, built in the 1980s?

When it comes to real estate, the issue of the age of a building is one of the main factors that determine the value of properties, and it is usually balances against the issue of location. As a rule, older properties are located in better locations in city centers, or are built on more open land in more outlying areas. When city centers weaken, as happened in large cities a few decades ago, demand falls, and the location element affects the price. When city centers strengthen, as is happening in Tel Aviv, location becomes very important, and the prices of old apartments remain high, despite their age.

When it comes to residential high-rises, the situation is more complex, because the age of the building also has a functional significance, such as sophisticated systems that exist today that were not there when the tower was built: outdated elevators, a shortage of parking spaces, and more.

"Globes" examined what is happening in the old residential towers in Tel Aviv, and how age has affected them. During the war, the significance of age has come to the fore because of the need for a security room during missile attacks.

In addition, the location formula in Tel Aviv dictates that the further west the tower, the more expensive it is, because of the view and proximity to the sea.

On the seafront, are the most luxurious towers in the city, with sky high prices, even by Tel Aviv standards. The most prominent project among these is the Mandarin Oriental, where deals reflect an average price of about NIS 130,000 per square meter, and there have been deals there at even higher prices.

The market for mega-luxury towers, located along Tel Aviv's seafront promenade and Hayarkon Street, mainly attracts foreign-resident wealthy individuals, who are drawn to Tel Aviv's golden Mediterranean beaches, while wealthy Israeli individuals, are more interested in life further inland in the beating heart of Tel Aviv.

Three generations of towers

The two projects that initiated the trend of luxury residential towers in the city are the King David Towers on Uri Lesser Street, built in the 1980s, and Lev Ha'Ir, built on what was the Tel Aviv Zoo, on Hadassah Street, near city hall. The third on the list was the Basel Tower, built in the Old North.

In the 2000s, expensive residential towers, some distance from the city center, became a major trend. Alfred Akirov started this wave, when he built the trio of towers named after him on Pinkas Street, and a few years later, the Habas Group began building the YOO Tel Aviv project in what is now known as Tzameret Park. At the time it was considered one of the least sought-after areas in the city, due to its location between Namir Road and the Ayalon Highway, and its isolation from the city.

Sporadically, developers made efforts to return to the city center, although the lack of available land hampered such efforts. These projects included Beeri Naharda, Rothschild 1, Dizengoff-Frishman Tower, and Hashoftim Tower. With the help of appraiser Tamar Avraham, we examined current apartment prices in a sample of towers in the city, choosing towers from several generations: the early King David and Gan Ha'Ir towers, Akirov Towers, Beeri Naharda, and Park Tzameret Towers, which constitute the "middle generation," and the newer Hashoftim and Dizengoff-Frishman towers, which are located in the heart of the city.

The results: Location, location, location

The initial finding from "Globes" examination was that in terms of Tzameret Park, the location was and remains less preferred by the market, and apartment prices are at the lowest level of those examined NIS 53,000 per square meter.

Although a deal was found worth NIS 78,000 per square meter, this was an anomaly, and the rest of the deals completed in the area in recent times ranged from NIS 43,000 to 59,000 per square meter. Unlike other projects where these are mostly single buildings, the competition in Tzameret Park is very high between different buildings, different apartment types and different architects, which probably contributes to the relatively low level of prices there.

The prices of apartments in Gan Ha'ir were also found to be relatively low, about NIS 55,000 per square meter, but with a significant caveat: apartments in the tower are unusually large. The four-room apartments that were sold cover 160 square meters - more than 40% larger than an average four-room apartment. So the average price per square meter is 10% lower than the appraised price per square meter.

In both cases, apartment prices were found to be lower than the Old North, although regarding Gan Ha'ir, there are almost no apartments of the type it offers further north.

About half a kilometer from Gan Ha'ir are the David Towers, and more than 35 years after their construction, they maintain their illustrious character, with an average price of about NIS 78,000 per square meter. Akirov Towers were considered the most innovative and expensive towers 20 years ago. In the early 2000s, apartment prices in them were higher than apartment prices in previous generation towers - Gan Ha'ir and King David.

Akirov Towers were built a few years before the YOO Towers, and the distance between them is very short geographically - about 150 meters - but the two projects are separated by the busy Namir Road, and this means there are significant price between Akirov Towers and Tzameret Park, reaching NIS 20,000 per square meter. The Beeri Naharda Tower is already considered part of the newer generation of towers, as it was built in 2010. Appraiser Tamar Avraham found prices per square meter in this tower average NIS 77,000 per square meter, slightly less than those in King David Towers.

Why exactly? If we compare the locations, we find that they are quite similar, and the distance between the two projects is about 250 meters. Avraham believes that this is a matter of reputation, which stems from the tower residents, and in this regard, the King David Towers is unique.

"The older towers maintain high prices," she says. "These are prestigious projects with high maintenance costs that are inhabited by wealthy people. The public areas, although less modern, are always maintained to a high level and they renew what needs to be renewed in order to maintain the level.

"It also seems that according to the market, there is a preference for the city center over the YOO complex, which is in any case located on the outskirts of the center. Although the Park Tzameret area includes prestigious towers with all the luxuries that people who can afford to buy an apartment there like, I still think the location wins and the old center/north - beats the new."

The most expensive: New projects in the city center

So what happens when residential towers are in both a highly attractive location and are also new? It’s a win-win situation, as the examination shows. "Globes" chose two newer towers: Hashoftim Tower and the Frishman-Dizengoff Tower, both of which are located in the same core area of the city, and both of which have price levels that exceeded NIS 90,000 shekel per square meter.

The gaps in prices indicate that in the long term location remains triumphant, and transcends passing fads and trends.

Published by Globes, Israel business news - en.globes.co.il - on February 2, 2025.

Read Entire Article