Tired of Tel Aviv, Affluent Israelis Set Their Sights on a New Suburban Dream

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Drone footage of a neighborhood in Hof Hacarmel, November 2020.
Drone footage of a neighborhood in Hof Hacarmel, November 2020.Credit: Ofer Vaknin
Gili Melnitcki
Gili Melnitcki
Gili Melnitcki
Gili Melnitcki

"The situation in our moshav, Megadim, has reached the point of despair. There is no secretary or committee,” A. Azoulay wrote in the Davar newspaper in April 1964. “The Jewish Agency and the other settlement institutions keep promising to improve the standard of living in our moshav, but unfortunately all is forgotten. The small agricultural plots have been worked for years already and have been depleted, and the Israel Land Authority won’t let us build factories. Does the Jewish Agency intend to bury the moshavim? This is how you abandon 700 souls in Israel.”

Nearly six decades later, the starting price for a single-family home with a pool in Moshav Megadim is 6 million shekels ($1.842 million). In local terms that’s practically a “bargain” compared to the mega-luxury deals of the past two years in this and other Hof Hacarmel communities. And while the area farmers still fight the central government to try to reduce the red tape, taxes and regulations they have to deal with, their despair is tempered by living in a villa surrounded by greenery and overlooking the sea.

Guy Biton, owner of Gev Real Estate Investments and a fourth-generation resident of Megadim, is very cognizant of the real estate turnaround here and is grateful that his grandparents didn’t leave the moshav, which was founded in 1949. Like them, Biton also evinces a pioneering spirit, at least when it comes to identifying and marketing properties for sale in the swelling real estate bubble of Hof Hacarmel.

'There’s no shortage of potential buyers. It makes the prices pretty extreme, almost insane'

“I call it being an active real estate agent, a method that developed because of the very sparse supply of available properties in Hof Hacarmel given the tremendous demand from affluent buyers who’ve grown tired of Tel Aviv and the surrounding area, and are seeking a different kind of life experience,” Biton says. “Very wealthy couples come to me, with a budget of 10 million to 15 million shekels and a dream they want me to make come true for them. You have to understand, it’s not that there’s an available property sitting there in Moshav Habonim, right on the sea, just waiting for a buyer. It’s that I have a client who says: ‘I want to wake up with a view of the sea and walk barefoot to the beach and play on a tennis court in the backyard. Do whatever needs to be done. Money is no object.”

Biton describes himself as “the guy who has to convince people to recognize the opportunity – and sell.” He says, “I have a waiting list of potential buyers at every price point starting at 4 million shekels. In my daily routine, I go knocking on doors in a moshav, systematically going street by street, and if I find any common interest between buyer and potential seller, I get to work.”

A view of Habonim Beach in northern Israel.Credit: Tomer Appelbaum

“Let’s say the house and lot are appraised at 4 million shekels. I offer 4.5 million. The owners say no. A week later I offer 5 million, two weeks later, 5.5 million. Still no? I go back a month later and offer 6.5 million, 7 million, 8 million, until they go for it. At 10 million shekels and up, there’s a lot of emotional work involved; it can take up to a year of persuasion until they finally agree and the deal is closed. Then you get a situation where the whole street goes crazy and everyone’s eyes are opened. When nearby properties are selling for 3.5 million, a property can suddenly double its value. This is why prices keep going up and up.

“There’s no shortage of potential buyers. I have no problem knocking on doors and presenting potential sellers with tempting offers, because I know there’s a buyer to back them up. It makes the prices pretty extreme, almost insane,” he laughs. “Yes, my style of working has completely changed,” Biton admits.

Good public schools, a cohesive community, the ability to cruise around (maskless) on bicycle and send the kids to play in the park without worrying are the things making Hof Hacarmel very desirable to young married couples, even if they didn’t grow up in the area. The potential and the quality of life for the 34,000 families who live in this regional council, spread over more than 72 square miles – most of it agricultural land – have also caught the interest of those in the tourism and restaurant industries.

In the past two years, the artists’ compound in Ein Carmel has seen the opening of Café Zahara, a branch of the popular culinary institution in the Jaffa Flea Market. Selina, which operates boutique hostels in more than a dozen countries that target so-called digital nomads, recently opened one of its resort-style work-and-leisure compounds in the woods of Beit Oren. Parking spots at the Ein Hod Artists Village are full on weekends, and there’s a two-month wait to reserve a table at the Amphorae Winery. This trend wasn’t slowed in the least by a recent episode that caused a stir in the area: Hof Hacarmel Regional Council head Asif Izak allegedly recruited singer and businessman Mosh Ben-Ari to turn Atlit Beach into “Mosh’s Beach” without a proper bidding process. The move was halted at the last minute.

