Where the immigrants go

The profile of immigrants to Israel has changed, and with it the kind of housing they buy.

The great wave of immigration in the 1990s brought the Israeli real estate market to historical highs. Many contractors erected huge numbers of homes all over the country. Some of the construction companies that flourished then are among the main companies in the market today.

In recent years, immigration has diminished, but the expectation is that the economic crisis, together with rising anti-Semitism around the world, will mean higher immigrant numbers. According to Jewish Agency figures, 15,441 people (including immigrants from Ethiopia) immigrated to Israel in 2008, while in 2009 the number will grow substantially, to some 18,000 (excluding immigrants from Ethiopia). Anyone who moves from one country to another of course needs somewhere to rest his or her head. According to the Jewish Agency, 85% of immigrants prefer direct absorption, meaning that they buy or rent an apartment, while 15% opt for an absorption center.

Cheaper healthcare

The projection for 2009 includes about 7,200 from former Soviet Union countries, 4,000 from Europe, 4,000 from North America. This means that, in contrast to the past, more than half the immigrants arriving in Israel this year will come from rich Western countries, a fact that will undoubtedly have an impact on the kind of homes that the immigrants will buy, where they will choose to live, and prices of the homes in demand. With the help of experts, "Globes" examined the forecast trends and the innovations that the new immigrants will bring to the local real estate market.

Anthony Galgut is a native of South Africa. The company that bears his name provides comprehensive real estate services, and has a clientele among English speakers in Israel and Jewish communities overseas. He says that many people who wavered over coming to Israel were now acting on their thoughts. "Anyone who has a house in a good area in Britain and can sell it, even if he receives less for it, will do so. Anti-Semitism is rampant, while in South Africa developments are not positive for the Jews and push them to move to Israel."

Galgut also mentions the high costs of Jewish education and of healthcare overseas, whereas in Israel all you have to do is register with a health fund. "The economic crisis is making this burden heavier. Israel has suffered less from the economic crisis. We are talking about people from a high socio-economic segment, and that's an important element in a fragile real estate market such as we have today," Galgut says.

Importance of community

A study conducted by the Real Estate Appraisers Association in Israel also found that the share of the real estate market accounted for by new immigrants and returning Israelis was likely to grow substantially, and to make a positive contribution to demand for residential real estate, particularly in the center of the country. Association chairman Erez Cohen says that this market has an impact much greater than its proportion among real estate buyers because it is focused on central towns and cities such as Tel Aviv, Ra'anana, Kfar Sava, and Modi'in, and most of the buyers belong to above average socio-economic groups.

Cohen says that in Tel Aviv and neighboring towns such as Kfar Sava and Ra'anana, this market segment could reach 15% or more of all home buyers, because new immigrants tend to be concentrated in economically strong towns in the center of Israel where it is possible to find work, good education for the children, and neighbors from the same country of origin. "Even in the tough economic condition of today, most immigrants enjoy considerable buying potential, with the euro, sterling, or the dollar strong enough, and they manage to buy suitable housing of a high standard in Israel, helped by easy, subsidized finance terms."

For the English speakers, community is very important, and a large proportion of the South Africans come to Ra'anana, although lately Modi'in has been displacing Ra'anana because prices there are lower, with some people moving there from Ramat Bet Shemesh, where the haredi (ultra-orthodox) population is growing and which attracts the haredi immigrants. Galgut says that "10% of the current buyers in Modi'in are from English speaking countries, a fairly low percentage, but one that appeared suddenly in the past few years. There are also immigrants from France, and not all of them congregate in the coastal towns."

Galgut predicts that almost 20% of new homes in the coming year will be sold to immigrants and returning Israelis. Because they buy expensive housing, the economic share of deals done will be higher. He estimates that about a quarter of the homes will be bought in Ra'anana, about 17% in Modi'in, 30% in Bet Shemesh, while the coastal towns like Netanya, Ashdod, and Herzliya Pituah will account for 15-18%. As a general rule, 80-85% of immigrants prefer new housing, and only 15-20% go for secondhand housing.

