The Promise of Modi'in

There are things about this city of 65,000 residents that people don't know, and should, before considering whether to buy a flat there.

A combination of developing the public transportation infrastructure while cultivating industry and businesses, including the Modi'in Azrieli shopping and business center, should turn Modi'in into one of the classier cities in the land. Right?

Well, they've been saying that for 12 years now, they being the Modi'in municipality, the builders, the contractors. But finally, something seems to be happening in this central Israel city that sprouted out of nowhere between Tel Aviv and Jerusalem. Perhaps finally, they'll be proved right.

Modi'in is unique. It's the only city ever founded in Israel in which every little detail had been planned in advance. Because of its location mid-way between the densely crowded Dan region and Jerusalem, it's an option for more than half of Israel's population. But there are things about this city of 65,000 residents that people don't know, and should, before considering whether to buy a flat there.

For instance, until a year ago the average price of an apartment in Modi'in was $191,000, or NIS 850,000. That was by and large in line with average prices for all of Israel, according to the Geocartography Institute. This year the average price of housing in Modi'in jumped to $228,000 or NIS 939,000. In dollar terms the price shot up 19 percent and in shekel terms, by 10 percent.

The bottom line is that for the first time in its short history, Modi'in has clawed its way out of mediocrity and achieved numbers well above the national average.

The year 2007 is arguably a turning point for the city. The price hike over the last year isn't a blip, it's part of a trend: in 2005 the average price had been $173,000 per apartment, or NIS 775,000. "During Modi'in's first years, homebuyers had generally been struggling young couples coming from the periphery and buying small, low-cost apartments," says Moshe Zarfati of Zvi Zarfati & Sons, a company that builds extensively in Modi'in. Today's buyers are just as likely to be people from nearby towns, including Jerusalem, who seek better living standards, he says.

"Our building has people from Rehovot, from Ramat Gan and from Jerusalem, and I know of one who came from abroad," says Michal, who moved from Tel Aviv to Modi'in three years ago.

To debunk a myth, no - Modi'in isn't sucking residents from Jerusalem, according to figures from the former's city hall. Since Modi'in's establishment in 1995, some 127,000 residents have abandoned Jerusalem, of whom only 2 percent moved to Modi'in. What is true is that Modi'in has become attractive to foreign residents.

The South African Zionist Federation has designated Modi'in as the focus for an aliyah endeavor instead of Ra'anana, the usual stamping ground for South African immigrants. The combination of sky-high housing prices in Ra'anana and the bottom-crawling rand have induced South Africa's Jews to seek more affordable residential solutions.

"They found them in Modi'in," says Levy Yitzhak, compiler of pricing lists for housing and cars. The South Africans are joined by Jews from the United States, Argentina and France, too.

A second distinguishable group of Modi'in residents are older people. If at first the city was awash in young people who scented opportunity, today you can find a growing population of pensioners. Not a flood, to be sure: only a quarter of the city's residents are aged 40 and above, and less than 5 percent are more than 60 years old.

But developers say that grandparents are increasingly moving into town, following their kids and grandchildren. Aunts and uncles come too and it isn't unknown for a whole clan to be living in close proximity. Or for a neighborhood to be marked by its "Anglo-Saxon" residents - this sort of thing can happen when a city is built from scratch.

Miri Zalman, construction engineer and deputy chief executive at Plasim Development & Building relates that another characteristic of Modi'in's brisk real estate market is that people upgrade within two or three years, to a better apartment within the city.

"A lot of the young couples start with a three-room apartment and as the family grows, they buy something bigger," she says.

Which leads to another characteristic of Modi'in's property sector: unlike most other cities that need to evacuate and raze whole neighborhoods of run-down homes in order to renew, in Modi'in the oldest flats are 12 years old. That means that second-hand homes can be even pricier than new ones. The sheer supply of new apartments depressed their price. But second-hand flats in good condition were readily available, accessorized and convenient, says Zalman. In the last year, used flats tended to cost about 5 percent more than comparable new ones, she says.

Haim Kakon, marketing manager at construction company Bonei Hatichon, blames the overnight collapse of housing builder Heftsiba collapse for poking holes in the fabric.

What has that collapse have to do with anything? Simple: "Heftsiba's implosion affected Modi'in because the company had been selling low-cost housing in Har Homa which posed an alternative for young couples in Jerusalem. The prices that Heftsiba demanded were low, which forced other construction companies building in that area to toe the low line. The moment the company collapsed, prices in those projects climbed, which is another reason why sales in Modi'in picked up."

Modi'in is a city that arose from nowhere, planned to the umpteenth degree, but mistakes were still made which limited its potential. One was putting off the decision to develop the main business area at Wadi Anava.

"The outcome was that each neighborhood developed its own small commercial areas but Modi'in lacks the downtown that a city of its size must have," says land assessor Ran Virnick. In short, the industrial zone of Modi'in is marked by bad planning, in his view, and it employs only a tiny fraction of the city's population. "So far the city has relied on one single main traffic artery, highway 443, which is bumper to bumper in the morning rush hour. Driving to Tel Aviv or anywhere in the Dan area becomes a nightmare," Virnick says.

Though the future Azrieli commercial center and the train between Modi'in and Ben Gurion Airport, and Tel Aviv, are expected to improve matters, the city has no solution for employment. That's a huge minus in the growing city. People commute from their homes in Modi'in to jobs in central Israel, creating massive traffic congestion and, as the city grows, the problem will only worsen unless jobs are created locally. How did that happen?

"A horrible mistake in planning by the city's architects," bluntly says Benny Geffen, Inter Israel industry and logistics manager. Namely, they modeled the "industrial zone" on Silicon Valley-style high-tech parks, with buildings featuring stone and glass facades. But high-tech didn't want to move to Modi'in. Business wanted to stay in the greater Tel Aviv area," Geffen says.

He thinks this mistake can be righted by adapting the industrial zone to - wait for it - industry. Traditional industry.

The Modi'in municipality promises that it has learned from past mistakes, and that the new infrastructure being built proves this. In the last year, a train line has finally reached the city, and highways have been built that connect it to Ben Gurion Airport, and to Tel Aviv's city center. In 15 minutes, traffic allowing, one can be in downtown Tel Aviv. More roads are being built and once Azrieli is up and running, there will be more leisure opportunities for the city's residents. It will also create some jobs.

Based on all the above, land appraiser Nehama Bugin believes that housing prices in Modi'in will continue to climb, though she won't make a firm prediction. "It's already here: demand for houses and apartments in the city is greater than the supply," she says. Modi'in is expected to have about 200,000 residents, or four times its present population, Bugin adds. Levy Yitzhak agrees, but in his case he'll get specific: In 2008, he thinks prices in Modi'in will be 5 to 8 percent higher than they are now.