Livni

By Goel Pinto

"No one ever dreamed Tel Aviv would become like this," says architect Danny Kaiser, a former Tel Aviv city engineer. "Up until a decade ago, the image of residential housing in Tel Aviv was terrible. Anyone of means left for the suburbs, to Ra'anana, Ramat Aviv or anywhere else they could build three housing units on half a dunam [1/8 acre] of land."

Over time, however, and especially in the past year, this situation has gone from one extreme to the other. The transformation of downtown Tel Aviv is evident in the changes undergone by the plans for the luxury towers set to rise on the corner of Allenby Street and Rothschild Boulevard. More than a decade ago, the developers who purchased the land applied for a permit for an office tower. The city, fearing that the area would become desolate and dangerous at night, as happened around the Diamond Exchange compound in Ramat Gan, demanded that any plan include a minimum quota of residential units.

Now, ten years later, the developers have recognized the high demand for housing in the city, in particular in the return of the richest of the rich to the city center, the boundaries of which are now defined as Hayarkon Street and Eilat Street.

In the case of the building at Allenby and Rothschild, says Kaiser, who handled part of the negotiations with the developers, "they are taking advantage of a breach in the process that no one anticipated."

They changed the plans, explaining to the city that they were obligated to a minimum, but that no one had ever mentioned a maximum; they hired American super-architect Richard Meier, and in another few years the building will be one more luxury tower in the urban landscape.

"Many apartment owners in the city, who in the recent past would definitely have sold their apartments, have now decided to wait so they can make a greater profit," says Marcel Cory, of Anglo-Saxon Realty.

"Prices have not peaked yet. There is still room for them to climb," declares Cory, noting that towers like the Opera and Basel, in both of which the apartments need renovating, have average prices of $6,000 per square meter (about $600,000 for a three-room apartment). Apartments in Beit Hanna, on Adam Hacohen Street, with a view of the sea, are going for as high as $16,000 per square meter. "It is not just a feeling that Tel Aviv is becoming a place for the rich, it is a fact," says Prof. Elinoar Barzacchi, an urban planning expert and former head of the school of architecture at Tel Aviv University. "At the end of this process, Tel Aviv will be a city of the very rich and the very poor, since rich people cannot live alone - they need a support system around them. Who will take out their garbage? Who will tend to their elderly? They need these invisible people. This leaves the middle class out of the picture. A normal family, in which both parents work, with one or two children and maybe a cat, will have to pay so high a price for an 80-square-meter apartment that they will have no choice but to move out. The city is essentially pushing them out."

About two weeks ago, it was announced that a group of investors had purchased the Pitman school compound, on Balfour Street in Tel Aviv, and planned to turn it into a luxury housing complex. The developers, however, have not received a permit to build upward: Instead, the school building, which has been declared a protected landmark, will be converted into a residence for one very affluent client, and more housing units will be built alongside it.

This type of planning joins that of other future projects, such as the G Tel Aviv building on Ibn Gvirol Street, between Shaul Hamelekh Boulevard and Hashoftim Street; one of the buyers there is Shari Arison, who reportedly paid some $13 million for a 700-square-meter, triplex penthouse.

In conversation, decision makers at Tel Aviv City Hall reveal that they view the transformation of the city center into a locale for only the most well-off as beneficial to other neighborhoods in the city. These include Bitzaron, Montefiore, Florentin, Hatikva and Kerem Hateimanim. Thus, for example, a permit was recently granted for the construction of 330 housing units in two towers in the Bitzaron quarter, on Yigal Allon Road. Apartments there will go for $2,700 per square meter, putting the price of a 100-square-meter apartment at $270,000.

"For a new tower being built in a central location, close to the Azrieli Towers and the train station, that is not considered expensive," says Tel Aviv city engineer Hezi Berkowitz. "The upscaling process of the city center is something that is happening in every big metropolis worldwide. The city does not own the land, but is rather charged with developing regions and making them attractive to construction companies and the population."

Although Bitzaron is an example of a neighborhood whose image has changed, there are no real signs of this in the other neighborhoods.

Tel Aviv deputy mayor Yael Dayan, who holds the welfare portfolio in the city council, says that at today's prices she would not be able to buy her old apartment in Ramat Aviv Gimmel. Dayan concurs that the proliferation of luxury buildings in the city center is promoting the development of the southern and eastern neighborhoods, which have suddenly become attractive to the middle class.

"I look at greater Tel Aviv, and not just at the city center," explains Dayan. "From this perspective, Tel Aviv is still a city of young, middle-class people. The city center has a shortage of green spaces, and this has led to the development of other neighborhoods, in which we are investing substantially. Our role at City Hall is not to vacate space in the city center for middle-class families, but rather to raise the quality of the urban ring around the center."