Strict budgets

"My job is to bring the immigrants to the contractor and to see to it that there is full transparency," Galgut says. Besides an existing community, he says, the main attraction in certain towns is houses that resemble those in the country of origin, which is why South Africans went to Savyon in the 1950s, even though it was then close to the border, or to Ramat Hasharon and Ra'anana in the 1970s, and today to the Buchman neighborhood of Modi'in. "Someone who has come from a large house, seeks to feel at home in another place. If we send them as pioneers to Yeruham, the chances are that they will take the next plane back." Secular immigrants, and those from New York (religious ones too), tend towards Tel Aviv, or to Bet Shemesh or Elad if they are haredi. A right-wing ideological population goes to Judea and Samaria Efrat, Beitar Illit, Sha'arei Tikva, and more isolated settlements."

Other characteristics also stand out among the immigrants (as a generalization of course). Unlike their Israeli brothers, they usually come with a precise budget for buying a home, from which there can be no deviation. In addition, about two thirds of the immigrants do not physically see the home before they buy it, but check it out thoroughly through representatives and from photographs. Trustworthiness is highly important, and last minute additions to the price are liable to mean the deal is off.

A developer who does a great deal of business with new immigrants told "Globes", "They know how to make demands, but not always how to keep their side of the bargain. They require construction to the highest standard, but when it comes to paying, they say it's no big deal to delay half a million shekels for a few months. After the purchase, they feel that they can afford to do that. It's not a matter of one or two instances, or immaterial amounts. We haven't come across this among Israelis," the developer said.

Jerusalem out of favor

Adv. Miriam Donin-Shoob, who runs a law office that specializes in real estate, says, "The choice of where to buy an apartment varies according to country of origin and age. South African Jews, mainly from Johannesburg, are very active, because of the deterioration in the political situation there. Some of them emigrate to Australia, and some to Israel. In fact, the current wave is of parents whose children preceded them and came to Israel after the change in regime in South Africa and mostly bought homes in Ra'anana. The parents mainly buy in Tel Aviv.

"Jews from Britain, on the other hand, because of the fall in value of sterling and the severe blow to the economy, are hanging on to their money and not going wild. American Jewry is also suffering from the economic crisis. They mostly used to buy apartments in Jerusalem, and they aren't players in the Tel Aviv market. French immigrants aged 50 and over congregate in the Herzliya Pituah area, although because of the crisis there is a revival among this age group in Tel Aviv. Religious French immigrants buy homes mainly in Ra'anana. Young immigrants buy apartments in Tel Aviv."

Galgut says that few immigrants land in Jerusalem. "Just as Jerusalem is not in demand among Israelis, the new immigrants have received this feedback. It happened when the periphery became more innovative and relevant." According to him, none of the immigrants go for three rooms. They want four rooms and more.

The bigger the better

Ofer Sagiv, CEO of May-Tal Engineering and Development, which is building in, among other places, Jerusalem's Har Homa neighborhood and the Afike Nevo project in the Mitzpe Nevo neighborhood of Ma'ale Adumim, says that Ma'ale Adumin is among the preferred destinations for immigrants from certain countries. "Almost all of them upgrade their apartments, investing in interior layout, kitchens, and flooring, and many of them take on designers." Sagiv agrees that most of the buyers buy their homes unseen. "In the end, without exception, the person who signs on the apartment is a lawyer with a power of attorney. The occupier never signs the contract. The lawyer conducts the negotiations for him over the contract terms, but not on the price; the price is fixed. They all bring in an engineer to accept possession of the apartment, and in practice he is the one who receives the key."

Afike Nevo has a religious Zionist population. Sagiv estimates that only 25-30% are Israeli-born, in the cheaper apartments, the rest being mostly American, with some British and Canadians. He says that what attracted the buyers were the large balconies, kitchens, and bedrooms, and the extensive open areas, or "anything to do with size."

Published by Globes [online], Israel business news - www.globes.co.il - on June 3, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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