The dream of living atop a high rise, with its views and status, carries a steep price, with penthouses in Tel Aviv selling for tens of millions of shekels. But a lot of that price is due to location. People who truly want the advantages of penthouse living, but don’t have the wallet for it, can find their pick of affordable homes further from the center of the country.
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In Nahariya a seventh-floor penthouse on Herzl Street went for 2.1 million shekels ($736,470), while in the southern part of Hadera a similar apartment on the 13th floor was sold at 2.5 million shekels. Some closer to Tel Aviv can be found for less than 2 million shekels.
Penthouses are relatively new to Israel’s urban landscape. Very few were built before the 1980s. Highrises back then typically appeared to be upright rectangular boxes with the top floor uniformly stacked above the floor below. In the 1990s penthouses were mostly found in Tel Aviv and adjacent suburbs, spreading to Modi’in, Netanya and Petah Tikva at the beginning of the last decade. In recent years, though, penthouses have sprung up nearly everywhere highrises are built.
It’s not a mystery why penthouses took so long to arrive. The widespread construction of housing blocks from the state’s establishment until the late 1970s, along with the government’s complete control over planning and building, encouraged uniformity, functionality and simplicity. With the privatization of the large construction companies in the 1990s, developers became free to cater to the whims of home buyers who craved something distinctive. Nowadays there is a range of specialt formats like lofts, garden apartments and above all penthouses.
People are drawn to living high above the crowd for several reasons: a better view, more open air, less noise from outside and from the neighbors, and the possibility of using part of the roof for a spacious balcony. There is, however, one more explanation.
In a study done eight years ago, economists Danny Ben-Shahar and Eyal Solganik concluded that living close to the top of a building is primarily a matter of status. “In many places around the world, management is located on the top floor of the building and employees ‘go up to see management,’” notes Ben-Shahar.
“When you buy a penthouse,” says Solganik, “you’re at the top of the building and have a status that can’t be higher. You are the highest and look down on everyone, and you have to pay for this.”
Such considerations aren’t foreign to Israeli culture, and this has led to the rapid spread of penthouses to far-reaching peripheral areas, too. Anyone craving the honor reserved for penthouse owners but not having the means to buy one in the center of Tel Aviv, nor in the center of Kfar Sava, should know that penthouses are also available for the price of a three-room apartment in Tel Aviv or a four-room apartment in Herzliya.
The market for penthouse apartments is limited, according to Ronny Cohen, CEO of the Eldar real estate group.
“We’re not talking about a young couple with empty pockets but a population that has at least 2 million shekels,” he says. “These obviously just include people, mostly aged 40 to 55, who are trading up. This is a relatively well-off segment with property and capital accumulated over the course of their lifetime. Unlike the case with other apartments, this is a population that doesn’t buy under pressure.”
Penthouse buyers can be divided into two main groups, says Cohen: One is from the wealthy local population, while the other is made up of buyers willing to distance themselves a bit from the center in order to afford a penthouse. He says anyone willing to relocate to Tel Aviv’s outer ring of suburbs can find a penthouse for 2.4 million shekels, the same price as an average five-room apartment in Kiryat Ono.
“In recent years we have seen more potential home buyers who are willing to make the move to cities further away from where they lived before, in order to raise their quality of life,” says Cohen. “These are buyers who want to move ahead in life and purchase a distinctive property, and have no problem distancing themselves from where they previously lived to achieve this, as long as it’s a place with quick and easy access to the Tel Aviv area.”
Ehud Hameiri, head of the Ehud Hameiri & Company appraising group, says penthouses hold a tremendous appeal for those who build them, too.
“This is a product for which developers charge a high premium. The penthouse is one of the most profitable units of the building,” says Hameiri. “When it comes to very unique apartments, developers often prefer leaving the marketing to the end of the project to maximize the profit on its sale. After all, building a regular apartment costs the builder the same as the penthouse, but he sells the penthouse at a higher price tag.”
Now in Sderot, Dimona
In recent years penthouse apartments can be found in places like Afula, Sderot and Dimona, which were previously unaware of the concept. These are cities whose residents enjoy living at street level, especially in detached homes with a big yard.
“The proliferation of penthouses in the periphery is a result of highrise construction that’s developed in recent years in cities like Be’er Sheva, Ashkelon, Ashdod, Pardes Hannah, Hadera and elsewhere,” says Amos Dabush, marketing manager at Y.H. Dimri Building and Development. “In projects we’re building in Be’er Sheva, for instance, we’ve discovered that there is demand mainly from people trading up for the highest apartments providing a view of the urban landscape. These are mostly families moving from detached homes in nearby communities who have grown tired of taking care of the large garden or whose children have flown the nest.”
The price of a penthouse compared to an ordinary apartment varies widely from place to place and from project to project, ranging from 50% to 150% more. As a rule, the more luxurious the project, the higher it rises and the closer it is to the center of the country, the greater the difference between the cost of a penthouse and a regular apartment in the same project.
Close to the sea
Going back to the two penthouses mentioned earlier, in Nahariya and Hadera, the high prices they fetched were due to their proximity to the sea. Penthouses are available from builders at 2 million shekels or less, even in areas close to the center like western Rehovot, Ramle’s Matzliah neighborhood, Tzur Yitzhak, Kfar Yona, Pardes Hannah-Karkur and others. Several second-hand penthouses fetched up to 2 million shekels in Netanya’s Kiryat Hasharon neighborhood.
That’s not an inconsiderable sum, but anyone with the required capital who wants the most for his money and from the building he lives in - without going bankrupt - can have a look. The only condition is dispensing with the idea that Tel Aviv is the only place to live.