"Only those who do not understand claim that 'price for the resident' is a bad step"

Dr. Rina Degani, an experienced urban economist and the owner of the "Geocartography" research institute, has been researching and surveying the Israeli public for 35 years. Before the 2022 Tishrei holidays, we asked her for explanations and predictions. A fascinating (and not very optimistic) interview with the biggest authority in the field of research and real estate. n

David Rosenthal

13/09/2022

Tuesday, September 13, 2022, 00:23

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On video: Rothschild protest against the cost of living (Photo: Uri Sela)

Just before the Tishrei holidays, we wanted to stop for a moment and review the state of Israel in areas that concern us all.

We were looking for someone who would allow such an educated glimpse and look towards what is expected of us in the future.

The paths led us to Dr. Rina Degani.

Degani launched the largest research and survey company in the country "Geocartography" together with her husband Prof. Avi Degani, 35 years ago. She is at the heart of economic processes every day. Companies from the fields of real estate, consumerism and more turn to her So that she will investigate for them the economic feasibility of their expansion, therefore she has a lot of material in her hands that can shed light on the most burning phenomena that we are all affected by.

We haven't peaked yet.

Dr. Rina Degani (Photo: Ofer Vaaknin)

She also thinks that the state has been negligent in the way things are managed and has brought us to a situation where the cost of living is unbearable: "We live in a global world and it is impossible for people to buy products in Israel that are more expensive than their price overseas. It is no secret that Israeli products are sold internationally for half the price. We will have to open up the whole market to the free world and allow parallel imports. This problem has existed for many years when large importing companies dominate the market and cause an unforgivable situation. In addition, the restrictions that Israel imposes on products worsens the situation. We must get things in order and understand that products that are good in Germany, Belgium and France are probably also good for Israelis and we need to stop limit their imports. People are finding it very difficult to finance life in the country, especially in the last year, against the background of the wave of price increases, but unfortunately we have not yet reached the peak. Today, the mortgage payment due to the increase in interest rates and the increase in the housing price index rises by hundreds of shekels and even over a thousand shekels more per month Two graduates who together earn NIS 20,000 net per month, after the mortgage payments,The kindergartens, the classes, the clothing and the footwear, can be broken and reach the point of harming the purchase of food and medical products."

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"The marketing moves of 'Price for the Resident' created a new possibility"

"Real estate prices are breaking records and therefore the 'price for the tenant' move is a great step," says Degani, "those who don't understand claim that this is a move that spoiled and harmed the growth of the market.

It's true that sometimes it allows those who didn't deserve it to get discounts, but it happens everywhere in the world.

All in all, this made it possible for couples who didn't have a chance to purchase an apartment even in the suburbs.

We live in a world that presents us with a fact: an apartment is the most important asset, especially in the Jewish sector.

70 percent of Israeli residents live in an apartment they own.

The marketing moves of 'price for the resident' created a new option and will spread the residents more correctly across the country.

"Something must happen to stop the mad rush to Gush Dan and Tel Aviv. In every country in the world, the central city is the most expensive. Tel Aviv has become Israel's Manhattan. A simple economic analysis proves that two main audiences are being built here: wealthy adults who live in large luxury apartments, on the way In general, high-rises and young people working in high-tech professions are content with tiny apartments and ride scooters. The desire to enjoy a diverse cultural and nightlife life drives everyone into the city non-stop. Here it is happening after 70 years, but in the big world it has been like this for hundreds of years. In recent years we have seen that more Young families who in the past preferred large and comfortable apartments in the outskirts of Tel Aviv - KFS, Ra'anana, Rasheltz and Pet, prefer to settle for small rooms and stay in Tel Aviv."

In the world they are looking to grow, in Israel they prefer small but in the center.

Tel Aviv (Photo: Reuven Castro)

Degani believes that the trend is contrary to enlightened countries in the world, where the desire to improve the standard of living causes an attempt to increase the number of square meters we have for living: "Enlarging and renewing an apartment and a car are the most common indicators in the world, in Israel the opposite process is happening.

More people prefer a small apartment in the center instead of a spacious apartment on the outskirts.

This is also the main reason for the fact that the prices for apartments in Tel Aviv, RG and Givatayim cannot go down, there will always be someone who will pay more."

"No to close the entrance to Tel Aviv, yes to tax vehicles"

Dr. Degani spends dozens of hours a month analyzing the exploding transportation situation in Israel. She is building on the red line as the first bud on the way to the beginning of the relief.

The tools we have in our hands or in front of us are suburban train, metro and light rail.

