NTA – Metropolitan Mass Transit System Ltd. continues to commit to the Red Line of the Tel Aviv Light Rail system opening this November, and carrying 70 million passengers a year. Even before excavation of its underground section began, the real estate market started to respond to the prospect of public transport making places on the line of the route more accessible. The real estate along parts of the route was already in high demand, and since the works began, the prices of housing and commercial space nearby have risen substantially. Has the potential already been exhausted, so that investors who did not jump on board at the beginning have missed the train, or will prices continue to climb after the line is opened? And what will be the consequences for public space along the route?
The line was planned as the backbone of the mass transit system in the Tel Aviv metropolitan area, running from the central railway station in Petah Tikva to Beilinson Hospital, and then along Jabotinsky Street in Bnei Brak and Ramat Gan to the Savidor Central railway station in Tel Aviv, continuing along Begin Road to the Azrieli Center and southwards to Menashiya, Jerusalem Boulevard in Jaffa, terminating in the south of Bat Yam.
Experts with whom we spoke said that real estate prices had risen substantially along the route, but not just because of it, but also because these were areas in high demand and real estate prices in general have been rising.
“Prices will jump again when the Red Line starts operating”
Nevertheless, the price rises along the Red Line route have been very significant. According to analysis by real estate appraisers Nehama Bogin Ltd. of home prices nearby planned light rail stations, in the vicinity of the Maharozet station in Jaffa prices have risen by NIS 1.32 million, or 120%, since 2015.
In the vicinity of the Abba Hillel station in Ramat Gan, prices have risen 75%; in the vicinity of the Kaf Tet Benovember station in Bat Yam they have risen 30%; and in the vicinity of the Dankner station in Petah Tikva they have risen 27%.
“In the past few years, real estate prices in general have risen by 25%, with no connection to the Red Line. Discounting the general rise in prices, it can be seen that, even before it starts operating, the Red Line has led to a significant rise in prices of homes in the first and second circles around the stations, “Bogin says.
What will happen later? “I predict that as the Red Line starts reaching full operation, we shall see another jump in prices around the stations,” she says, but adds, “As far as investment is concerned, the recommendation is to focus on areas in which work on the lines is less advanced, such as around the Purple Line or the Green Line. The potential for a rise in value there is greater. “
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Commenting on business districts along the Red Line route, particularly the BBC (Bnei Brak Business Center) district, Bogin says that the rise in housing prices has not yet translated into price rises there. “As soon as the Red Line starts operating and businesses understand the potential, that could be a spur for investors looking for their next investment,” she says.
Tamir Ben Shahar, CEO of economic consulting firm Czamanski & Ben Shahar & Co., explains that the network of lines of the Light Rail and the Metro was planned in accordance with existing high-demand areas rather than areas in which it was desirable that there should be demand. “This is a very clear statement about planning in Israel, that through transportation solutions are created for the existing situation, and not competitive advantages for new places,” he says.
“Over time we have seen the advantages of places near Israel Railways stations, national highways and main junctions, and close by the Diamond Exchange and the Azrieli Center. New places are also being created, such as the Elef complex in Rishon LeZion, and others are starting to be planned.
“Around the world, many examples and studies demonstrate the growth of economic value, of income-producing real estate of course, offices and commercial space, but also of homes, next to stations, and also within up to half a kilometer or more from Half a kilometer is estimated to mean eight minutes on foot to reach a station.
“Looking at the years ahead in Tel Aviv and its environs, it will be hard, in fact almost impossible, and not economically worthwhile, to move around by car, because the regulator has created that situation by giving preferential lanes to buses and reducing lanes for cars, or through the prices we are forced to pay.Most of us will therefore forego cars, and in that situation the mass transit lines will become much more important.
