Acre is the place to be
The long-forgotten northern seaside town is staging a comeback, with a new mall, a number of modern new neighborhoods planned and skyrocketing prices for an apartment in the Old City.
With perhaps more attention focused now on the city than at any time since Napoleon's army laid siege to it over two centuries ago, the northern port city of Acre is starting to shed its image as a sleepy backwater. The city is now besieged by real estate developers, with seven new neighborhoods currently in various stages of construction. Leading the charge is the Azrieli Group, which will soon open a new mall there.
"I can only say that if Azrieli came, you can reach your own conclusions," Acre mayor Shimon Lankri told developers at a real estate convention in Tel Aviv two months ago when asked if it is worthwhile investing in the city.
"When David Azrieli arrived in Acre I was amazed he was planning a large mall for the city," Lankri said. "In response he said that when he planned the Azrieli Towers (in Tel Aviv ) he was asked why he was building three towers - couldn't he be satisfied with one? 'Now everyone see the results' he told me, 'and now it's up to you whether to back me or not' - so I cleared the way for him."
Azrieli's new NIS 150 million mall is part of a new wave of investment in Acre: Super-Sol has a shopping center underway and Rami Levi plans to erect a commercial center. A. Levi Investment & Construction recently won an Israel Lands Administration tender to build 50 homes in the city. Peretz Bonei HaNegev, B. Gaon Holdings and Almog C.D.A.I. are also planning projects.
For several decades the construction firm E. Abada had the city virtually to itself, winning almost every ILA tender in the area. "Until recently there was only one builder in the city," Lankri said at the convention. "Only lately have other developers arrived: Azrieli, Dankner, and also Strauss - with its strong connection to Acre."
A decade ago only a handful of plots in Acre were sold by the ILA, and they didn't cost much. In October 2001 Abada won an ILA tender for about NIS 53,000 per unit, and in May 2007 it won two more at a price of approximately NIS 66,000 per unit. The latest tenders in March 2011 were more competitive as new firms entered the fray, and unit prices skyrocketed to around NIS 130,000.
Abada is now in a position to cash in, and is now selling rather than buying. The company has amassed 40 dunams of land in Acre for building 1,000 apartments and is generating handsome profits off sales.
"Two years ago we could sell a new 120 square meter apartment for about NIS 650,000 but now an apartment like this goes for around NIS 810,000," said Ernest Abada, the firm's owner. "We have worked in this city since 1987 and built 4,000 homes. Over the last few years we feel that negative migration of city residents to other northern cities has been stemmed, despite the rise in prices."
Interest from locals and outsiders
Abutting the Mediterranean Sea between the modern seaside suburbs of Haifa to the south and the resorts of Nahariya to the north, the ancient port's strategic location has been a magnet through the ages for settlement, commerce - and conquerors.
The range of property claims in the city derives from its long history: There are Muslim Waqf properties, Church-owned buildings, assets held by the Old Acre Development Company and Ottoman-era deeds.
Amidar, the state-run housing company, maintains 900 residential units within the old walled city, with protected tenants who have paid "key money" having priority in purchasing them.
Despite the unique complexities in buying and selling Amidar apartments, such transactions have become widespread, and over the last several years prices have even risen.
In mid-2008, a 162-square-meter home was bought for NIS 500,000 and flipped 18 months later for NIS 886,000. A 160-square-meter property near the sea recently sold for NIS 1.04 million.
Attorney Doron Goshen of Goshen, Goshen, Sigal Law Offices who serves as legal counsel to Old Acre Development Company says Amidar offerings are drawing interest from several quarters, including locals and outsiders who are looking to fix up the dilapidated properties and turn them into vacation rentals.
"Real estate in Old Acre has become attractive to investors looking for high returns, with rental apartments yielding up to 10%," he said. "The prices bid for land offerings show that Acre is slowly shedding its image as a forsaken old tourist town struggling to realize its sightseeing and real estate potential."
The city's facelift includes the development of tourism projects, like a NIS 10 million investment in the Effendi Palace Hotel, initiated by the owner of the renowned local seafood restaurant Uri Buri, Uri Yarmias.
Akkotel, a boutique hotel that once housed the magistrate's court, has undergone restoration. Conversion of the crusader-era Khan es-Shuna (Grain Inn ) complex into a 200-room hotel and a restoration of the northern wing in the city's historic prison are being planned. A tender has gone out for the seafront Bustan cinema complex, and the ancient port will also be restored.
Fishing for bargains
The Old City of Acre, sitting on a peninsula, is divided into several sectors: Ha'Hagana Street, the only vehicle-accessible road in the enclave, featuring the lighthouse; Block 10, adjoining the lighthouse and the seawall promenade; Block 11-12 by the marketplace; and Block 13 - Venice Square, popularly known as Fishermen's Square.
"The most expensive area is around Fishermen's Square, which fronts the sea, and the lighthouse area in the second tier from the sea," said Naomi Bechor, the owner of a property management and development office in the city. "In Fishermen's Square there are almost no remaining properties for sale, and sales there already surpass NIS 1 million for authentic high-ceilinged 90-square-meter homes. Ha'Hagana Street has more properties, and a 90-square-meter third floor walkup in the area now sells for between NIS 700,000 and NIS 800,000. These homes, which also have high ceilings and mosaic floors, are what people coming from the central region are looking for. But anyone thinking they can be bought for around NIS 400,000 like in 2006 is mistaken."
Acre is currently planning seven new neighborhoods with thousands of residential units to add to its approximately 47,000 residents. The largest of these is Maale Hakramim, in the city's north, where 900 homes will be built. In Hatmarim neighborhood at the city's eastern entrance 480 homes are planned. The South Beach neighborhood at the city's southern approach will include a huge project by the Arison group's Shikun & Binui, with 400 housing units, 400 hotel rooms and a country club. The Aqueduct neighborhood will contain an additional 220 homes.
A group of three 20-story buildings is now under construction in the city, with four-room apartments being sold for about NIS 820,000. Penthouses and lofts ranging from 170 to 220 square meters have passed the NIS 2.2 million mark.
"Prices aren't what people think," says Bechor. "They aren't low, and they are approaching price levels in Nahariya, and perhaps even in the central plains. However, there are still bargains."
Despite its rich history and unique cultural assets, until now Acre wasn't able to attract an upscale population. Throughout modern times it has been considered economically backwards, suffering from chronic budget deficits and struggling to pay the salaries of its municipal workforce.
In 2001 UNESCO added Acre's Old City to its list of World Heritage sites, giving the city's image a desperately needed boost. "In the past decade, Acre was in a catatonic state," said Ben Miost, acting CEO of the Acre Economic Corporation. "This was reflected by a freefall in housing prices."
Miost says much of the city budget went to pay workers instead of municipal works programs, and in 2003 the city was decades behind, with dirt roads and the smell of sewage.
"With no sewage treatment plant, the Health Ministry wasn't prepared to authorize building new neighborhoods in the city," Miost said. "The first thing that Mayor Lankri embarked on between 2003 and 2005 was economic rehabilitation, firing workers and reforming the tax collection department. Only after this was accomplished could budgets be assigned for development. The mayor managed to obtain over NIS 700 million from the government, brought in 40 new factories, invested about NIS 540 million in infrastructure and development, and improved the municipal tax collection rate from 50% to its current 90%. The annual city budget gradually grew from NIS 150 million to NIS 240 million. All this drew to the city investors who saw the changes taking place, which helped to push up housing prices."