Three long-term rental projects have been occupied: two of them from tenders published by Apartment for Rent - The Governmental Company for Housing and Rental in recent years in Ramat Hasharon and Herzliya, and another project in Ra'anana from an earlier initiative by the Ministry of Construction and Housing.
The winners building a rental project are committed to managing and maintaining it and leasing the apartments for 20 years. The projects contain apartments for rent on the free market, in addition to 25% or even 50% of the apartments being leased to eligible people who do not own their own housing (this is the case in a tender currently being closed in Shoham, for example).
The small number of long-term rental projects in Israel, the booming price of apartments, and the continued decline in the inventory of apartments for rent in the private market (investors have been selling more apartments than they bought in the past year) should be leading to a situation in which the demand for long-term rental apartments is inelastic, and should increase supply. In other words, we would expect to see a rush to rent, with the apartments being snapped up quickly.
The occupancy rates for the first three projects, however, show a 100% occupancy rate in none of them, and a rate far below that in some cases. The empty apartments are only those for rent at the prices on the free market. For those eligible, the apartments are offered at rents amounting to 80% of the market price, with a waiting list. In the lotteries conducted before those apartments were rented, there was a significant surplus of demand over supply.
At the same time, it is important to note that renting is affected by seasonal factors - the period of the year - and finding tenants for a project during the wrong period is likely to be far more difficult.
Real estate sector sources said that the developers regarded an occupancy rate of over 90% of the apartments in a project as full occupancy, even overseas. The sources added that the existing supply of rentals in these projects is an achievement in itself for the government initiative, and that it takes time for the public to realize the advantages of projects of this type, managed by a single company responsible for maintenance.
Ramat Hasharon: The apartments are high up and expensive
The project with the largest number of empty apartments is the Aviv Sheli project of the Aviv group, located on Alexandroni Brigade Street in eastern Ramat Hasharon.
According to the company's figures, 195 of the 281 rental apartments built have been rented, 70 at a controlled rent, meaning that 86 apartments are waiting for tenants. Most of the apartments that have not yet been rented are on the high floors and are larger, and therefore more expensive. Among the apartments not yet rented are a four-room, 96-square meter apartment with an 11-square meter balcony on the ninth floor being offered for rent at NIS 6,600 a month.
Herzliya
In Herzliya, the situation is better. Africa-Israel has built 273 apartments of which 68 have been leased at discount prices to those eligible. 205 apartments have been rented at market price with 10 still waiting for tenants.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 21, 2018
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