Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts

Thursday, November 17, 2016

Haifa, an alternative to Tel Aviv?


Standup Surfing in Bat Galim beach Haifa. Slower lifestyle, quieter residential neighborhoods and affordable housing is luring Tel Avivians to north Israel. Haifa is one of the preferred destination © 2016 D-A Vider

Lifestyle and cost of living in Tel Aviv are compared to many European cities. Israel's central district (Gush Dan) has been on a growth spurt the last fifteen years. Most visitors who were here just a decade ago are amazed by the developments. But many Israelis are not happy. Housing prices are climbing steadily much faster than salaries. City centers (both Tel Aviv and surrounding suburbs) are crowded and noisy. The quaint Mediterranean beach cities, small communities hidden in sandy dunes, towns built in historical biblical locations and small agricultural settlements are gone. Simply put the last thirty years has turned central Israel from a quiet semi-rural land to a developed suburban sprawl. This is the lifestyle cost Israelis are paying for world leading economic success. When Israelis tell people about one of the most successful economies in the whole last century. Essentially creating a country from ideas and sand dunes. From colonial rule and antiquated laws to a modern fully functioning democratic republic - the personal cost is rarely mentioned. Yet this is the life in Israel.

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Sunday, June 5, 2016

Tel Aviv's Attraction for Millennials

Only the brave & adventurous para-sail Tel Aviv's coast on windy afternoons, yet plenty of foreign millennials are on the beach watching, May 2016

When you live and work in Tel Aviv, especially if you are a millennial, you notice the number of young foreigners here. The most surprising observation is the wide range of people from different countries (I go by languages) these millennials represent. Not only European and American, also Asians (especially Japanese, Korean and Chinese) and South Americans (especially Argentinians and Mexicans). With a few Africans and eastern Europeans thrown into the mix (Russian tourists still come in some numbers). Granted most come to visit or on business. Some come from curiosity, bucking the trend of staying away because of negative image. What will get all these millennials, energetic, optimistic, curious and a bit adventurous to come live and work in Tel Aviv? Besides the image of an active entrepreneurial center, there was a sense of adventure and maybe risk taking when coming to Israel. This is especially the image Israelis try to portray. Israelis also portray an image of a modern economically developed country. Almost on par with western European countries. Yet most western European and Americans see a different picture. Israel is still a small country somewhat isolated from Europe and completely apart from the surrounding middle east. This makes for a bit of an island mentality. Economically Israelis are still struggling to catch up with western Europe. Israeli standard of living is also below US middle class. Yet in culture, technology, architecture (especially residential construction), personal freedom, modern legal and government standards and many business sectors (particularly retail, banking and corporate structure) Israel has come close to many western countries. To most Asians and south Americans this is good news. Although adopting to Israeli culture takes effort and to some it's a steep learning curve, the benefits of living and working here are worth the effort. The same goes for most eastern Europeans, where economies and technology slowed to a crawl for decades, Israel is a breath of fresh air. The story of millennials in Israel is rich and interesting. More to come...
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Friday, May 27, 2016

Daniella Lehavi and Luxury Shopping in Tel Aviv

Daniella Lehavi is a well established luxury leather accessory brand in Israel, bags after shopping, Givatay'im May 2016

Tel Aviv is trying desperately to lure local luxury item shoppers. But with cheap travel to Europe and plenty of imported global branded items, the job is a tough one. Israeli designers have tried to establish a local luxury market for years, yet many fail. One success story is Daniella Lehavi [site here]. Still a relatively small retail chain with ten shops in central Israel. The shops are small boutiques with a few selected items from each category. The site and catalog show many more items available. The luxury accessory shoppers don't mind small boutiques, they happily support them. With the growth of mall shopping, essentially making them the primary shopping destination in Israel, Lehavi is taking advantage of the exposure. Israelis are not living the luxury lifestyle yet, but when they get there, Lehavi is happy to offer them local leather accessories.
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Monday, March 7, 2016

Shopping Still Strong in Israel

Givatay'im mall at a quiet weekday morning. Shopping at a street level has actually increased recently.

