The unsettled security situation in the south caught the real estate market at a bad time: a freeze that has lasted for several months, combined with the protest movement. This reality again raised the question whether the security situation affects housing demand and prices. Since the latest clashes are too fresh to draw any conclusions, "Globes" examined previous confrontations.
Israel's assault on the Gaza Strip, Operation Cast Lead, lasted from December 2008 through January 18, 2009. Euro Israel Development and Investment Ltd. builds homes in the south. CEO Ofra Hadad told "Globes", "People sold in a panic, lowering asking prices by tens of thousands of shekels, especially in Sderot and Ashkelon, because there seemed to be no solution to the situation. Buyers at that time profited later."
Hadad says that once Operation Cast Lead was over, it took time for the real estate market to recover. "After the campaign, there was a six-month slowdown. There were no deals, but once normalcy was restored, people rushed to buy apartments, and prices began to rise," she says.
Hadad believes that the Iron Dome anti-rocket batteries have changed the situation. "There's a slowdown," she admits, but believes that "things will get back to normal within days after everything ends."
Dr. Danny Ben-Shahar and Dr. Yuval Arbel of the Technion Israel Institute of Technology's Center for Urban and Regional Studies, Dr. Yosef Toubul of the Jerusalem College of Technology, and Prof. Stuart Gabrial of UCLA's Ziman Center for Real Estate carried out a study to see whether the security situation affects home prices. Their findings do not support Hadad's confidence.
The study examined the effect of firing on the southern Jerusalem neighborhood of Gilo on home prices there. Between October 2000 and April 2003, Gilo was frequently hit by fire from Beit Jala in the Palestinian Authority. Some apartments were at direct risk, while apartments that were not in the line of fire were nonetheless affected by the conditions.
The study found that prices for apartments in the direct line of fire were 8% lower than similar apartments in the neighborhood. The study also found that home prices in the entire neighborhood, and not only for apartments in the line of fire, fell by 10%, and only recovered two years after calm was restored.
Ben-Shahar told "Globes" that, at the peak of the shooting, apartment prices fell by 17%. "The riskier areas took longer to recover. Prices recovered 14 months after the shooting stopped."
Classified ads site Yad2 CEO Roy Segev told "Globes", "The figures unequivocally show that apartment supply and prices have not fallen since Operation Cast Lead; on the contrary." He believes only a prolonged security crisis can affect prices. "We adapt to everything. Crises pass and things quickly get back to normal."
Association of Contractors and Builders in Israel southern district chairman Eli Avisror agrees that real estate in the south is not affected by security incidents. As in the rest of the country, he told "Globes", "Prices jumped after Operation Cast Lead."
Sderot is one of the towns that took the greatest number of hits by rockets fired from Gaza. As in other southern towns, the security situation did not stop prices from rising in Sderot. Alex Aviram, a realtor in Sderot for 15 years, told "Globes" that prices for three-room apartments doubled within three years. "Today, the security situation does not affect real estate in the town. Most people have safe rooms."
The situation in Gilo is different from southern towns which still face security threats. But Ben-Shahar believes that the results of his study are applicable, and that cities such as Beesheva, Ashkelon, and Ashdod, which take fewer hits from rockets, need less time to return to routine, including home prices. Prices in towns with more incidents, such as Sderot, need more time to recover.
Between July 21 and August 14, 2006, all residents of northern Israel lived in air raid shelters, during the Second Lebanon War. ZMH Hammerman Ltd. (TASE:ZMH) marketed homes in Carmiel and Tirat Hacarmel and was building a residential project in Haifa at the time. CEO Haim Feiglin says that the war had an immediate impact on prices, but that it had no long-term effect at all. "During the war, sales ground to a complete stop. Not just at the time, but for months afterwards," he told "Globes".
Feiglin says that buyers returned to the company's sales offices after six months, and that prices did not fall. The soaring home prices nationwide did not omit northern Israel. "Five years after the war, and prices are much higher than before it," he says, adding, "Israelis are inured. We've seen a lot, and we know how to get back to normal."
Feiglin remembers that there was a strong trend of home improvement after the war, with people moving to homes with safe rooms. "People realized the importance of reinforced rooms when they found themselves unprotected during the war. People were looking for safe rooms. We felt the demand at our sales offices," he says.
Published by Globes [online], Israel business news - www.globes-online.com - on August 29, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011