The city of Modi’in has long since stopped being considered a suburb of Tel Aviv. The rising demand for housing has managed to shorten the gap in real estate prices in both cities. Statistics published by the finance ministry last month also indicate that prices are on the rise. Within a year, housing costs in the city will climb 11 percent.
Modi’in has had its fair share of “birth pangs” before it became what it is today. As early as the 1950s, urban planners were eager to transform this strip of land replete with dry valleys into a city, in order to establish population centers away from the coast.
Those plans, however, were put on hold by various governments who instead sought to earmark the area for other needs, whether it be headquartering state and government agencies, relocating a large cemetery that would serve central Israel, or relocating the large garbage dump from the nearby city of Rehovot.
These deliberations and discussions rendered the rocky hills of Modi’in barren. Nonetheless, the goal of establishing a city in the area was never abandoned, and was rekindled in the 1960s and 70s, initially to sustain security and defense considerations. Still, those intentions failed to propel the planning process forward.
It was only in the mid-1980s when the decision to build Modi’in in earnest was finally made. What tilted the scales in favor of building was the housing shortage triggered by the massive immigration of Jews from the Soviet Union. In December 1985, the government needed to find a housing solution as waves of Jews were coming over. The most immediate one was Modi’in. In the early 1990s, the plans were approved, and in 1996 the first residents began moving in.
“The situation today is not that much different from what it was in the early 1990s,” says construction giant Ashdar’s Deputy CEO for Marketing Racheli Brizel. “The government’s strong desire to flood the country with available properties and create an impact on housing prices led it to sign an agreement in which it promised to market 12,000 new housing units in the city, available housing in the center of the country.”
Modi’in lies within Israel’s central region, located atop the hills of Judea, between Tel Aviv and Jerusalem. The city was planned to one day become a major metropolis. Its municipal administration came about by the merger of two neighboring suburbs, Reut and Maccabim. Today, Modi’in has 82,000 residents. The population is expected to hit 120,000 within the next few years. Within a 10-year period, Modi’in will be home to a quarter-million residents.
If construction and building plans are any indication, it would appear that Modi’in is making giant strides toward this goal. The latest government plan calls for the construction of 11,800 residential units in the four main neighborhoods of the city. From now until February 2015, some 3,200 apartments will be offered on the market. The rest of the apartments will become available between 2015 and 2017.
While there is reason for optimism, some are expressing many doubts as to whether this will have the desired impact on real estate prices in the city.
“More than 1,700 apartments were offered on the market over the course of the last six years in Modi’in,” says Brizel. “Every tender that was announced has been higher than the previous one. The movement in the real estate market was what prompted the company to make the decision to move into Modi’in and invest there, even with the high property values.”
Today, Ashdar is involved in the construction of hundreds of apartment buildings throughout the country, including in Haifa, Netanya, Tel Aviv, Ramat Hasharon, Bat Yam, Rehovot, and Jerusalem. The company moved into Modi’in three years ago and began marketing its exclusive Ashdar Buchman Modi’in project, which encompasses 78 apartments in six six-story buildings.
According to the Israel Lands Administration, property buyers for pieces of land in the Buchman neighborhood in Modi’in paid NIS 607,000 per unit in 2010. A year prior, they paid just NIS 300,000. That’s an increase of better than 100 percent. Similar results were reported in other parts of Modi’in.
The deals in which people bought apartments in the Ashdar Buchman project were also indicative of the record-high prices in real estate that people paid to live in Modi’in. Recently, the company sold a four-room apartment in the project for NIS 2.1 million. Two years ago, a similar apartment went for NIS 1.8 million. A five-room apartment in the complex was recently sold for NIS 2.3 million, while two years ago it would have been sold for NIS 2 million.
“This is a 15-percent jump within two years,” Brizel says. “This is all the result of supply and demand, as well as market conditions. The demand for housing in the upscale Buchman neighborhood is among the highest in the city. Ashdar recognize the high demand for apartments in the city as well as the quality of the population that was willing to pay a lot of money in order to live in high-end neighborhoods like Buchman.”
“The project being offered by the company is tailored to the clientele and it offers four- and five-room apartments with a garden, a scenic view, and physical separation from the other apartments,” she says. “The buyers who come to purchase our apartments are looking for individual space, high-quality living arrangements, and nature. That’s why our apartment buyers are not just young couples but also those looking to upgrade their living arrangements and come from all over, including the center, the Sharon region, Modi’in, and English speakers.”
There are 20 apartments remaining to be sold in the complex, among them six penthouse apartments that take up the entire floor and could be had for a price of NIS 3.8 million each. According to Brizel, penthouse apartments are always the last to be offered for sale in projects like this, particularly when buyers could gain a greater appreciation for the complex’s development and the surrounding environment.
“The prices of the penthouse apartments, just like the rising prices in the city, stem from the massive development that has been poured into the city, and this has attracted quite a number of people from a high socioeconomic strata,” she says.
Modi’in boasts a large number of businesses and employment opportunities, top-quality educational institutions, and a strategic location – right between Tel Aviv and Jerusalem (the city is a 25-minute drive to each). It is also a short, 10-minute drive to Ben-Gurion Airport as well as the main highways that connect it to the south and center of the country.
Modi’in is also ranked among the cities with the highest socioeconomic quality of life for its residents. In addition, 63 percent of its inhabitants completed high school, among the highest in the country. As of 2008, it had a well-above-average annual salary for wage-earners (NIS 14,496 per month). In terms of employment, 79 percent of Modi’in residents have jobs, and its unemployment rate is extremely low (2.5 percent, well below the national average of 6.6 percent).
“Modi’in in recent years has managed to brand itself as one of the modern cities in Israel that offers a community lifestyle alongside a high level of education and well-maintained infrastructure that is among the best in the country,” Brizel says. “As such, there are only a few projects being built in the city today. This is what has enabled the city to keep its demand level high in the upscale Buchman neighborhood and in other areas. In my view, the prices in the city won’t drop, but they will stay at the same level, or even go up. Ashdar, which is a holding of the Ashtrum Group, certainly sees the city of Modi’in as a place in which to invest, and it will continue to monitor ILA tenders for more land purchases in the city.”
About the Author: Ranit Nachum-Halevi is a consultant to real estate companies, and former senior real estate correspondent for The Marker, Haaretz's daily financial supplement. She has been working in Israel's media for more than 15 years. You can reach her at email@example.com.
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