Israel somehow averted the global downturn of 2008. This makes for over two decades of steady growth (see Bank of Israel statistic). Some attribute this to the cautious Israeli bank lending policies. The average Israeli who wants to qualify for a mortgage needs to show ability to pay off a loan more convincingly than in other countries. Certainly more than in the US (see the recent movie "The Big Short") even after the sub-prime Wall Street fiasco. Some attribute the strong economy to fast move into new technology start-up sectors and security (i.e. military, internet cyber) sectors. Either way, the Israeli economy is growing steadily. This puts pressure on consumer sectors. The building industry has been suffering for years from slow growth and new home prices continue to see inflation year after year (2015 home prices in Tel Aviv increased by 8%). The state (in making land available), builders (due to labor shortage) and even banks are not "building" enough new housing. Demand is simply growing much faster than supply.
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Wednesday, December 2, 2015

North Tel Aviv Construction

Beautiful repeating geometric shapes in new north Tel Aviv neighborhood, Derech Namir, Nov. 2015

Tel Aviv proper does not have large tracts of land for new construction. The few empty areas have been spared so far are falling in the hands of developers. Old areas which can be cleared (as the old produce wholesale market on the Cheshmonaim street and the IDF headquarters) are also turning into target for luxury apartment builders. The shift from low cost mass construction to luxury is steady and strong. Waves of large immigration, which defined Israel's construction style in the past, are not expected in the near future. With the continued economic growth of the state, both consumers and builders are looking to buy bigger and better-finished apartments. Also the demand to live in the Tel Aviv area is stronger than ever before. Building large luxury neighborhoods in central Israel is strong now and should continue unless a major economic change hits.
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Monday, November 30, 2015

More dense construction in Tel Aviv & Surroundings

View of Ramat Gan and beyond (Judea hills in the background) with dense construction typical of Israel's central region

On the last post I mentioned how the green central region of Israel is slowly turning into a "gray" over-built "Brooklyn". It was a comment based on the view from Gan Ha'Banim (boys or children park) overlooking Ramat Gan (and some distant eastern Tel Aviv suburbs.) Tel Aviv and surrounding suburbs construction density reflects the waves of fast construction the last century (Tel Aviv's first big spurt was in the 1920s and 30s). Ramat Gan and Givatay'im, the suburbs east of Tel Aviv have seen bursts of construction in the 1950s to the 1970s. Today's central region of Israel, surrounding Tel Aviv, is densely populated. Most construction styles were low cost, fast in deployment and answered the need for housing after big immigration waves. The last wave of construction came with a million Russian (former Soviet Republics) immigrants starting in 1991. Today there are still empty lots being filled with the smaller buildings rising to eight stories. Taller buildings rise from fourteen to twenty four stories. The lower construction style is seen filling sections where most existing buildings are four stories high. In new areas, where land is designated for new neighborhoods, buildings are at minimum eight stories and rise to twenty four stories. Debate over the intent and overall result of high density, high-rise construction, is a constant hum in the media. Resistance to create dense neighborhoods, sometimes referred to "Israel's Brooklyn" after the construction of large residential buildings in the famous New York city borough is strong.
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Monday, September 21, 2015

Tel Aviv High-Rise Construction

New hi-rise buildings in north Tel Aviv still going up fast @ DAVider 2015

Tel Aviv construction is still going strong with luxury apartments leading the sector. Parts of the central region, left undeveloped, are now starting to be filled with high-rise buildings. In areas from Tel Aviv to Petach Tikva, buildings with 24 to 32 stories are planned or under construction. Although the Israeli economic statistics are showing almost zero inflation and zero growth, in the construction sector this is now what we see. 
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Tuesday, September 8, 2015

Apartment Listing: Dizengoff @ Bazel $500K 45mtr-sq 1 Bdrm

Apartment listed in north Dizengoff realtor: 45 sqr-mtr, 1 bedroon, US$ 500,000
The prices of Tel Aviv apartments are still going up. After years of steady and fast rise, Tel Avivian's are no longer screaming, protesting or surprised. A short spurt of foreign buyers, seems most likely French from the street level sounds, are keeping sellers happy. The state tried to stem the quick rise in housing prices will all kind of programs. Yet housing starts, tax incentives and even reduced building red-tape is still alluding Israelis. This listing, common in north Tel Aviv realtor windows, lists a one bedroom 45 square meter apartment for two million shekels. Sticker shock is common to foreigners, but quickly fades once people see a few properties and compare prices. For the most part, prices for similar apartments are fairly uniform. Most apartments in desirable locations are new or renovated and in good condition. Happy house hunting  ;-)


