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December 24, 2010
Lux living in the Holy Land
High-end Israeli real estate market is flush with foreign dollars.
TOVA G. KORNFELD
And you thought prices in “Vanhattan” were high! Israel’s high-end real estate market is being redefined, as foreigners, especially Americans, search for second homes in the Holy Land. Prices in Jerusalem are soaring and Tel Aviv is in the midst of a mini Manhattan makeover with New York-style residential projects breaking ground.
While foreign buyers make up fewer than five percent of total home buyers in Israel, they snap up a third of the luxury properties, defined as those priced at more than $1,000 a square foot. Uneasy times and a tense political climate have not seemed to dampen the enthusiasm of investors for Levant property.
Two recent projects exemplify this luxury boom: the Residences at the Ritz-Carlton, Herzliyah (RCH), nestled on the Mediterranean coast, just north of Tel Aviv, nearing completion, and the completed Yoo Towers, located in the exclusive North Tel Aviv Park Heights neighborhood.
The RCH, Ritz-Carlton’s first foray into the Middle East, will perpetuate the gold standard of affluence recognized by the brand name. The promotional video (rcr-herzliya.com) provides an inside peek at an upscale lifestyle set against stunning Israeli scenery and is certainly worth a watch.
The project is being developed by the Tidhar Group and Adi’s Investments. Architect Rani Ziss (who did the recent renovations of the Plaza Hotel in Manhattan) designed the complex. The 12-storey property, which is scheduled to be completed at the end of 2012, will feature a luxury-suite hotel, on top of which will sit the residences. Each unit will have a sea view and overlook the Herzliyah marina.
Marketing director Sigal Ben Menashe told the Independent, “The interior design of the RCH reflects the timeless appeal of the Ritz-Carlton brand combined with a contemporary Mediterranean edge. These units are being built to cater to the sophisticated international traveler in search of a second home in Israel. As an added bonus, the project will be the first kosher Ritz-Carlton in the world.”
As of Sept. 30 this year, 30 of the 80 units were already under contract. The average price for units per square foot is $1,200 US, with prices starting at $640,000 for a studio, $740,000 for a one-bedroom, $1.4 million for a duplex, $1.6 million for a two-bedroom and $2.9 million for a penthouse suite.
Ownership will be in fee simple, but owners can only occupy the units for six months of the year; the other six months, the units must be rented out. Annual maintenance fees will include 24-hour concierge service, in-suite electricity and water, and maintenance and repair of common areas. All owners will have access to the hotel’s services and amenities, including a rooftop outdoor pool, spa and fitness centre.
The other development, Yoo Towers, is being touted as “the most prestigious residential project ever built in Tel Aviv.” The building, designed by world-renowned Philippe Starck and Yoo Group’s property mogul John Hitchcox, consists of 297 luxury apartments in two high-rise towers, 37 and 41 floors, respectively. Constructed and marketed by the Habas Group, presales were brisk. Creative director Jade Jagger (yes, Mick’s daughter) helmed the interior design team to produce posh interiors notable for their attention to detail. A luxury spa, swimming pool and doorman are included as standard features. The Yoo Group has a solid track record in the luxury development field with projects in major cities around the world, including New York, London, Hong Kong, Miami, Buenos Aires and Mumbai.
The landscape of Tel Aviv is changing to accommodate these new towers that are fast-becoming vertical nests for the well feathered and are today a hot commodity in the land of our forefathers and mothers. However, though “new” sells well, there is much foreign interest currently being generated for sales of Tel Aviv’s stylish Bauhaus homes, built in the 1920s and ’30s. Known as the White City and declared a World Heritage Site by Unesco in 2003, Tel Aviv’s historic core includes 4,000 Bauhaus buildings. As a recent New York Times article indicated, buying into this unique architectural heritage is not for the meek. Landmarked buildings command at least 30 percent premium over conventional prices – you should probably count on having at least one million dollars in your wallet. Purchasers are required to keep the exterior of the units intact but are turning the interiors into contemporary oases of luxury.
Tel Aviv caters to a secular market, however sellers of Jerusalem properties tend to cater to religious Americans who wish to spend time, mostly over the major Jewish holidays, in the holy city, within walking distance of the major religious sites. And buyers are prepared to pay the premium necessary to afford this privilege, spending $400,000-$1.5 million US for apartments there. Some even opt for American-style gated communities, like the 600-unit Eden Hills project, to cushion their landing in the Middle East.
Anyone considering buying in Israel should work with a reputable local realtor and retain legal advice to ensure a headache-/problem-free purchase. One should also expect closing costs of seven to 10 percent of value, which includes a 3.5 to five percent land purchase tax, two percent real estate agent fee, a one percent lawyer fee, a value-added tax on new construction, and the requirement in some areas to prepay one year of municipal taxes.
Tova G. Kornfeld is a Vancouver lawyer and freelance writer.
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