Beit Shaap - Ofer Vaknin - 16012012
Beit Shaap in Ramat Gan - a 5.5% annual return on the deal. Photo by Ofer Vaknin
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A subsidiary of the Dan bus cooperative paid a record-breaking price of NIS 137,000 per parking space for a lot in the area of the Ramat Gan Diamond Exchange last week.

Amad, the subsidiary, already owned half the rights to the parking lot in Beit Shaap tower on 3 Hayetzira Street. It has now bought out the half owned by its former partner in the asset, Danny Avni, for NIS 42 million, which, as said, works out to a record-breaking price per parking space ever paid in Israel - NIS 137,000.

The underground lot has 610 parking places.

The Harel insurance company had thought to buy the parking lot itself, or half of it, based on its plan to add six stories to the building next door, Beit Crystal. But it can't add parking spaces and has to forgo 50% of the parking slots that Beit Crystal has for public parking. Harel therefore thought to make use of the parking next door at Shaap.

Amad, however, had a right of first refusal (its partner had to make an offer to it first ), and bought out its partner at the same price Harel was offering.

The previous record price paid for parking was in 2009, when Ogen Real Estate bought 60 parking places in Moshe Aviv tower, also in the area of the Ramat Gan Diamond Exchange. That deal priced each parking space at NIS 108,000.

Amot Investments, a subsidiary of Nathan Hetz's real estate company, Alony Hetz, is negotiating to buy the Migdal Ha'Mea parking lot from Liberty Properties for NIS 43 million. If the deal goes through at that price, the parking spaces would be selling for NIS 84,000 each. The reason parking space there is relatively cheap is that the building is leased out to the Tel Aviv Municipality.

Yet the price Amad is paying doesn't seem to be motivated by pure considerations of returns. It is worth noting that Harel was prepared to pay that extraordinary price to have parking for its employees. Amit Kedem, chief executive of the Central Park company, which runs 17 parking lots, says a monthly lease for a parking space in Beit Shaap costs NIS 600. The deal therefore reflects gross annual returns (without considering costs ) of 5.5%. Amad may be assuming that the price of parking will rise even higher, thus increasing its returns.

That wouldn't be an unreasonable assumption. Business areas in Tel Aviv and around the Ramat Gan Diamond Exchange are sorely short of parking. Demand has risen and open space that had been used for parking lots has been diminishing, and high-rises are going up in their stead. For instance, the parking lot on Hayetzira Street, with 250 spaces, will be abolished entirely for the sake of a 40-story building.

Dan chairman Michael Nagar and CEO Shmuel Rafaeli refused to comment for this report.