Tel Aviv’s crowded beaches and cafes since the easing of the nationwide coronavirus lockdown might give the impression that the city that never sleeps is back. But appearances are deceiving: Tel Aviv is seeing an exodus of younger residents, and the pandemic has only exacerbated the trend.
Mayor Ron Huldai is concerned that Tel Aviv is at risk of losing its special character, which hinges on the city’s young people. A Tel Aviv without bars, restaurants, cultural and artistic events, parties, nightlife and concerts might as well close up shop.
“The energy of the city is what drives its appeal,” says Menachem Leiba, the municipality’s director general. “Tel Aviv makes families want to keep living here without parking and in a cramped 70-square-meter apartment because life outside of their small apartment is sufficiently interesting and exciting.”
The pandemic caught Tel Aviv at a precarious moment, after living and housing costs had soared over the past decade to the point that the city’s population of 18-35-year-olds had already shrunk by 7%. Over the same period, the city saw a nearly 20% rise in the over-65s. With 47% of those furloughed from work and 44.7% of those laid off in the 18-35 group due to the coronavirus, the cost of Tel Aviv living has become beyond the reach of even more young people.
The distress may remain for years to come. Both the government’s employment service and the Israel Democracy Institute, a private think tank, estimate that Israeli unemployment could triple from pre-pandemic level, and that the majority of jobless will be under 40.
The municipality seems less concerned about the crashing of a few startups or the drop in demand for office space. Israel’s business hub will survive the current crisis, city officials believe. But time is running out for those who have lost their jobs: Unemployment benefits end after 100 days, at the most. If they don’t find jobs, they face economic distress.
David Arbel, 31, is one such case. A music producer, he became unemployed in April and just before that, his wife, a designer at a high-tech firm, was furloughed. Now they are weighing whether they can afford to stay in the city.
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“I’ve been here six years, and if this crisis hadn’t come and put us in a corner, I wouldn’t have thought of leaving before we had a child,” he says. “This is the place to become established and develop my career, it’s the only city in the country where you can live without being buried in an endless loop of home-traffic-office-traffic-home, where you can just really live,” he said extolling Tel Aviv as where “you can be whatever you want, or several things at once.”
Recaculating the cost
“I don’t want to move. The cost of living has always been high, but the calculation was that if the rent is high, I’m also gaining more – not just in terms of salary. I’m spending less time in traffic and have more time to enjoy what the city has to offer,” explained Arbel.
But now the situation has Arbel thinking about leaving town. “I have musician friends who left the first week [of the lockdown], without thinking twice. When I moved to Tel Aviv with an overdraft of 30,000 shekels (around $8,700), I told myself that I could work as a waiter and make 10,000 shekels a month and I’d manage – and I really was able to get out of overdraft. Today, the restaurants are gone too, and even if I give up on earning a living from doing something I know and that I’m good at, I don’t have any way to recover. I managed projects at big companies and I ask myself – How will I earn money now? Working for Wolt?,” he said, referring to a popular restaurant delivery service.
Arbel expresses frustration at the choice he has to make. He did his mandatory army plus two extra years, got his degree, worked for a big company and married. “We did it all, but somehow now we may find ourselves out of the game,” he said. “In our generation, to go back to your parents’ home at age 30 is a sign of failure, because it means you’ve lost your independence. ... But I’m also thinking about going back to my parents in Ramat Hasharon, and I’m not the only one.”
Arbel is definitely not alone. The coronavirus caught Dean Krispel, 30, just as things were really taking off for him. He has lived in Tel Aviv for a decade, during which he worked as a lifeguard, waiter and bartender and then, after some studies, found positions in editing, casting and content writing. A year ago, he opened A+, a design and advertising studio. Just before the crisis exploded, he had signed some big contracts with new clients and had hired four more designers to handle the workload.
“In one day, everything stopped,” he says. “Project after project was frozen, with no resumption date. In the beginning, we sent the people home and spent the minimum needed to cover expenses. My partner was also furloughed and we’ve had to face some tough questions: Can we really stay here? What happens if there’s a second wave? Where did all our money go in normal times? We managed to get through this round on our feet, and we cut back on things. We did all our cooking at home, we didn’t order out even once,” Krispel says. “But if we don’t want to burn through our savings, we have to plan ahead.”
“To be 35 with a kid in a moldy apartment above a pizzeria, with no elevator, and for my wife to have to chain the stroller to a baluster in the stairwell and climb up three flights, It doesn’t make sense. Our generation is getting further away from being able to save enough for a downpayment on an apartment that costs 1.5 million or 2 million shekels. When I see the new high-rises going up with apartments starting at 5 million shekels, I realize I have no future in this city,” he said.
Gali, 29, is already on her way back in her parents’ home in the suburbs, with her husband and daughter.
