Herzliyas Glil Yam provides huge govt subsidized bargains

The Buyer’s Price program (Mechir Lemishtaken) was initiated by then Minister of Finance Moshe Kahlon in 2015. He would be proud to show the program’s opponents what has been achieved for young couples in the new Glil Yam neighborhood of Herzliya, where buyers are currently moving into some of the nearly 4,000 apartments that have been completed. Of these homes, built on former land of Kibbutz Glil Yam, in what is now southern Herzliya, 1,468 apartments were included in the Buyer’s Price program lottery, for eligible young couples, who did not already own a property.

Even so, some of the program’s opponents wonder what the new neighborhood will do to housing prices in Herzliya and whether it was justified to provide NIS 1 billion in discounts on these apartments – a vast sum that might have been distributed differently more from the public coffers.

It is no coincidence that the current Minister of Construction and Housing Ze’ev Elkin has not made Herzliya part of his new “Apartment at a Discount” program. Because of the huge discounts given for the subsidized apartments in Glil Yam and not only there, and due to the Ministry of Justice’s opposition to continue such a model, the Israel Land Authority decided last year that future lotteries would only include regions where homes cost up to NIS 20,000 per square meter.

60% jump per square meter

Six companies won the Buyers Price tender in 2016 to build the 1,468 apartments in Glil Yam – Africa Israel Residences, Azorim, ISSTA Properties, Sela Construction, Rami Shbiro and Prashkovsky. Almost all these homes have been built, sold and occupied.

Sela Construction VP development Yossi Faermark says that the situation created in Glil Yam demonstrates the consequences of the Buyers Price program in the best possible way. “On the top floors of buildings, you can find two four-room apartments, front door opposite front door, both 100 square meters in size and with similar specifications – one in the Buyers Price program and one on the open market. The first was purchased at a discount of up to NIS 1 million and compared with the apartment opposite it, the price difference today is even bigger.” Azorim VP marketing Gil Gurevitz adds, “If three years ago when we began to market the project the price level in the neighborhood was around NIS 25,000 per square meter, and in Buyers Price it was set at NIS 16-17,000 per square meter, then today we have already reached NIS 40,000 per square meter or more.”

“The buyers in Buyers Price, of course did a good deal,” observes Idan Abu, owner of the Herzliya-based Real realtors. “The demand is varied and very many of the buyers come from outside of the city. Interest in Glil Yam was mainly from buyers who didn’t have enough money to purchase in Tel Aviv.”

Most of the winners live in the apartments

One of the criticisms of the Buyers Price program is that the buyers can rent out their apartments from day one, thus creating a market of new investors. A survey conducted earlier this year by the Ministry of Construction and Housing found that of the 27,000 winners in the program, one third of them rent out their apartments, mainly because they won in a neighborhood that they didn’t want to live in. But in Glil Yam the situation is different. In effect the program has created a complete market of ‘investors’ in peripheral regions, where apartments are less attractive, while in the more attractive center of the country the lucky winners received discounts worth hundreds of thousands of shekels.

Gurevitz says, “Relatively speaking, in the Glil Yam neighborhood, most people who won an apartment also live in it, certainly in comparison with other neighborhoods marketed as part of the program. In Glil Yam we are talking about 80%-20% in favor of buyers living in the apartments.”

But not anything is rosy for the residents of Glil Yam. On paper the plan includes an attractive raft of municipal spaces and services including a 53.25 acre park, new schools and community centers and a nearby office park. The residents are still waiting for most of this.

“We moved for economic reasons”

New resident Yael Paltin says, “We moved here from Tel Aviv and for us it has been an extreme change. At the moment there is nothing in the neighborhood and the closest supermarket is in the mall. The neighborhood shopping center isn’t yet operating and the school hasn’t opened. On the other hand, I work in Herzliya Pituah and there is a lot of grass and greenery here – it’s like a kibbutz within Herzliya, so that can’t be bad.”

Azorim say that the areas in the shopping center, which it has built, the largest in the neighborhood, have been marketed and it will open in the coming weeks.

Indeed most residents have no regrets about their choice of Glil Yam. “We are very satisfied that we decided to move here,” says Maya Sar Shalom, who moved to the neighborhood last October. “We see and feel the investment. By the time our oldest child goes to first grade the school will be open right opposite our home and I can send him straight to the class. We have no plans to move asway from here.”

Paltiel’s family bought a five-room apartment for NIS 2.4 million and estimates are that it is worth NIS 4 million today. Sar Shalom’s family bought a four-room apartment for NIS 1.8 million and estimates are that it is worth NIS 3.8 million today. Buyers Price program participants cannot sell their homes until 2024, so the market price is not currently relevant.

Nir Fayna, the owner of the New Glil Yam real estate agency and a member of the neighborhood committee says that the Buyers Price program is pushing up prices further in the neighborhood. “There is an economic failure here because Buyers Price apartments cannot be sold until 2024. Only those who bought on the open market can sell and so when an apartment does go up for sale people argue over it and the price soars.”

In other words, instead of cooling the housing market, these apartments are helping to push prices up. Moreover, in Herzliya the Buyers Price program hasn’t exactly helped the disadvantaged with only eligible young couples with the means to bring hundreds of thousands of shekels able to participate and win such a huge, government subsidized benefit.

Published by Globes, Israel business news – en.globes.co.il – on July 12, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.