BEERSHEVA – ISRAEL’S REAL ESTATE FRONTIER

The run on Beersheva real estate that has been in play for at least the last 5 years shows no sign of slowing down. If anything, investor appetite for properties in this city will only intensify. 

In my opinion this is fully justified. 

While there are many periphery locations in Israel that present solid real estate opportunities, Beersheva stands in a class of its own. 

In many ways it was just a matter of time. However the coalescing of a number of factors have created the current real estate investment dynamics. 

Fantastic demographics

Starting from about 1991 Beersheva was the lucky recipient of tens of thousands of Russian olim. Mostly they came with nothing more then a suitcase. However they were educated, very educated, and hungry to achieve. Fast forward 20 years and they represent a hefty segment of Israel’s middle-upper class. My guess is that they have not finished their upward climb, and we will see more and more Russian Israeli’s breaking into the upper classes. 

Basic economics will confirm that a constantly improving ability to purchase more expensive real estate translates into upward price appreciation. There are sufficient examples of this exact dynamic in Israel. Tel Aviv, Raanana, Modiin and Zichron Yaakov immediately come to mind. 

Tel Aviv to Beersheva in 45 minutes

It is now entirely possible to live in Beersheva and commute to places of work in the Tel Aviv area on a daily basis. Since 2012 a high speed railway service connects Tel Aviv to Beesheva. The ride takes 55 minutes. This will be shortened in the coming years to 45 minutes. 

In addition, the Kvish 6 (Highway 6) now extends to Beersheva. This allows for a private commute of just over 1 hour from Beersheva to Tel Aviv. 

What this all means is that it is now entirely possible for the young families who cannot afford real estate in the Tel Aviv area to relocate to Beersheva without sacrificing on job opportunities. 

Advanced Technologies Park  

With an ability to capitalize on its well educated population, local engineering schools and the Soroka University Medical  Centre, Bersheeva is currently in the early phases of creating what will be Israel’s leading facility for promoting technology and the commercialization of cutting-edge research and innovation. 

As a joint venture between Ben Gurion University, the Municiplaity of Beersheva and the American company KUD International, a subsidiary of the Japanese based Kajima Corporation, the park is set to encompass over 20 buildings with a total area of approximately 200,000 square meters, including offices, laboratories and commercial areas. 

The first building covering 17,500 square meters was complete in 2013. The second building, covering 12,000 meters will be complete in the course of 2014. The park is slated to accommodate 12,000 employees. 

The park has all of the initial signs of another Israeli success story. Some reasons I am particularly fond of this project include:  

  • Companies such as Deutsche Telekom (its first outside Germany), EMC International, Lockheed-Martin, Elbit Technologies and NESS Technologies have already taken up research space in the park. In addition, HP, Oracle, Cisco, dbMotion, IBM and others have also indicated their intention of taking space in the park. 
  • Beersheva’s northern train station is located in the park, allowing for easy access from anywhere in Israel. 
  • The park is adjacent to  Ben Gurion University. This location eases a range of tasks, including joint research, recruitment, and developing in-house study programs. 

The park is located on the edge of the prestigious Ramot residential neighborhood. This will allow the various company employees to live close to work in one of Beereva’s top residential neighborhoods. 

Relocation of IDF technology and intelligence departments 

The decision to relocate the IDF’s technology and intelligence departments from Tel Aviv to the Beersheva perfectly harmonizes with all of the above factors. 

On it’s own, the immediate significance of this transfer is that thousands of IDF officer level personal will be relocated Beersheva and its immediate surroundings. 

Investment opportunities 

The most attractive real estate investments are those that allow maximized returns with maximized upward potential. 

Traditionally returns in Israel are nothing exciting. The magic in Israel real estate lies in its very strong price appreciation. However, Beersheva allows for more attractive returns. Unlike areas such as Tel Aviv, Raanana, Jerusalem and Netanya where annual returns very rarely exceed 3 %, current returns for good areas in Beersheva, such as Ramot yield in a range of 3.6 % – 4%. 

As in all areas with strong supply and demand imbalances Beersheva exhibits steep price appreciation. Close to completion, one of my projects in Ramot is currently selling 4 room apartments for NIS 960,000 as compared to selling prices of NIS 880,000 when the project commenced 14 months ago. For all intents and purposes, this appreciation in pricing will continue and even grow stronger, as the supply and demand dynamics becomes ever more imbalanced. 

For anyone interested in hearing more about investment opportunities in Beersheva please note that I am currently representing a number of developers in the Ramot neighborhood, as well as the developers of Beersheva Advanced Technologies park.