In June, Roni Katabi had just finished a municipal planning course and was looking for work. She interviewed for positions in Or Yehuda and Ramle, and even considered going farther south to Ashkelon or Sderot. But then the high-tech company where her partner works informed employees that they wouldn’t need to go back into the office for the next several months, and all options became open. “One evening between the lockdowns we were sitting and drinking a beer on the Tel Aviv boardwalk and we suddenly said, ‘Why not Eilat?’” Katabi recalls.
“We were living in a small, old apartment in (the Tel Aviv suburb of) Givatayim, without a patio, without windows, without enough light, and we were paying 4,500 shekels a month before bills. Our first instinct was to say, ‘What high-tech industry does Eilat have?’ and blame the beer for the crazy idea. A week later, we realized that the thought still excited us, and that the pressure in central Israel was only getting worse. Fortunately the planning job in Eilat was still available, so we decided to go for it.”
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At the end of November, and despite the many eyebrows raised by people around them, Katabi signed a four-year contract for a job as the deputy to Eilat’s architect. She and her partner rented a spacious three-room apartment for 3,500 shekels a month with a patio overlooking the Red Sea. “We wake up and see the shining sea, the lights of Aqaba are twinkling at us, and it’s amazing,” says Katabi. “I leave my home and I’m at the office in 10 minutes. In the center we were stressed over parking and traffic jams, and here we have much more free time.”
Katabi notes that Eilat is much less of an urban center than Tel Aviv and she misses that, “But these things disappeared somewhat during the pandemic in any case. I hope that when our routines go back to normal, we’ll feel that we’re benefiting from the quality of life here. Of course we took a gamble. Our expenses decreased, there’s less tax, so our disposable income is larger and we’re more able to save. The money wasn’t the motivator, but you can’t ignore it,” she adds.
Hard to go back
Katabi and her partner are part of a global trend. Amid the coronavirus pandemic, families are moving away from crowded, expensive urban centers in search of more space and a cheaper lifestyle. The option of working from home is fueling the trend.
In Israel, too, the three lockdowns have made big cities less attractive and changed some Israelis’ housing preferences, pushing quite a few people to consider locations they would have dismissed a year earlier, primarily due to the lack of local employment options. In the high-tech industry, for instance, some 79% of jobs are in central Israel, and anyone who wanted one needed to live nearby or spend two to three hours commuting every day.
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While it’s still hard to forecast how Israel’s labor market will look once the country returns to routine, it seems that after many Israelis were forced to work remotely for a year, it will be hard to go back to the office. It will also be hard to ignore the opportunities the pandemic created for Israel’s outlying areas, after many years of the government failing to draw well-off families away from the center of the country.
Israel’s small size is an advantage, in that it enables workers to work from home some days and come into the office on others, and that’s likely what the future holds for many high-tech companies. This would also help address some of the issues with working remotely that managers describe: While employees’ productivity has not decreased, teamwork is more challenging, it’s harder to start new projects and some fear that innovation and company culture will be impacted.
Sources at high-tech companies say that prospective candidates want a clear answer regarding whether they’ll be able to go on working remotely, even just part of the time, after the coronavirus passes. Some say they’ve been receiving resumes from applicants who live fairly far away, something that didn’t happen before the pandemic.
Business intelligence company Sisense recognizes the opportunity, says human resources manager Nurit Shiber: “We’ve already told workers they can keep working remotely and we know that some of our employees have moved. Flexibility and hybrid work options will enable us to hire quality people and maintain workers.”
Ben Sand, manager of global services at data security company Verint, which has some 1,400 workers in Israel, says, “Most start-ups that have measured worker efficiency in relation to their work setting have shown that work focused primarily on analyses in Excel spreadsheets or writing code, an office isn’t justified, and it’s even better for many companies that their workers stay home.”
In a panel discussion last week, Sand noted that while some 70-80% of office space is currently devoted to personal work stations while the remainder is meeting rooms or other meeting spaces, in five years the set up will be very different. “I’m saying now to workers: If you work alone, stay home; if you want to meet with several people, solve problems, work in innovation, come in.” If employees spend two days a week working from home, offices will save 40% on space, he says.
No longer one center
The Finance Ministry’s chief economist found the beginning of this trend to move out of urban centers reflected in the December real estate market review. An analysis of 2020 third-quarter home sales found a notable recovery in the number of home sales, “but the trend passed over Tel Aviv and the center,” the ministry’s economists wrote. “In Tel Aviv there were fewer than 2,000 transactions in the third quarter, one of the lowest quarterly numbers we’ve seen from a historical standpoint.”
There was an 8% decrease in transactions in central Israel, which comes after decreases in the previous three quarters as well. This was seen in both new home and second-hand home sales. Between January and September, only 3,900 homes were bought in central Israel, a 17% decrease from the parallel period of 2019. In Tel Aviv, the number of transactions in the third quarter was 3% less than in the same time period in 2019, after a 33% drop in the second quarter.
Tel Aviv ranked last in all measures related to the number of transactions. While the report found that home sales increased 15% in November compared to November 2019, in Tel Aviv the number of transactions was down 5%, despite increases in sales in every other region.
Real estate investors increased their purchases in outlying parts of the country, but haven’t been very active in Tel Aviv or central Israel, according to Finance Ministry statistics. Previous homeowners who were buying in order to upgrade followed the same trend in November: There was a 4% increase in purchases by these buyers in 2019, but a 10% decrease in purchases by these buyers within Tel Aviv.
“Individuals and businesses understand that Tel Aviv’s borders have been broken open, and Israel no longer needs to be a country with one center – we can have new cultural and employment centers in the Negev and the Galilee,” states Roni Flamer, founder and CEO of the OR Movement, an organization focused on developing communities in these outlying areas. “Between May and August we heard from 2,000 families that were interested in moving, three times more than in 2019.”
He says that until it’s clear how the labor market will look after the pandemic, the trend will be relatively limited, but people are already moving now.
‘People want culture’
But even the biggest optimists realize that the coronavirus won’t do what decades of tax benefits and government incentives weren’t able to do for Israel’s periphery. “Employment is important, but there’s also the issue of schools, culture and community – the planning process isn’t just about employment,” says Hebrew University Prof. Shlomo Hasson.
“Outlying towns will have trouble offering education, culture and community in the near-term without a strong pre-existing infrastructure,” he notes. “Even Haifa had employment and high-tech companies before the pandemic, but young people still left and there was negative migration. People want culture and a vibrant urban life. Culture is more concentrated in central Israel than employment is.”
Young people were leaving big cities due to high costs even before the pandemic, he notes, and that included Tel Aviv: “It will continue, but until now people were heading to the borders of the metropolis. Now the third ring of the metropolis may reach as far as Sderot, but that depends on infrastructure like the train.”
Israel’s Interior Ministry recognizes that the pandemic created an opportunity for outlying areas to draw new families, notes its Director General Mordechai Cohen.
“The quick adoption of technology that enables working from home and flexible conditions showed that we can close the gap in terms of employment faster than we thought, at least for some communities,” he says.
But Cohen notes that employment isn’t the only issue: “It’s true that there’s some romance about outlying areas offering quality of life and community, but medical services are lagging behind the center, particularly given the health crisis right now. And as a generalization, education there is weak, too.”