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Wednesday, June 17, 2015

Tel Aviv's Hidden Business World: Financial Services

AIG is a large retail insurance in Israel, also runs financial operations unrelated to Israel

Would you be surprised to see a large American financial company with 200 employees in the middle of Tel Aviv? Would it be more surprising to hear what they do: the same work as similar workers are doing in New York, London, Shanghai or Berlin? Managing mutual fund portfolios, supporting customers in the US, researching markets (opportunities), analyzing and advising on economic trends, essentially whatever financial workers are doing anywhere. The trend to open a dedicated operation or a department in the financial sector is not new here. What is new is how people make the transition from Paris, London and Sidney to Tel Aviv. In the past a move to Israel was not advised to the faint of heart. Today Tel Aviv's status as a global city similar in character to most European ones is accepted by many. This change is what drives mostly American financial companies to open work centers here. 
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Wednesday, August 13, 2014

Quiet North: What the media doe not report

Haifa, Bahai Temple and port from above (c) 2012 Ami Vider
There is lots of talk on Israeli Radio and in the social media pages about Arab (Muslim) loyalty to Israel. Now that the Palestinian question is back on the front pages. Some relatively small groups like the Druze bring up their loyalty to the Israeli state and their service in the IDF. Some bring up the small number of Arab Muslim protesters during the war in Gaza as a sign of tacit approval with the state's policies. Yet what we don't see is the slow and steady decline in the tourist and regular activity in the north. If you haven't heard, tourism traffic to Israel is just about zero. Even evangelical Christians, ones that sometime on purpose come to Israel to support the economy in hard times are delaying their trips. Both local Jewish and Arab residents are also traveling less inside the state. The tourism department is taking out advertisements to support local tourism. But in general, this small step by the state is not helping. Some tourist destinations from hotels to restaurants and cultural sites (museums, parks, archaeological sites) are also offering discounts through advertisments. This comes at a time when the north needs as much support as possible. We just need to stay aware and see where this Gaza war takes us. 
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Monday, November 25, 2013

Israel's Bell Curve Spread: Between Populism and Elitism


If you follow the economic and lifestyle stories on Israel's main media outlets, you get a mix of split personality opinions. I say "opinions" because some media stories are not really objective reporting as much as opinion of one expert or another. Sometimes the media outlets are simply a propaganda channel to one politician or another. Which seems to be just fine in the eyes of most Israelis. Lately, besides Bibi's harping about the Americans not taking the Iranians seriously enough (with the supposedly "just around the corner nuclear bomb making drill") most politicians, from proper ministers all the way to Ron Huldai (Tel Aviv's mayor), is the wide economic gaps everywhere. It seems like the Israeli economy is one big Swiss cheese of a system. The mix of socially based and merit driven realities clash each other. Then there is the old school cronyism in friction with simple family centered oligarchy. Some going back a century (Teva pharmaceutical) some just a few decades (Tshuva family / oil and gas). Then there is the continuous scratching between organized labor and private management. This goes on in the private sector as well as in public service (physicians, nurses, school teachers).

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Monday, September 30, 2013

Middle Class Consumerism: Strong and Steady

Doughnuts sold as the latest fad from the US at a local bakery

If you take a stroll through a mall or visit a new apartment construction sales office, Israel feels more like America in the 1970s or Spain in 2000. For that matter probably Moscow or Beijing or even Rio De Janeiro of the last decade: strong economic growth and growing consumer spending driven by new credit policies. In Israel, large mortgages were unheard of fifteen years ago. Today, a couple with steady income record can get 50% montage without too much trouble. The banks have flooded the market with so much cash, housing prices have been on the rise regardless of supply and lately regardless of geographic location inside Israel. Even apartments if remote towns are rising in prices while supply is plentiful. Builders simply "up-sell" by loading up large apartments with high end finishes. The same goes for consumer products. There are more luxury malls and luxury shops everywhere. Just recently the luxury Italian car companies Maserati and Ferrari hung up their brand symbols on a central Tel Aviv building (just across from the central train station). If you want Rolex, go down to the new luxury building on Ibn Gvirol, a street considered tired and rundown just five years ago. The push by the market is not limited to luxury items. In the middle areas, there are even more signs of strong growth and credit use.