“In other words, if I’m on the Petah Tikva line, not only will employees come to me, but it will also be easier for them to get to a workplace or shopping in central Tel Aviv, and the same applies from Bat Yam .There is no doubt that the Beilinson area will grow even stronger, and of course Kiryat Aryeh, the industrial zone in Bnei Brak, and the Diamond Exchange and Azrieli, which will continue to rise.The Hassan Arafa site in Tel Aviv will also rise .
“We shall see demand strengthening along the southern part of the route as well, chiefly around the stations, to the extent that for every meter that you get further away from the station you will see a drop in rents both for homes and offices. You have to understand, though, that in Tel Aviv, in the Azrieli, Toha and Sarona towers, prices are so high not just because of public transport routes, but also because they are accessible to the young talents who live an electric scooter ride away from In other words, in order to create demand like that, heavy transport and the mass transit system alone will not be enough, and they have to be supported by a network of urban streets and bike-riding and walking infrastructure. “
Ben Shahar explains that businesspeople accumulated assets around the stations years ago, as the line was talked about for many years before work on it started. “As soon as they started work, the market put its faith in it. Demand strengthened in most of these centers even beforehand. Some buildings were designed with internal entrances to the stations, exploiting the advantage even further, such as Azrieli in his wisdom did with the railway station. Since these investments started a long time ago, I estimate that we have exhausted the growth potential. “
Petah Tikva: “Companies can not pay NIS 150,000 per meter”
Itai Shafran, vice president of business development at Geocartography Knowledge Group, says that the Red Line has worked wonders in Tel Aviv and Ramat Gan, and has been a factor in the price rises in those places. In Petah Tikva, he explains, the business areas are mainly in the west of the city, with Kiryat Aryeh to the north of the Jabotinsky route and Ramat Siv and Kiryat Matalon to the south of it.
“Three years ago, a massive construction spurt began in Petah Tikva – BSR City, with 120,000 square meters of offices, and Global Tower next to it, with the space in both of them sold through buyer groups to investors and end customers. same time, Sasson Hugi built an office building on the south side of Hasivim Street and is selling at fairly low prices, and these places are near the Light Rail, but many more projects will be built along the Jabotinsky route, and there is an expectation that companies and businesses will abandon the core of the metropolis and migrate eastwards, because price levels will rise.
“As soon as that happens, businesses and finance house, and law and accounting firms, that can not pay NIS 150,000-200,000 per square meter, will shift eastwards. The successful places will mainly be those that can offer entertainment and restaurants, such as Ramat Siv. In Petah Tikva, the Light Rail route will mainly lift business districts. “
Bat Yam: “Game changer for a trapped city”
In Bat Yam, the picture is more complicated, Shafran says. Bat Yam has no modern business district. “The Red Line will cross the city from north to south and will connect with all the lateral routes, so that there will be a warp and weft of desirable roads. We’ll see big companies coming in, and on the residential side we are seeing a rise of the order of 20-25%, and some deals at NIS 40,000-45,000 per square meter.More than anywhere else, the Red Line is a game changer for a city trapped between the Ayalon Highway and the sea, with no possibilities for geographical development. Here, there will be both an urban and an economic solution, both for real estate developers and for companies. The potential in both Petah Tikva and Bat Yam has not been exhausted; it’s just beginning. “
For the potential to be realized, however, a rail line and building rights are not enough. Omer Rafael Bor, an economist at the UK Department of Transport, explains that to make the line successful, there has to be successful urban development around it. When the economic viability of a transport project is examined, it is not just the transportation aspect that is looked at. Economic benefits are examined such as the productivity of companies that will be able to hire better, the rise in value of real estate, changes in land zoning that change the make-up of the population and the businesses around it, and this is a symbiotic relationship between the transport route and surrounding use.
“You have to remember that the main users of a system like this are public transport users who are first and foremost pedestrians, and if the development around the line is such as we see in Israel, a space that does not encourage walking but rather the use of private cars, which is the case in the vicinity of the railway stations in most of Israel, the potential will not reach maximum realization. “
Published by Globes, Israel business news – en.globes.co.il – on April 17, 2022.
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