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Last update - 01:37 18/07/2005
The young are leaving Haifa; there's no land and contractors are also voting with their feet
By Arik Merovski
"Collective building in Haifa is becoming a real plague," complains the chairman of the contractors association there, Avi Yarom. "Fifty percent of the apartments today are being built by private associations and not by contractors, primarily in the older neighborhoods on Mt. Carmel." But Yarom is complaining only about the symptom. The shortage of available land, in addition to the attrition rate, is causing large contracting companies to move away from Israel's third largest city.
The problem wasn't born yesterday. For years, Haifa has been outside most of the large companies' construction map. Here and there, there are a few large companies that come to Haifa, such as U. Dori, which built together with Shikun U'Pituah a project in the Yizraeliya neighborhood; and Yaakov Engel, who built a project on the slopes of Derekh Hayam. Today the companies active in the city include Azorim, which is building a project above the Neveh David neighborhood; Gav Yam, which is building luxury towers in the French Carmel; Shikun Ovdim, which has several projects in the city and plans for several more - but these are all independent cases.
As of now, the most dominant companies in the city are A. Faber, Sharviv and Mizrahi, which are building in the Ramat Alon complex and in Savyonei Denya, as well as Yuval Alon and Doron Ofer, who are building in an area adjacent to Savyonei Denya in the municipal boundaries of the neighboring city of Nesher.
Developers note that in Haifa there are no sites for massive construction that would justify large companies entering the market. Only the Savyonei Denya and Ramat Alon neighborhoods, where high-rise residential buildings are being built, are options for building dozens of housing units that could be of interest to large contractors. The other neighborhoods have plots for building four to eight apartments, and they are not attractive to the large contractors. This is the domain of small, local contractors.
Uri Dori, who holds the controlling share of U. Dori, is the owner of a contracting company currently not active in the city. "The problem is that the city has no lands available at reasonable prices for large projects. Most of the collective construction projects are on plots for six to eight apartments. We're looking for lands in Haifa and believe in the city, but we haven't found anything yet," explains Dori.
In Haifa, there are also no Israel Lands Administrations plots. Almost all of the land in the city is privately owned, which makes it very hard to find available ground. Another problem is the location and price of plots in the city. The desirable areas of the city are Carmel-Ahuza, Ramat Eshkol and Ramot Golda - but there are hardly any available plots there and when there are any, they are designated for a limited number of housing units and the cost of the land per housing unit can hit as much as $180,000. Yarom confirms that this is the problem, which is leading to an increased number of private housing associations. There are hardly any local contractors who could meet such payment terms.
In the absence of available plots for reasonable prices in desirable neighborhoods, contractors are trying to find plots in less sought-after locations. Savyonei Denya is one example. Another is the slopes of Mt. Carmel to the east and west of the city, but those areas still contain many undeveloped plots. It is unclear when they will be developed, and this makes them less commercially viable.
The director general of Ashdar, Shraga Waseman, notes the issue of unavailable lands and adds two more reasons why his company should not enter Haifa: "The Haifa market is a special one, with special behavior patterns that have to be carefully studied, and you also have to be prepared to pay tuition. If I have a project of 1,000 apartments, I'm willing to pay tuition for the first 50 apartments, but in Haifa there is no land for so many apartments.
"In addition, Haifa has a bad name among developers as a city that makes it very difficult to obtain building permits and prepare plans - and that's reason enough for a developer not to invest in it," says Waseman.
A demographic problem
There's also another, demographic problem. The population of Haifa is not growing. The number of residents peaked in 2001 at 271,000. In 2003 the city had 269,000 residents, and by the end of 2004 the number had dropped to 268,000. Over the past two years, the city's population has been shrinking at an annual rate of 0.5 percent.
"The problem with Haifa is that many young people don't find their place in the city," explains a realtor who works there. "Whoever doesn't find a job tries his luck in the center. Whoever has a job has his eye on the communities nearby, such as Nesher and the Krayot and even the hilltop communities in the Galilee and Zichron Yaakov, which are on the edge of the metropolitan area. The arnona municipal taxes in the city are very high, most of the apartments on the Carmel are old and uncomfortable and the alternatives beyond it are more attractive. Therefore, contractors building in the city do so in the face of decreasing demand."
"I don't think that the gist of the problem is here," says Dori. "Haifa isn't dead and has great leverage for growth, and that is the Matam science complex, which is flourishing."
Says the realtor: "Too many in Haifa rely on Matam, and the fact is that despite the fact that this high-tech park is thriving, the city isn't. The conclusion - what is true of smaller cities, which transform their industrial parks into an index of urban growth, is not true of large cities.
"A city the size of Haifa must offer its residents much more diverse sources of employment, and that is not happening.
"As of now, the population that should be the heart of real estate demand in Haifa, the 30-something group, is leaving. It's no wonder then that the city is deterring contractors," the Haifa realtor says.
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