In Ashdod, Buyers Angle for a Room With a View – and a Bomb Shelter

The wave of buyers from France materialized, but home prices soared 7-8% last year. What’s in demand? A vista and a reinforced-concrete safe room.

Pavel Tolchinski

The high price of housing in Ashdod may seem surprising to some observers, but not to the city’s residents. The city is just 38 kilometers (23 miles) from the Gaza border and during last summer’s fighting it was routinely subject to Hamas rocket barrages.

Yet today, prices of four-room homes in the new neighborhoods in Israel’s fifth-largest city start at about 1.5 million shekels ($377,000), while five-room units easily pass the 2 million-shekel mark. In the older neighborhoods, apartments for first-time homeowners can still be found at affordable prices, but buyers still need hundreds of thousands of shekels in equity.

The logic behind Ashdod’s high home prices is that as close as it is to Gaza it’s even closer to Tel Aviv, situated at the southern end of the Gush Dan (Greater Tel Aviv) metropolis and homes are cheaper than places like Rishon Letzion. However, the city has no significant source of employment except the port, which means most residents engage in inter-city commutes every day.

At the beginning of the year, Ashdod was bracing for a wave of French immigrants after the Paris terror attacks. The city has been popular with French Jews for quite some time, with approximately 6,000 French immigrants constituting 2.5% of city’s population. There was some movement in the weeks after the attacks, but in the past month it has subsided, and foreigners are these days not central players in the city’s real estate market.

Housing prices in Ashdod shot up by 7-8% in 2014, which is quite a lot considering the fact that the market was virtually frozen for half a year due to former Finance Minister Yair Lapid’s abortive Zero-VAT initiative and for two months during last summer’s war in Gaza.

Most of the price increases came after the initiative was shelved, when many of those who had been sitting on the fence quickly jumped off and bought a property. The explosion of pent-up demand is one of the main reasons behind the steep price rises.

Unique neighborhood

The City district, in Ashdod’s center, is still fairly new. Construction in the area is almost completed, with only a few lots still remaining. The uniqueness of this neighborhood lies in its mixed-use planning, which placed residential buildings alongside stores and offices. A typical residential building in the area comprises a commercial unit on the ground floor and then one or two stories for offices, topped off by about 14 floors of apartments.

All of Ashdod’s municipal services are concentrated in this neighborhood: the central bus station, shopping malls, government and municipal offices. The price of four-room homes ranges from 1.4-1.7 million shekels and five rooms from 1.6 -1.9 million shekels. Such prices clearly indicate that most of the buyers are homeowners seeking an upgrade, with young couples making up only a small percentage.

In Ashdod’s trendiest neighborhood is the Marina, most home buyers over the past year have been Jews from France. Yet the long-term trend is the opposite direction: Foreign residents have been net sellers, with Israelis taking their place and the number of “ghost apartments,” homes unoccupied most of the year. Today the area is entirely built up, so most sales are for second-hand apartments. A four-room apartment costs 1.8-2 million shekels and five rooms go for 2.2-2.9 million shekels.

In every Ashdod neighborhood, prices vary based on the size of the apartment and the floor it’s on, but in Marina these factors play a super-sized role: Apartments facing the sea, especially from a higher floor, can cost hundreds of thousands of shekels more than similar units without one.

The Maar district is currently the locus of residential construction in Ashdod; massive building is still underway and most of the real estate transactions here involve new apartments. The neighborhood is near the marina – in other words, very close to the beach – with 20-story buildings going up. This means that apartments on the higher floors facing west, even if they are not on the waterline, offer a sea view. The neighborhood is also very close to the city center and entertainment, cafes and the Ashdod Performing Arts Center.

Four-room apartments in Maar are going for 1.8-1.9 million shekels and five rooms for 2.2-3 million shekels putting them out of the range for many looking to upgrade to a bigger house. In addition, the management fees in the new buildings are high. As a result, most buyers in this neighborhood are selling a detached home in Ashdod or somewhere nearby and want to move to a luxury apartment.

Although the Tet Zayin quarter, in the southeast of the city, is far from the sea, some of the penthouse apartments in the highest buildings do have sea views. Construction in the neighborhood began in 2007 and attracted many first-time homebuyers. While the neighborhood has become well-established, construction is still going on and well-to-do young people find the apartments affordable.

The price of four-room homes in Tet Zayin ranges from 1.4 million to 1.6 million shekels and five rooms sell for 1.6-1.8 million shekels. Apartments with special features, penthouse apartments and garden apartments in the neighborhood fetch 2.2-2.3 million shekels.

The Yod Zayin quarter, which is very near Tet Zayin, is the city’s southernmost neighborhood. It is considered high-end, one reason being the combination of high-density construction and detached homes. Four-room apartments are going for 1.5-1.8 million shekels and five rooms for 1.7-2.2 million shekels. Apartments with special features can cost 3 million shekels and more.

In Yod Zayin, a detached two-story home including a basement of 270 square meters on a lot of 350 square meters, is going for as little as 3.5 million shekels and for as much as 6 million. More luxury properties of 300-350 square meters on larger lots of 500 square meters and up, and a swimming pool, can cost up to 8 million shekels.

Although its 30-year-old homes don’t meet modern standards, Yod Aleph is currently in great demand. Many residents like living in the neighborhood and remain loyal to it, so when apartments go up for sale there, the seller usually buys another apartment in the neighborhood. The problem is that the great majority of apartments in old buildings lack a reinforced concrete room to serves as a home bomb shelter, which in Ashdod is a serious drawback.

Housing prices in Yod Aleph are considered reasonable relative to today’s market: They start at 1.2-1.3 million shekels for four-room apartments without an in-house shelter and go up to 1.6 million for a four-room apartment with one. A five-room apartment without a shelter goes for 1.3-1.5 million shekels; with a shelter, the price climbs to about 1.8-1.9 million shekels.

The most expensive home sale in Ashdod last year was for an eight-room, 344-square-meter private home on Habesor Street on an 862-square-meter lot. But already in January of this year, the 2014 record was broken, with a six-room, 505-square -meter apartment on Herzl Boulevard on the 20th floor, with three parking spaces selling for 8.1 million shekels.

But there’s still home in Ashdod, even in this era of soaring housing prices: The least expensive home in sold in the city last year was a 47-square-meter, two-room apartment on the fourth floor on Mishmar Hayarden Street, which was sold for 187,000 shekels.