The expected peak hour capacity in one direction is 10,000 passengers per day in the suburbs, 40,000 in the metro and the light rail will be able to transport 7,500 people.

"The red line is supposed to start moving at the end of the 22nd and is expected to transport passengers from Petach Tikva through Bnei Brak, Givatayim, Jaffa and Bat Yam while entering the Tel Aviv neighborhoods. According to the plan, it will have 34 stations and the trains will operate with high frequency. I anticipate a radical change for the better following the operation of the line, as who made the light rail line and the train to Jerusalem."

"In my opinion no. What should be done is to oblige those who use the roads and infrastructure of the big cities to pay a special tax when entering the city with a car. Prof. Gronau called it a 'density tax', which means that you will pay for entering the big city depending on the time you enter and oppresses the transportation ".

Without core studies we will all be harmed (Photo: Maariv, Avshalom Sashoni)

The "Geocartography" company operates as a research institute that deals with economic feasibility and testing demand for economic ventures.

The company owns the largest polling institute in the country and employs 150 people.

It operates from the center of Tel Aviv, with the Degani couple living a few minutes' walk from the offices.

Prof. Avi Dagani, the founder of the company, developed geographic information systems.

He was one of the first in the world in his field and accumulated vast knowledge in the field.

Dr. Rina Degani studied city planning and models of urban economy at the Technion in Haifa.

"I am very proud of the enterprise of our lives.

These days I am writing the biographies of the company and it goes without saying that we have remained leaders in the field for several decades.

In the field of economic feasibility, we have done hundreds of projects for the leading entities in the country: shopping malls, offices, supermarkets, home centers, power centers, the layout of various networks, residential towers, employees for economic companies, large companies in the consumer sector, discount and more.

Referring to Israel's situation on the eve of the Tishrei holiday, Dr. Degani says: "We are facing serious problems in the areas of planning and education.

Education is in crisis because almost 30 percent of the children who started their studies in schools this year are ultra-Orthodox and Arab.

There you don't dwell on learning the Hebrew language correctly.

In the USA, for example, a Jewish student learns general studies and English in ignorance. In Israel, the children in the Arab society learn in their language and have a great lack in the Hebrew language. This causes their ability to express themselves to be harmed and so does their chance to succeed. This must not happen because they are the future of the country and a significant part from her. The ultra-Orthodox population also does not study core studies - computers, hi-tech, this will create unforgivable gaps and will ultimately harm the entire country. The teacher status is also eroded in terms of level because they are not paid enough and not enough thinking is invested in the matter."

"The planning industry in Israel goes through many processes and fatal mistakes have been made there"

In Dr. Degani's opinion, the discourse on establishing new settlements in Israel is in most places a mistake: "Establishing new cities in places very far from the center of the country will seriously damage the ability of that settlement to develop and strengthen.

There is not enough district vision in Israel, although in recent years the district committees are taking an increasingly important part in the role of the 'bad' policeman and the 'good' policeman.

For example, in the Negev region there is an unlikely situation.

It is impossible to develop Kiryat Gat, Dimona, Yeruchem, etc. at the same time.

There is not enough power for such development and this creates competition between weak settlements.

Instead of walking with your head against the wall, you should take care of strengthening the central city of Be'er Sheva.

A strong Beer Sheva will do good for all the surrounding cities, it will provide them with respectable and diverse employment opportunities, it will provide culture, health and more at higher levels.

"The same is true in the north, around the Hula Valley. The existing master plans include all the settlements in the vicinity and everyone tries to make a living from the same things such as tourism, B&Bs and parks. In practice, there is no systematic plan that determines the priorities for development. It is not clear what the financial distribution is and what the development plan is being led. Because This mess, every such locality wants to receive the allowances first, for fear that the money will run out, so there is no overall systemic planning."

Why develop separately and not together?

Buildings in Kiryat Ono (Photo: Reuven Castro)

And in the center of the country?

"Take for example the settlements in the Ono Valley - Kiryat Ono, Or Yehuda, Yehud, Savion and Gani Tikva," she says, "there, each pulls in its own direction and wants to build and develop separately and there is no spatial plan. We must examine the option of regional development stages and revenue distribution between the settlements Everyone will work together to increase one area and another and share the revenues, instead of competing with each other. But all the heads of the authorities are afraid that they will not distribute the money reasonably and therefore continue to fight each one for their place in the area, instead of glorifying the entire area as a unit.

"The issue of clusters in Israel is extremely important , but to this day he is too little involved in industry, employment, etc.

