Part 3 – Southern Israel’s Boom Towns

As in other parts of the country, certain communities in Israel’s southern region are undergoing significant expansion and are expected to double their population in the next decade. The third in a series of three articles about Israel’s fastest growing towns.

The construction momentum in Israel has reached new heights over the last decade, with cranes and new neighborhoods under construction everywhere. Israel’s population is growing by 1.5% a year, but a survey conducted by the urban-economic consulting firm Svivot Megurim found that in some communities there is an annual growth of 5%, equivalent to a doubling of their population by 2030.

This accelerated construction is reflected in the thousands of new housing units being built in small communities and in small and medium-size towns. According to real estate appraiser and attorney Haim Mesilati, a population doubling over a short time period has unprecedented consequences for any community. The implications of accelerated development are usually positive, often reflected in an upgrading of a town’s image, with an influx of a young and well-established population, upgraded infrastructure and expanded public services. These are important tools for bringing about urban renewal that carries with it public and national benefits, in the form of an increase in the number of available housing units. The vast majority of communities slated for accelerated development are not located in traditional high-demand areas, leading to relatively reasonable prices.

Nevertheless, a massive addition to the available pool of apartments entails a non-negligible economic risk. Individual households usually constitute net losses for local authorities, since property taxes don’t cover municipal expenses. The key to financial resilience lies in the extent of commercial and industrial areas that are included in a local authority’s jurisdiction. Thus, municipalities that are interested in maintaining a sound economic basis while providing residents with high-quality services must ensure that thousands of new residential units are supported by business-oriented real estate as well.

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These are some of the communities and towns in southern Israel that are expected to double in size:

Kiryat Gat

Current population: 50,000; projected population in 2030: 100,000, a 100% growth. Price of a new 4-room apartment: 1.04 million shekels ($267,000).

Kiryat Gat is conveniently situated midway between Tel Aviv, Jerusalem and Beer Sheva, close to Highway 6 and with a train station in the city’s center. Intel employs 4,000 people there but most of these employees live in smaller rural communities nearby or farther away. The new neighborhood of Karmei Gat is expected to change all that.

Karmei Gat lies to the north of Highway 35, with room for 7,500 housing units of different types: detached and semi-detached homes along with dense building, with towers up to 22 floors high. 20% of the apartments in these towers will be 75 sq.m. at most. Spaces offering employment, an educational complex and a 160-acre central park for recreation and sports are part of the plan. Along with the accelerated construction of housing units, the municipality is trying to expand its industrial park by 500 acres, in order to expand the city’s economic and employment base.

One of the largest companies operating in Karmei Gat is Dona. The ‘Dona in Karmei Gat’ project will include 225 units at first, with 144 of these located in 7 buildings of 5 floors each, planned by architect Larry Sternstein. 81 units will be in a 23-story tower.

This project is located in the most attractive section of the neighborhood, close to a 115-acre park and containing many open spaces. Karmei Gat is one of the flagship neighborhoods the state has chosen to market aggressively through arrangements made with construction companies. The neighborhood will contain 7,500 units, commercial centers, schools and kindergartens, and is located on the banks of the Lachish Stream, only 35 minutes away from Tel Aviv on the fast train. Highway 6 is only 5 minutes away.

Dona Construction will build more than 1,000 units in the neighborhood, after winning a 2015 tender put out by the Israel Land Authority. According to Ohad Saban, the company’s VP, “the company sees this neighborhood as a strategic target, since it is located close to central transportation arteries and attracts young people from the center of the country. We are strategically extending our operations in cities that are of interest to young couples, to families wishing to upgrade their housing and to people who see these areas as an alternative to the metropolitan Tel Aviv area.”

Be’er Yaakov

Current population: 20,000; projected population in 2030: 80,000, a 300% growth. Price of a new 4-room apartment: 1.6 million shekels ($410,000).

Be’er Yaakov is in the midst of an urban revolution which includes a burst of development on an unprecedented scale. New neighborhoods are springing up, changing the community’s skyline. Some of these will be built on the old Zrifin (Sarafand) army base, whose land has been annexed to the city. There is an urban revival taking place, changing the old fabric of the community as well as upgrading its infrastructure and the services it offers.

Be’er Yaakov now has a population of 20,000 but is expected to grow to 80,000 by 2030 and will soon be designated as a city. It enjoys a strategic location close to major transportation routes, including Highway 431, which has greatly improved access to the community. Be’er Yaakov’s new neighborhoods are attracting young couples and people upgrading their housing, coming from above average socio-economic strata. They are all taking advantage of prices that are 15% lower than in nearby Rishon LeZion.

The Resido City neighborhood in the western section includes 4,000 units, built as two-family cottages, garden apartments and dense building with 23-story towers. The Itzhaki Group, constructing the 2B project in Be’er Yaakov, is building the first and only shopping mall there, scheduled to open in June 2016. The mall will serve not only Be’er Yaakov residents but also nearby towns. According to Roni Tanenbaum, VP marketing in the Itzahki Group, “for business owners and stores along Be’er Yaakov’s streets, this is a great opportunity to advance and move their businesses to a modern mall. Their customers will be able to enjoy an upgraded shopping experience and easier access.  This should significantly enlarge their customer base.”

Sarfati Shimon is constructing the Sarfati Garden project in Be’er Yaakov. It will include 430 apartments which have almost sold out already.