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Monday, September 2, 2013

Israel Aerospace Industries Launches Amos 4 Communication Satellite

Israel Aerospace Industries Amos 4 Communication Satellite - Sept. 2013
Today (Sept. 1, 2013) Israel Aerospace Industries launched Amos 4, the most advanced communication satellite deployed to date. The 4.2 ton satellite will give Israel a unique position as a communication supplier in Europe, Asia and Africa. Amos 4 will give Sapcecom, the operating company, capability to supply the Israeli government as well as private and governmental customers high bandwidth communication for TV, telecom and Internet services. In addition to traditional broadcast capability, traditional communication services into rual areas. Israel, is one of the leading service providers racing to give governments in Asia and Africa the ability to connect rural areas without the expense of large terrestrial wired and radio based networks.  
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Wednesday, August 21, 2013

The Politicization of Israeli Economy and Foreign Investment

Rosa Parks with Martin Luther King Jr. - unintended speaker of truth...
This topic would not have come up in my writing if not for a recent comment by UN secretary general in his visit to Israel (see: http://www.un.org/sg/). According to reports, Ban Ki-moon said to students in a speech a few days ago:
“Unfortunately, because of the Israeli-Palestinian conflict, Israel has been weighed down by criticism and suffered from bias and sometimes even discrimination,” UN Secretary General Ban Ki-moon admitted during his visit to Jerusalem, according to the European Jewish Press (EJP).
This admission is good news to Israelis which have been complaining about negative bias no only in the UN. What seems like a new revelation, is the secretary's explanation which amounted to something like “what do you expect, after such long and bitter Israeli-Palestinian conflict”. Israelis are accustomed to negative bias from foreign government (and government representatives). Israelis have experienced with bad treatment when visiting foreign countries. Even treatment at embassies representing foreign governments IN ISRAEL, have been known to treat Israelis badly. Is this a new step in honesty from UN officials? Will UN officials be able to limit discrimination from member states? At least in the UN?


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Wednesday, August 7, 2013

High Price Apartment Solution: Higher Mortgage, Lower Interest, Easier Credit

Gindi, a leading real estate developer, market luxury in Tel Aviv (Israel)
As Israel's real estate prices soar, banks are not sitting by the sidelines. Banks are making home buying easier than ever before. Israelis are taking more debt, at a faster rate, worrying the central Israel bank regulators. Yet Israeli mortgage is not as leveraged as the US and European markets were when the real estate bubbles collapsed there. While Israeli regulators and policy makers (i.e. government agencies) are worried and taking steps to lower the market's exposure to collapsing prices, Israelis are still following the path buyers in the west went down before. Are Israelis not aware of the danger in taking high percentage mortgages? Are Israeli banks unaware of the risk in a collapsing housing market? What about the regulators and policy makers, are they not aware of the economic collapse due to real estate bubbles? Well, it is not the case of now knowing or misunderstanding. But it is a case of “this happens to others, not to me” (or to “us” here in Israel). We call it the “ostrich behavior”, stick your had in the sand when you are being chased. You don't have to be Australian to understand the ostrich analogy. Pretty much every western culture understand ignoring reality and hoping not to fall in the same situation as others. Just keep on ignoring things enough, and hopefully things will take care of themselves.  
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Sunday, July 28, 2013

Tel Aviv Stock Exchange: Stagnant & Reeling

Tel Aviv 100 Stock Index: Stagnant? Or Irrelevant? What's Next?
All the top management of the Tel Aviv Stock Exchange has resigned. According to "Yediot Achronot" business section (Mamon), the top brass has been at odds with the government's top regulator. It seems like reality is a bit more complicated. The Israeli stock market has been experiencing a slow stagnation for the last three years. Not necessarily because of the underlying business condition, business has been good in Israel. Most of the blame goes to the commercial bond market. The last five years, Israeli companies preferred issuing bonds rather than stocks. Partly a consequence of heavy regulation on common stocks, reflecting a change in policy of encouraging more competitive (individual) stock ownership. Israel, with almost an oligarchy economy, ended up with a stock exchange dominated by a small number of "ownership groups". Another factor in the drop of trading volume on the Tel Aviv stock exchange is the steady drop of foreign investors. Foreign funds prefer larger exchanges with deeper trading. When things go sour, it's easier to get out.
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Wednesday, July 24, 2013

Cleaning Up Financial Speculation Mess: Will It Affect Israel's Sound Business?