Even so, Berkowitz presents figures indicating that in the past five years there has been a steady increase in the number of children under age 6 living in Tel Aviv. This number, however, is still the lowest in the country - 17 percent (up to age 14), compared to the national average of 28 percent of the population.

A less rosy picture is presented by Sharon Rotbard, author of the book, "White City, Black City" (Bavel Publishers, Hebrew). The book deals with Tel Aviv, the White City, and its outgrowth from Jaffa, the black city. Rotbard contends that the faulty planning of the city chases away the middle class.

"The planning system, in its current structure, promotes economic inequality and creates a connection between the size of the building lot and the building rights on it," says Rotbard. "The larger the lot, the greater the building rights. Thus whoever can afford a larger lot will have broader rights and will be able to make a greater profit."

Kaiser, who during his tenure as city engineer approved many of the luxury buildings going up in Tel Aviv today, including the Yoo Tower and the Wholesale Market Towers, says he had no choice.

"Due to the high demand among people to work and live in Tel Aviv, the city, like any large urban locale, had to take advantage of its precious land and infrastructure," explains Kaiser.

Even so, Kaiser also understands that now Tel Aviv has a problem. "The balance of population types in the city has been upset," he admits. "On the one hand, there is a very established, perhaps older population, with fewer children, and on the other hand, there are unestablished young people living four [adults] to an apartment."

The construction skyward does not help middle-class buyers or renters - not because they do not want to live in towers, and not even because the apartments are expensive, but because the upkeep of such apartments is out of their reach. Any building over eight stories that is not maintained via a substantial monthly investment, explains Barzacchi, quickly becomes an urban nightmare.

At this stage, apparently none of the decision makers, whether in the government or at City Hall, is planning to do anything for protected housing tenants. This is in contrast to municipalities such as London, Paris and New York. Just last month, the New York City Council passed a law obligating every residential building owner in the city to sell 20 percent of the new apartments at a reduced price. The city even ruled that building owners cannot decide which apartments will be sold for less - only after a building is completed will a city official visit the structure and determine which will have the lower price tags.

In Paris, Mayor Bertrand Delanoe has similarly ordered an allocation of protected housing that requires the lowering of rents, such that middle-class families can also live in the city center.

"These mayors realized that members of the middle class are the backbone of any city," says Barzacchi, "because they support and are not supported. Studies have shown that the children of this class are the best citizens. It has been proved that the children of poor families generally do not succeed all that well, while the children of rich families simply do not care."

Berkowitz does not believe that Tel Aviv has reached a situation as extreme as that of New York or Paris, and therefore says he feels there is no need for the city to make such a drastic decision.

"Perhaps we will reach that point in the future," he admits, "but in the meantime we have the Montefiore, Kerem Hateimanim and Florentin quarters, and many more thousands of housing units that can certainly be populated by the middle class. True, the areas I mentioned have many problems, and there are reasons that they are not developing and are not in demand among the middle class, but that is precisely the city's job, to develop those areas, and that is what we are doing. Only after the current potential of thousands of housing units has been exhausted will we examine the steps taken by Paris, New York and London." Kaiser, on the other hand, explains that even if the city were interested in doing something, it would require the state's approval, and at present the state is not allowing the city to interfere with apartment prices. Kaiser even notes that when the state, via the Israel Lands Administration, sells public land, such as the police station compound on Dizengoff Street, like any other merchant, it sells to the highest bidder.

"The state does not make any attempt to lower land prices when it sells lots, but rather maximizes its profits," declares Kaiser.

Kappa21

Its an epidemic everywhere....

new units come and change prices for everyone. The more you go up the more luxurious it gets. In the end, houses cost a fortune. Investors come and fix them up and then sell them at a high price and make the whole area expensive and luxurious.

Thats why Israel or Tel Aviv needs to keep some sort of tab on the prices of houses and rentals

NorthPole

It's global problem (prices in Poland rocketed by some 60% last year and some 200% last four years).
If I had to guess, I'd say it's global speculation after developing markets stabilized (and do not give 50% interest / year anymore) and investments in China/India are already done. It's not possible that in so many countries prices are going so high in such short period.
Now developers have some 50% interest from investments on apartment market (what more, they do risk nothing, as you have to pay 10-50% before construction starts and the rest before it ends).
I don't know what are non-speculatation factors for prices rising in Israel. In Poland cities do not sell (or rather lend) municipal ground for apartments' developing in hope to gain more next year (and it continuues for almost 10 years here), so the land for apartments is very deficit good here.
But I'm still against prices regulation. It's against contitution protecting any private property (the private property protection is virtually in every constitution). Well, Israel has not constitution, but you have well shaped and executed law.