The annual fundraiser by the Los Angeles branch of Friends of the Israel Defense Forces, led by billionaire businessman Haim Saban, raised $33 million this year. Among the donors were well-known Americans such as Oracle founder Larry Ellison, the richest Jew in the world; Michael Dell, founder of Dell Computers; and Sheldon Adelson, gambling magnate and owner of the freebie newspaper Israel Hayom, and his wife Miriam.
The donations were a show of support for Israel, but if you ask Israeli property developers they would say that Saban, Ellison, Dell and their deep-pocketed peers should buy a home here. And they are ready to help them do so with an array of super-luxury apartments, with price tags starting at $10 million.
The record? A $35 million penthouse
Does that sound over the top? There are a lot of properties in Israel changing hands at far higher prices than that. The biggest residential property deal in Israeli history, completed just this year, was Canadian businessman Sylvan Adams’ purchase of a penthouse at 10 Herbert Samuel Street on the Tel Aviv waterfront for 120 million shekels, or nearly $35 million. His new home is a huge duplex on the top two floors of a 21-story tower, with 1,300 square meters in floor space (including 300 square meters of balconies). The price worked out to 109,000 shekels, or $28,700, per square meter. Adams broke a record set in 2013, when an anonymous buyer acquired an apartment spanning the entire 17th floor of the David Promenade Residences project on the beachfront Hayarkon Street in Tel Aviv for 81.5 million shekels. That apartment spreads out over 612 square meters.
That’s what we mean by mega-luxury housing and those aren’t the only two examples of what is available. As demand has picked up, builders have been happy to accommodate The result is a spate of luxury towers in planning or under construction, in which a single apartment can cost as much as a whole new neighborhood in a moshav.
There are several dozen properties in Israel priced at 50 million shekels and up, estimates Noam Dzeldov, of Naot Shiran Luxury Home Specialty Marketers. Israel still isn’t in the same league as Monaco, London or New York, he hastens to add: The most expensive properties in Israel still cost a lot less than in those world capitals of luxury.
If those prices seem over the top, bear in mind that in the mega-luxury market that buys you nothing more than floors, ceilings and a breathtaking view. The price does not include interior design of any type. If that interior costs, say, 15,000 to 20,000 shekels a square meter in an ordinary apartment, when one gets to the super-luxurious category, the cost climbs to six digits — yes, per square meter.
The market for such housing is primarily wealthy Jews around the world. And indeed, the Forbes ranking of the richest Jews in the world would seem to indicate that that market holds considerable potential. Few of the big-money Jews have residences in the Jewish state.
Hawaii, not Tel Aviv
Ellison, who tops the list, is known to own homes all over the world. This year the magazine Business Insider wrote that he owns dozens of assets in Malibu alone. He has also bought a Hawaiian island for half a billion dollars and owns a mansion in Woodside, California, styled like a Japanese palace that cost $70 million. Yet he owns no property in Israel.
No. 2 on the Forbes list is former New York mayor Michael Bloomberg. He, too, owns no home in the Holy Land. On a recent visit to Israel, Bloomberg stayed at a hotel.
In third place is Adelson, who owns several properties in Israel, including a large penthouse in the upscale Tel Aviv neighborhood of Bavli, and two apartments on the 32nd and 33rd floors of the TreeTops luxury housing project, also in Tel Aviv, which he reportedly bought in 2006 for his daughter.
As we go down the list of wealthy Jews, though, we find that few are known to own property in Israel. Not Google co-founder Larry Page or Sergey Brin; not financiers Carl Icahn or George Soros. The eighth on the Forbes list, the Russian energy and banking baron Mikhail Fridman, visits Israel several times a year and did buy a home in Tel Aviv. So did Russian billionaire Len Blavatnik, who owns the Israeli companies Clal Industries and RGE, and comes right after Fridman on the list. Finally, there are reports that the Brazilian banking magnate Joseph Safra, the 10th on the list, owns a home in Israel, or at least that one of his relatives does. It’s hard to know. In the category of super-luxury homes, purchases are often made discreetly through trusts and companies registered abroad.
The G Towers in Tel Aviv
When we descend lower than the top 10, we find even fewer Jews who own homes in Israel. Mark Zuckerberg of Facebook fame has no home here. Nor doe Steve Ballmer, former CEO of Microsoft, or Michael Dell, who owns a giant estate in Hawaii but nothing here. Roman Abramovich, who’s 22nd on the Forbes list, had considered buying apartments in the seaside Tel Aviv neighborhood of Neve Tzedek and even offered to buy Chelouche House from the Israeli billionaire Marius Nacht but apparently nothing came of the initiatives.
The art of selling to the super-rich
Selling super-luxury housing is an art. Dzeldov of Naot Shiran explains that the target market is any billionaire, pure and simple. Getting their attention involves networking with lawyers, representatives of investment funds and Jewish community leaders. Also, everything must be done discreetly. In this crowd, loose lips flap exactly once.
