Israeli Real Estate

Why We are Bullish about Yavniel?

JOEL YOSEF BUSNER

JOEL YOSEF BUSNER

Director, Buy a Piece of Israel

Many people like to be where the ‘action’ is.  The museums, restaurants, bistros, nightlife, etc, of the cosmopolitan city of Tel Aviv come with unbelievably high real estate prices.  Sale and rental prices for apartments are sky high for very small units.  Jerusalem, the capital city of the Jewish People, has seen its prices rise by leaps and bounds as so many want a piece of the City of Gold. 

Savvy investors don’t always go with the flow.  They look for opportunities precisely where most people aren’t looking.  How many times in the past have I seen a relatively small retail chain, not being followed by analysts on Wall Street, suddenly explode in price.  If I had $100 for every one of these types of examples, I’d be retired a long time ago. 

I believe in value.  That’s an easy phrase to say but not so easy to find.  Like any good investment, we need to look at the fundamentals.  In the case of Israeli real estate, far too much of the population, industry, and jobs are concentrated in what is called the ‘Mercaz’ or the ‘Center’.  The truth be told, it’s not the center of the land of Israel and I’m not only referring to the much larger Biblical Land of Israel.  I’m specifically referring to the fact that the so called ‘Mercaz’ in today’s modern State of Israel, encompasses a sliver of the tiny state, mostly close to the shoreline of the Mediterranean sea.  70% of the population live in the Mercaz and 80% of the jobs are there.  The result?  More and more super high rise buildings, impossible parking, constant traffic jams, and of course, unaffordable housing prices. 

Over time, a growing amount of people have discovered that the Galilee, Israel’s northern region, allows for a completely different lifestyle from the hustle and bustle of the big cities in the Mercaz.  While average wages are certainly lower than the Mercaz, the cost of housing can be but a fraction of the price.  It is a fact that over the last fifteen (15) years, the price of real estate has risen dramatically throughout the State of Israel, often doubling and tripling over this time period, depending on location. 

In the Lower Galilee village of Kfar Tavor, a building lot of 450 to 500 square meters is listing for almost 1,000,000 shekels (a little under $300,000) today.  In the nearby growing city of Afula the prices are a little higher.  Just ten (10) minutes past Kfar Tavor, in a beautiful valley, lies the village of Yavniel.  The same building lot in Yavniel is about half the price of its neighboring village.  True, Kfar Tavor is more developed, better organized, etc, than Yavniel.  However, Yavniel has its advantages besides price.  

Yavniel is closer to Lake Kinneret.  Yavniel has a larger and growing mix of religious people.  Yavniel has many, many, more tzimmerim (bed and breakfasts).  In addition, probably due to the fact that Yavniel is further away from certain Arab villages than is Kfar Tavor, it is fair to say that the level of theft and other such crimes appears to be lower. 

Quite a number of people have chosen Yavniel as a place to go for Shabbat.  Others have invested in country homes and a growing number have taken the leap and are now full time residents.  This has all the makings of a groundswell of sustainable growth.  Very quietly, one home and then another gets built.  A few years pass and there’s a few more shops, take out food stores, etc.  This village doesn’t need to grow from its current 4,300 residents to 50,000 for prices to explode.  The population of full time residents increased by almost 40% in the last decade.  Watch the fundamentals.  Watch the growth rate.  Compare the value with its neighboring villages and cities.  Where in Israel can you purchase a two-level 160 meter (almost 1,800 sq. feet) house on a 500 square meter lot for around 1,200,000 shekels (apx. $350,000)?  When a 100 additional English speaking families purchase homes in Yavniel, the prices will only rise, and friends, they have a lot more room to rise before catching up to the neighbors.  Fifteen (15) years ago was a great time to invest in real estate in Yavniel.  Prices of building lots have tripled.  Forget the Jackie Mason joke about what he could have done and now it’s too late.  Prices have certainly risen but the value in proportion is still there.  It’s not too late, but time is expensive.

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