“I have to stop myself from crying,” she confesses. “Yesterday we found someone to move into our apartment after we’d been showing it for three weeks and no one was ready to sign for it. In any other situation, people would be lining up for our place, but now the only ones moving into a three-room apartment in the old north of the city for 9,000 shekels a month are people who were used to paying 12,000-14,000 shekels and are trying to trim expenses,” she says.“You constantly see moving trucks around the neighborhood. Everybody’s leaving. Only somebody who’s really well-off can keep paying these prices.”
Gali, who asked not to be identified by her full name, says the general sense of a return to normalcy masks the deeper crisis that many young people are in.
“The last thing we wanted to do was leave the city, but the apartment here is becoming a privilege that’s impossible to afford. We were willing to pay the price because of the access to and availability of bars and restaurants, but all that evaporated during the crisis,” she says. “There’s this illusion that the crisis is over but self-employed people like me will be dealing with this thing for a long time to come.”
The municipality is taking measures to address the situation. It recently published a strategic plan for reviving the restaurant and club scenes, and the cafes, bars, theaters and cultural institutions as a first step toward reviving the local economy.
“The lively street life is Tel Aviv’s main asset, and if the independent cafes and shops close, Tel Aviv will lose some of its power of attraction. You can find branches of Castro in Petah Tikva. The fact that part of the workforce will continue to operate from home could also work to the city’s detriment. Many offices will remain empty and fewer people will be roaming around outside – buying their morning coffee or ordering the business lunch,” said Eitan Zinger, CEO of the real estate website Madlan.
This change may well hit the local real estate market and even cause prices to fall.
“If there’s no unique street life and no need to commute to work anymore, families may not want to continue to compromise on the physical conditions of their housing just to stay in Tel Aviv. The upheaval of the coronavirus may make the New York of the Middle East a quieter place, and also quiet the frenzy to live there,” Zinger says.
In the long term, the situation poses a conflict for the city: On the one hand, municipal coffers have been significantly padded by rising real estate values. On the other hand, the city is being pressed to promote urban planning that will also provide a place for its lower-income population and for those who can’t afford a 4-million-shekel apartment.
“Owning a new apartment in Tel Aviv is not something that a young middle-class couple can afford,” says Leiba, the municipality’s director general. The city’s high cost of living can be lowered somewhat by the city’s discounting municipal taxes (arnona), educational, cultural and community services. For their part, residents can cut costs by forgoing a car. “Somebody who spends hours in traffic and pays high arnona in surrounding cities finds themselves with the same expenses at the end of the month,” Leiba says.
Because about half of Tel Aviv’s residents are renters, the city enjoys a population mix that contributes to its vibrancy. Someone in an 8-million-shekel penthouse on Ibn Gabirol Street may live only a few meters from a couple in a 60-year-old building without an elevator who pay 6,000 shekels a month.
“Both share the country’s largest pantry in the form of restaurants, supermarkets and services right outside their door; they have the largest yard in the country in the form of Chen Boulevard, Rabin Square and Habimah Square; they ride on the bike paths and of course, they have the beach with the most beautiful boardwalk in the country,” Leiba says.
High housing costs threaten this mix, to a large extent due to high land prices. At the luxury Summayl Complex in the city center, for instance, the land cost only accounted for 2.5 million shekels of the total cost of each per apartment.
Tel Aviv Deputy Mayor Zipi Brand-Frank says the city must do more to safeguard its mix of socioeconomic backgrounds and age groups. She says the municipality should be creating long-term rental housing that suits families, especially. “In projects involving city-owned land we can mandate a higher percentage of affordable housing. Our job as a municipality is to ensure that young people stay in the city,” she says.“Many of the apartments that are owner occupied are a family an inheritance or purchased by high-tech types who can afford them. I don’t want a city that’s just for the rich,” she says.
Brand-Frank says variety is also key to Tel Aviv’s attraction as a tourist destination. “The human and cultural variety of the city are what attracts tourists. It’s important on the national level, too – a city that is a liberal and multicultural beacon. ... We don’t have any extraordinary monuments here, or a Colosseum to boast of, but this is a pulsing city with a vibrant population that mustn’t be pushed out, especially when the crisis has caused young families to start asking themselves why they’re paying so much money if ultimately they can work from home and order everything at the press of a button.”
City officials cite several undertakings that could provide a solution in the next few years. One is to crack down on Airbnb apartments that are used exclusively for short-term rentals. “The commercialization of Airbnb properties is a destructive phenomenon that has stolen about 17,000 apartments from the city’s supply and affects entire neighborhoods,” says Leiba. “We’ll see that there is regulation and mechanisms that permanently restore these apartments to the city and that will bring down rents.”