Red-hot Times in the Desert

"The real estate market in the Negev is beginning to blossom," declares agent Martin Siorno of Meshakim Banegev. "Most of the moshavim in the northern Negev have doubled the number of families living there in recent years. In many places, schools and kindergartens are under construction. Moshavim that forgot what development is have started to refurbish their infrastructures, and real estate prices are going up accordingly."

During the past decade, prices of homes in the Negev fell and sometimes even crashed, but now things are picking up. This situation is not to be taken for granted, since the State of Israel actually been converging on the country's geographical center for many years, and just nine months ago the area in question came under rocket bombardments from the Gaza Strip. Now, however, a town like Ashkelon, a recent favorite target of Hamas, is flourishing as it hasn't for years in terms of the extent of building there. Be'er Sheva has come back to life after long years during which its real estate market was treading water; as a result, the city's its prestigious satellite towns - Meitar, Lehavim and Omer - as well as the moshavim in the northern Negev are starting to celebrate.

The question, of course, is why the prices are going up - and why now? Many people are citing the completion of the southernmost segment of Highway 6 as the factor that has encouraged demand in the south. Others mention investors who want to get involved in the southern real estate market before Ir Habahadim - the new complex of military training bases - is completed, so as to profit from the price increases that will come upon its completion. Siorno mentions the Tara plant slated to be opened in Netivot and to employ 1,500 workers as an additional factor.

However, the most influential element in the recovery of the southern market appears to be the substantial price increases in the central part of the country: People who want to buy an apartment and have a limited amount of money are looking less for housing solutions in the once-typically popular places than in the past.

Realtors in Be'er Sheva are exuberant. In most neighborhoods of the city apartment prices have gone up dramatically, and contractors who survived the deep recession and the price crashes there in the first half of the decade are now reaping the rewards. Among the winners are the Y.H. Damari Construction company, controlled by Yigal Damari, the Moshe Avisrur company owed by the Avisrur family, and Peretz Bonei Hanegev, which is owned by the Peretz family.

Indeed, anyone who had turned his back on the local market for a moment in recent years will not recognize the new prices: A four-room apartment in the Ramot neighborhood that was sold two years ago for about NIS 520,000 is selling today for NIS 700,000 or more. A five-room garden apartment in the Neveh Ze'ev neighborhood that sold about a year ago for approximately NIS 750,000 is now going for about NIS 800,000. Plots of about half a dunam (1/16th acre) which were selling about a year ago for about NIS 267,000 are now being sold for NIS 430,000 or so - with dozens of bids being submitted for every offering.

The rising demand is awakening real estate concerns and developers that purchased land in the early part of the decade and suspended construction until now. Thus, Peretz Bonei Hanegev is now planning to build 200 units in the Darom neighborhood, while Avisrur is to construct 216 additional apartments in that same neighborhood. Y.H. Damari will soon be advertising 202 apartments in high-rise buildings in downtown Be'er Sheva after having built 182 apartments in the city recently, and after marketing 130 apartments in the Neveh Ze'ev neighborhood, which were snatched up within a few months.

The city's older neighborhoods, nearest the university, are enjoying steep price increases due to an onslaught of investors from the center of the country. Two-room apartments in the Gimmel, Dalet and northern Regger neighborhoods are now selling for around NIS 250,000 - double their price two years ago. Some sources believe that prices in this "niche," at least, are rising in a totally unreasonable way.

The boom in Be'er Sheva has also propelled price rises in Omer, Lehavim and Meitar.

"An apartment owner in Be'er Sheva, whose apartment over the years was valued at NIS 500,000, now finds he can sell it for NIS 700,000, take out a mortgage and move to a more prestigious locale," says real estate agent Yoram Sa'adon, from the Lehavim agency. Sales of homes with gardens and land prices in these locales have surged considerably.

During the past three years Omer has enjoyed a rise in prices of 25 percent for single-family and two-story homes, and land prices have doubled. A plot of 600 square meters is now selling for NIS 1 million, as compared to NIS 450,000 in 2006. A home of about 200 square meters on a plot of about 600 square meters is now selling for approximately NIS 2 million, as compared to around NIS 1.6 million a few years ago.

Lehavim, too, is enjoying higher prices. The local council and its approximately 6,000 inhabitants recently benefited from two very important economic catalysts: the train station that has opened in the western part of the township and Highway 6, which is quite close by.

In Lehavim today there are 250-square-meter homes with gardens on about half a dunam. In 2006 these plots were selling for an average of NIS 350,000; less than a year ago they were selling for NIS 650,000 and today they go for NIS 700,000 to NIS 750,000. Properties there have risen in price by about 20 percent in recent months. Indeed, if half a year ago it was possible to buy a two-story home for NIS 1.2 million to NIS 1.4 million in Lehavim, today the price is NIS 1.5 million to NIS 1.7 million.