After you, Kfar Shmaryahu

In the last two years, with the green slopes of Mount Carmel and the prettiest stretch of coast in Israel beckoning people away from the ever-growing density in the center of the country, the real estate scene in the Hof Hacarmel communities has become quite lively. Spacious houses and open spaces are causing prices to approach those of upscale properties in the most affluent locales in the center, and luxury cars and SUVs are becoming a more common sight than farm tractors and dust-covered pickups trucks. While prices easily cross the 4-million-shekel mark, even for properties in the new expanded neighborhoods of moshavim, they are far from top market prices for luxury properties in places like Rishpon, Kfar Shmaryahu, Bnei Tzion, Mikhmoret and Arsuf. But the trend cannot be ignored. The high demand for purchases and rentals in the area indicate that the luxury housing market is expanding, with new strongholds springing up beyond central Israel and leaving Caesarea in the dust.

“The coronavirus accelerated the demand for Hof Hacarmel properties like crazy. In July and August, the phone was ringing nonstop,” says Alon Maayan, real estate and development specialist from Kerem Maharal. “The flight from the city to the countryside just intensified everything we were seeing before that: People from the [Tel Aviv area] who are looking to leave the city, they see Emek Hefer is too expensive, then they come to Hof Hacarmel and they fall in love. There are a lot of people from Savyon, Tel Aviv and Herzliya who don’t want to live in a big fancy high-rise. They’d rather move here and they have the money to do it. There are also clients who can afford a vacation home and they play with that idea.

A private home in Hof Hacarmel, November 2020.Credit: Ofer Vaknin

“The problem is that there’s not enough supply,” he adds. “If I hadn’t bought during a narrow window of opportunity in 1999, today I’d be standing in line waiting. I have friends who have been renting for 12 years, just waiting for the day a property they can afford becomes available, and as it looks now – that chance is growing more distant. The entry threshold is becoming very high. Even the [offshore natural] gas rig, which for a moment seemed like it might threaten the area’s development, isn’t slowing demand at all.”

'The flight from the city to the countryside just intensified everything we were seeing before that. People would rather move here and they have the money to do it'

The short supply is also fueling a steep rise in rental prices. Dafna, 30, grew up in one of the moshavim in the area and now lives with her husband and 1-year-old son in an apartment near her parents’ home. She asked that her last name not be used here. For six months she’s been searching for a small house to rent in one of the local communities, without success. “The prices are abnormal,” she says. “Three years ago, you’d pay 3,500 shekels a month for a 40-50 square meter place, but now the same place would be 4,500 shekels or more. We don’t want to move too far from our parents or to give up the quality of life we grew up with – with a yard, grass, a garden, community and the beach nearby – but we realize we’ll have to leave these communities if nothing changes. Things have been stagnant around here for a decade at best, and for decades in some cases. No new housing has been built in these communities for years. There are about 30 families from our community who are waiting for something to change. Right now pretty much the only time a property becomes available is if someone dies or a couple divorces. A few years ago, a woman in my parents’ community died and my mother called me and said maybe now there was a chance, that we would wait until after the shiva and then call to inquire. Two weeks later she called the woman’s daughter, who told her that there were new tenants already. Here they rent the houses before the body is cold.”

Not enough construction

The only way to rein in rising prices and provide a solution for the locals and for young families coming from other parts of the country who want to live in Hof Hacarmel is to build. Most of the land in the area that has been rezoned for residential building and put up for sale in recent years has come from three sources: The Caesarea Development Corporation has sold lots in the community’s new neighborhoods. Hundreds of new apartments have been built in Atlit, the only community in the regional council where high-rise buildings are going up. In addition, a small number of lots have been sold in the moshavim. Lots were recently put up for sale in a new neighborhood in Moshav Habonim, built on what had been part of the communal agricultural farmland. The prices of new homes there, including both the lot and the house, are expected to reach 3.2 million to 3.5 million shekels by the most conservative estimates. Figures from the regional planning and building council show that between 2015 and 2020, only 2,000 permits were issued for new homes in the area.