“They also don’t like to have their time wasted. You have to be focused and identify what they subconsciously want,” advises Dzeldov. “For instance say you have a potential client who likes the sea. You could offer a house in Beit Yanay [right on the Mediterranean Sea shore], for weekends, even if he doesn’t really need a house there.”
“The interesting part about this market is that we’re selling properties that people hadn’t thought to sell, to people who aren’t looking to buy,” says Dzeldov. Sometimes the houses are just sitting there unused and their owners have no idea how much they can get for them, he adds.
Different sales process
The sale process itself is also different, says Yigal Zemah, CEO of the property company Berggruen Residential, which is building the Meier Project on Rothschild Boulevard in Tel Aviv. “The customers aren’t calling because of an ad in the paper. These homes are sold on a whim, and ultimately, the property is simply a symbol of success. These are apartments that you have to desire, and the deals originate with somebody close to the buyer, who knows the buyer and says to him, ‘I have something you’ll like.’ The next stage is negotiating with the buyer’s representatives — lawyers, brokers and others but the final price is closed with the buyer himself.”
What about haggling? You bet. That turns out to be part of the negotiating process, even with the super-wealthy, even though money in principle is no problem. “The customer will haggle over the price not because of need but because he wants to feel he got a good deal,” says Zemah. Of course it’s easier to close the deal with somebody actually living in Israel. If they don’t, convincing them to part with 100 million shekels can be tricky.
Zemah also dismisses the legend that the super-rich buy homes they’ve never seen. They wouldn’t buy a brick before seeing it with their own eyes, he insists.
There are several reasons why Jews abroad might want to own property in Israel, depending on their country of origin.
The conventional wisdom is that Jews living in countries with unstable regimes, like Russia, like to have a shelter for times of trouble, which an Israeli home and passport can give them.
Then there are those who live in perfectly stable regimes but seek relief from onerous taxes (France comes to mind). In any case, whether the buyer lives in Brazil, South Africa or anywhere else, risk diversification is recommended and the Israeli economy is considered stable.
There can be other reasons, too. Dzeldov notes that Tel Aviv is a magnet whose entertainment, dining and other attractions have won global recognition, including by the travel guide Lonely Planet. The city attracts tourists as well as business visitors.
Zemah of Berggruen Residential says the target audience for super-luxury housing in Israel are the kind of people who wouldn’t think twice about buying themselves a pad in London’s Mayfair or on Manhattan’s Fifth Avenue. Why would these people want a home in Tel Aviv? Primarily because they have a warm spot in their hearts for Israel, says Zemah.
Some Jews, mainly from North America, buy a home in Israel as part of their Zionist or philanthropic activity. A source involved in the Israeli philanthropic scene says many well-to-do Jews come to Israel on a charity mission, then return to see how the mission is progressing. “They start to view their donation as an investment and become emotionally invested in it, too, contributing more and more,” says the source. “Once they’ve stayed at a hotel a few times, they start to feel at home in Israel and that it’s time to buy a home here.”
People like that are more likely to buy a home that’s comfortable, as opposed to ostentatious, he says. “Take the house owned by hedge fund entrepreneur Michael Steinhardt, who visits Israel with his wife Judy several times a year, and donates millions of dollars to various projects, including Birthright. Six years ago the couple bought a house in Jerusalem that had belonged to the Jewish philosopher Martin Buber. The British real estate magnate Leo Noe, who funds work training programs for ultra-Orthodox Jews, owns an apartment in the Mamila project in Jerusalem, by the Old City.”
For sale: A home with a record high price
You could help set a new record price for an Israeli home if you have the 200 million shekels ($52.1 million) developer Emed Real Esate Development & Investment will be asking for a spacious Tel Aviv penthouse.
Price aside, Emed is ironically the real estate arm to Dan, the operator of buses that the future owners of its 200 million-shekel penthouse will probably never deign to ride (in fact, the site of the luxury building was originally a bus garage).
The penthouse will have 850 square meters of floor space of the 29th floor of 17 Arlosoroff Street in Tel Aviv near Dizengoff Street— just a short walk to the beach and an even shorter pone to the shops and cafes that line Dizengoff.
If you are willing to settle for a place two floors down and a tight 376 square meters (albeit with a 56-square-meter balcony), Emed will be selling a 54-million-shekel apartment. All told, when 17 Arlosoroff is completed in the middle of 2018, it will have 112 apartments in the tower and 12 more in a two-story building adjacent to it.
The 850-million-shekel project has a marble-lined lobby, 50-meter pool, a itness center and a six-dunam park surrounding it. The architect is Moshe Tzur. Interior design is being done by Pitsou Kedem. No contractor has been selected.
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