Meitar's real estate achievements are a bit more modest than Omer and Lehavim, but there too prices are markedly higher. About a month ago 72 career army people signed contracts with the Israel Lands Administration to buy homes with gardens there for NIS 1.1 million to NIS 1.3 million. They were given a discount of only 10 percent relative to deals signed a few months ago, which real estate people in the south say testifies to increasing prices.

Housing prices are also rising in southern locales that are considered less desirable than the above. Thus, for example, in Ofakim three-room apartments in mixed secular and religious neighborhoods which a half a year ago cost NIS 140,000 have jumped to NIS 180,000. In neighborhoods in the process of becoming ultra-Orthodox, such as the Harif quarter, prices for three-room apartments have in recent months gone from NIS 180,000 to NIS 200,000 or even NIS 230,000.

"I attribute the price increases to the low rate of construction in Sderot, which has greatly decreased the supply of apartments, and to the price increases in Be'er Sheva, which have pushed certain investors to seek alternative investments in cheaper places," explains Ofer Raphaeli of the Eretz Hatzvi agency. "Up until a few months ago, you could find properties here that yielded 9 percent to 12 percent annually. Now, because of the situation, the yields have dropped to 7 to 9 percent."

Siorno, too, talks about investors who are looking for apartments priced at NIS 100,000 to NIS 200,000, and are going as far as Yeruham and Dimona to find them. "There is hardly a locale where prices haven't risen," he notes.

Sderot, battered by hundreds of rockets during the past several years, is now in the midst of a wave of rising prices that began after Operation Cast Lead ended.

Realtor Yaakov Levy of the Bayit Vegan firm relates that prices have gone up by about 20 percent since the end of that campaign, and adds that four-room apartments in the premium neighborhood of the town, Neveh Rabin, now cost about NIS 350,000, while garden apartments of that size are selling for approximately NIS 440,000. In older neighborhoods - Neot Eshkol, Neot Hadekel and Neot Hameyasdim - such apartments are fetching up to NIS 180,000 to NIS 200,000, and are preferred targets for investors who are relying on rentals or purchases by students at Sapir Academic College nearby.

Ashkelon is blooming. According to the Central Bureau of Statistics, it is among the cities with the most building starts, plus the number of building permits granted there is also among the highest in Israel. Currently, at least 600 housing units are under construction in Ashkelon and another 850 are in the planning stages.

Demands in the southern seaside city are coming from "Ashdod victims" who are unable to afford the recent price rises in their port city up the coast, and from residents of the center of the country who, to their surprise, have discovered that in Ashkelon it is possible to buy a seaside home at a reasonable price. The railway service that is supposed to reach the town in the next few years and shorten the travel time to Tel Aviv is also a significant factor in the burgeoning real estate scene.

During the past year and a half, prices of apartments in Ashkelon have gone up by about 20 percent. Only last February one local firm was selling four-room apartments for about NIS 680,000. Today, such properties are selling for at least NIS 790,000.

Most of the new construction is in the Barnea neighborhood in the northern part of the city. The Azorim company has purchased a huge amount of land, slated for the building of more than 800 apartments.

The rural sector has also chalked up impressive price increases of late. Thus, for example, along Highway 293 between Beit Kama and Netivot, the real estate market is heating up - for example, on Moshavim Kelahim, Pa'amei Tashaz and Sde Zvi. West of Ofakim, housing on the moshavim of Patish and Merhavim are in demand, their great advantage being proximity to the base at Tze'elim, which naturally attracts career army people.

Siorno of Meshakim Banegev tells of prices ranging from NIS 900,0000 to NIS 3 million for agricultural properties, but the bulk of this demand is focused on expansion projects on the moshavim. In most of these places it is possible to buy a single-family home on a plot of half a dunam for NIS 1.5 million, as compared to NIS 900,000 two years ago.

"Real estate investors are invading these places in the expectation of further price increases when Ir Habahadim is built, and local inhabitants have already raised their prices in the expectation of buyers flocking there, though they haven't arrived yet," he says.

One of the moshavim most in demand is Sde Zvi, located near the Beit Kama junction, which is benefiting from Highway 6 and the Lehavim train station, as well as from a renewal of its population: From a moshav that just a few years ago was a failure, with its members deeply in debt, Sde Zvi has been transformed into a locale with a largely young population. Another positive factor has been the expanded building projects there. A 190-square-meter house that cost about NIS 1 million three years ago, is now selling for NIS 1.4 million. A plot of half a dunam that sold for NIS 130,000 can fetch NIS 300,000.

A bit west of Sde Zvi is Moshav Kelahim, founded in 1954. It numbers about 100 families, most of them founders, and is known as having a high quality of life and good education; potential members undergo interviews with an absorption committee.

A community expansion effort has been launched at the moshav, and the price of a half-dunam plot is now about NIS 400,000, whereas a house that has already been built in as part of the new project can go for about NIS 1.2 million.