'To be frank, people just grab their slice of heaven and don’t want to share it with new people that come along'

“In Kerem Maharal there are about nine more lots that could be developed and sold. Dozens of families would pounce on them, but there were objections to this process and the moshav’s committee decided to stop it, even though nothing new has been sold there for years,” Maayan says. “There are several reasons for the lack of development in area communities. On the one hand, you have kibbutzim where the legal situation and dealings with the Israel Land Authority create obstacles to planning and development, and then you also have powerful objections from residents of these communities about expanding the development areas,” referring to the new neighborhoods built on formerly communal land.

“To be frank, people just grab their slice of heaven and don’t want to share it with new people that come along,” Maayan says. “It’s a paradox. When you try to get accepted to one of the moshavim, you really believe in being open and welcoming, but after 10 years, you don’t want anyone putting a strain on the infrastructure, taking up parking spaces and crowding you.”

In 2018, Asif Izak was elected regional council head, in part on a platform of “giving a horizon for young people to return home.” Since taking over the job, he has been working to promote regional employment and trade hubs, such as a plan for an area north of the Mul Zichron compound and another near Hof Hamivtzar, north of Atlit.

Izak, who also established a financial company for the council, wants to develop the coastal area as a local tourism magnet with regulated beaches and restaurants. Meanwhile, he is stepping up law enforcement along the coastal strip, which draws thousands of visitors every weekend who leave behind mountains of trash that the council has to collect. This move is not very popular with some who rent out cheap campsites or organize bachelors’ parties there, as it hurts their livelihood. Izak dreams of a new employment compound for knowledge-rich industries in the Atlit area, and also mentions a 70-unit resort being developed at Hof Dor by the Nakash brothers, the owners of Arkia Israel Airlines and the Orchid hotel chain.

Izak is also trying – so far without much success – to incentivize building and development in the Hof Hacarmel moshavim. For now Atlit is the only community willing to join the program and is expected to double its population to 25,000 by 2030.

“The moshavim and kibbutzim have stabilized in absorbing new people and building for new families in recent years, after the wave of expansions concluded about 20 years ago,” Izak acknowledges. “I think they haven’t exhausted their growth potential and much of the ability to promote new construction now rests in the hands of the communities’ local committees – whether it’s in fully exhausting the capacity for expansion or in pushing to build the third residential unit on a specific lot, as the law allows.

A private home in Hof Hacarmel, November 2020.Credit: Ofer Vaknin

“We held a conference to explain this move and its importance to the local committees and we’re trying to lower the barriers and reduce the objections, but it’s stuck,” he says. “I think it’s mainly because of a fear of ‘Big Brother’ – the Israel Land Authority. In order to advance construction of a third unit you need an up-to-date ‘building and city’ plan, you have to go through the parcelization and taxation process, and people are afraid of of the process of legalizing illegal and irregular construction, which can’t be hidden during such a process. There’s also a fear of too much growth, which might change the character of the place. It’s obvious what the attraction is in this area – good schools, a good quality of life, the feeling of Tuscany in Israel – but people who already live here might feel that things are ‘being taken from them.’”

The regional council says it is in advanced discussions with the local committees of the moshavim of Dor, Tzrufa, Beit Hananya, Ein Ayala and Megadim to promote the construction of a third housing unit per lot, which would increase supply by 25 percent.

But the members of the associations and committees may not share Izak’s vision. A review of the decisions of the Hof Hacarmel zoning council shows that relatively few applications have come from the moshavim, compared to Caesarea. Kibbutz Ma’agan Michael has just approved a plan that would permit the construction of buildings up to a height of seven stories, but Kibbutz Nahsholim has been unable to resolve with the state issues of land ownership, and that is holding up potential construction. “They shouldn’t interfere. We can manage things ourselves,” says Yotam, a kibbutznik we met in the area.

Amid all the competing voices and real estate interests, there do seem to be residents who believe it’s time for a change: “Most of the communities in the council have admissions committees that you also have to pass, in addition to the large amount of capital you need to bring,” Dafna complains. “I think the committees of the moshavim and kibbutzim are sleepwalking and don’t see that the Israeli public is waking up and that one day their world could be turned upside down. As more years go by without any real decisions or progress, the possibility of meeting all the needs of the next generation will hit zero. We’re already seeing the disputes over the Asi Stream and with the Mizrahi Democratic Rainbow Coalition. Someone has to shake up the older generation and give the young people of Hof Hacarmel a chance.”

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