Nochi Dankner is today's financial shenanigan villain
If you follow the Israeli business papers, it seems like every week, some banker or fund manager is accused of some wrongdoing. There was a case of the “Israeli Madoff”, a broker who swindled about a hundred investors of millions. There is a case of Bank Leumi, Israel's oldest bank, announcing a write-down of a three billion shekel loan to Nochi Dankner's IDB companies. There are questions of sudden loss of value in the most conservative private retirement accounts in most Israel's biggest companies. In general, it seems like strange things are happening, yet regulators and senior executives are vague about what exactly happened. Israelis react in a wide range of responses. There are the angry and vindictive type, asking to prosecute finance executives as common criminals. Others are more philosophical, essentially accepting the losses as part of the risk of investing in any retirement fund involves in market speculation.
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Saturday, July 20, 2013

Trouble With Fast Economic Growth: Growing Socioeconomic Gap

Iron Dome military system has implication well beyond a security system
The last two years, Israel's educated middle class started protesting a widening socioeconomic gap. This gap, seem to be widening every day, is more visible in the upper middle classes. Upper classes brought about by strong economic growth in a few small sectors. There are many more luxury apartments going up, more new luxury cars on the street (new Ferrari and Maserati dealerships), and many more shops with items not seen here before. But there are also difficulties to some which are also a new surprise to many. College educated and well trained professionals are no longer assured a well paying job and a comfortable middle class lifestyle. As the number of luxury high-rise apartments is going up at alarming rate, it seems like everybody is enjoying this great economic growth. But as you look more carefully, that's not the whole story. In market segments where the economic growth is concentrated, like construction, high-tech, finance, and luxury retail, the benefactors are not necessarily “yeled tov Yerushalayim” (a good boy from Jerusalem), well educated middle class professionals.
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Sunday, July 14, 2013

High Cost Tel Aviv Properties: A Continuing Trend

NOT Tel Aviv, city of Mt. Maunganui, Not the expensive real estate of Tel Aviv (from http://ashkenas.com/)
Tel Aviv is one of the most expensive city in the world to buy a property. This has been the story until 2008, when many of the world's economies collapsed and comparison costs stopped coming out. The economy here also slowed down, not exactly a collapse. What makes Israeli properties so valuable? One explanation is supply and demand. Tel Aviv central zone was built quickly in the 1920s and 1930s. Small apartment buildings, four stories high with two bedroom apartments was the standard. Then in the 1950s, the rest of Tel Aviv, to it's borders was filled in. Flash forward to the 1980s and 90s and demand (and available money) is pushing apartment prices up. This drives steady new luxury construction. Since Tel Aviv does not have readily available open land for construction, whatever land is available is expensive. An alternative to open land, replacing old buildings with new one. This technique is called “clearing / building” (pinui / binui): clearing existing property, building new one.
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Monday, July 8, 2013

Buying Luxury Apartments in A Group Project: Bavli Project Offer

To reduce the cost of luxury apartments, a scheme of building and financing with a group is an alternative to buying from a traditinal builder. A general contractor organizes a construction “project”. The organizer, finds land, hires an architect and selects a builder. Then they offer apartments for sale in the project. In the early stages, before many units are sold, the project organizer does not spend a great deal of money, until she is sure the project will actually be done. For the buyers, the apartments cost less, up to 20% less than equivalent units in the same area sold by traditional construction companies. In general, it has been claimed that building using contractor projects are slower to be finished and sometimes are not as luxurious as ones built by traditional builders. Usually, construction groups raise money for each unit gradually as the project progresses. This may help buyers pay or raise money for a more expensive unit. In Israel, this scheme is still not a large part of new construction,  yet it is a good laternative to some buyers.
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