The clusters focus on the quality of the environment, joint purchases, regional problems.

The situation is similar in the Western Galilee region, thinking of examining which city whose development will contribute the most to the advancement of the region?

Acre, Nahariya Kiryat Eta?

Bialik?

The hangars?

A growing and incorrect phenomenon

What else bothers you?

"The issue of logistics, which is the field that is developing the most and the fastest in Israel. These ugly and huge warehouses occupy every good part of the State of Israel. On the one hand, when we talk about residences, there is a decision to build higher because there is a lack of construction areas. On the other hand, right now they are covering the country with hundreds of thousands of meters of storage areas and hangars. Drive from Tel Aviv and you will see along Route 6 on the way to Rosh Ha'Ain how everything is filled with hangars. This is a phenomenon that is intensifying without anyone asking if this is true for Israel."

"We have reached a situation where the amount of construction for employment in the last decade stands at 1.7 million square meters per year on average.

I include in this figure the industry, offices, commerce - the yielding commercial real estate as a whole. In the last four years, the amount of construction in these areas increased to 2.4 million square meters.

As always, it's all a matter of atmosphere, we need more yielding real estate and everyone is rushing forward. In the last year things have calmed down a bit, the numbers prove that too much employment space has been built. The increase in the construction of offices has increased at the expense of industry, for which the amount of square meters built for has only increased slightly in the five years the last, from 720 to 780 thousand square meters on average per year.

"The State of Israel does not build for industry, no new large factories are established. The growth is mainly due to the expansion of old factories. Urbanization is an area that is shrinking. Municipalities move the factories out of the city, because relatively speaking, it pays for them to introduce high property taxes from occupying the area with residential and office buildings compared to Very low income that is received as a result of the payment of property tax that comes from the industry. As a result, industry is pushed north and south and further weakens the periphery - low income per square meter.

In the end it will be an area of ​​mixed uses.

The stock exchange complex in Ramat Gan (Photo: Reuven Castro)

What inspires optimism?

"Taking care of the stock market area of ​​Ramat Gan, which has been in need of serious rehabilitation for decades. There are currently municipal plans to turn the area into a mixed environment of residences, nightlife, and advanced shopping centers. Thousands of apartments will begin to be built there, as well as student dormitories alongside offices. The area will undergo a significant renovation and will be A large addition of residential construction. If the plan goes through and they do build a large amount of apartments and offices, it will be a great success in terms of rental housing as well. A large commercial area must absorb thousands of units in order for it to rise and be truly mixed uses.

Note that there was such an attempt in the Haifa port complex, students were brought in there, but the area did not really rise into a lively neighborhood."

"There is no adequate reference to rental housing. The amount built in Israel does not exceed the 10,000 housing units threshold, which is a shame. We performed economic tests and were the first to test and propose projects. I remember that we were involved in the first project to build rental housing that was built in the Galilee. I sat down, researched and evaluated the economic viability. We proved that there are enough people who would want such use.

"Nowadays, we must take care of this area and increase the supply.

The state needs to release land and build and also convince contractors to give benefits so that they build for rent.

If there really will be a supply of apartments and a promise to pay rent that will not become more expensive six years from now, young couples will change their thinking model.

Some will stop chasing the money to get an apartment and the market will start to calm down.

If we guarantee reasonable rental prices for a long period of time, we will move towards a good solution to curbing the market."

Occupational development?

Not in the north and south

Dr. Degani speaks sadly about the chance for the north and the south to develop occupationally. "I don't see a positive direction in the development and strengthening of the periphery.

This is because of the roof agreements in the center of the country.

Each local authority in the center undertakes to increase the number of units by two thousand units. This is happening in Rasheltz, Rosh Ha'Ain and more.

The heads of the authorities demand to receive more money in revenues from business property taxes and approve large employment areas.

When you connect the roof agreements, you get more demand for the center of the country and nothing is left for the margins.

From my calculations, the estimates of employment areas in Haifa District, Jerusalem District, North and South are estimated at 400 thousand square meters of construction out of two million square meters.

It's just like the story 'Grandma cooked porridge', when the center swallows everything and they have nothing left.

The state made umbrella agreements with settlements to allow them to add apartments and had to compensate them by increasing revenues from commercial property taxes."

Dagni lives in Migdal.

She says that she checked the area and according to her, twenty years ago only one out of four Israelis agreed to live in the tower.

Today, 62 percent of the residents oppose living in the tower.

"Remember that in the not-too-distant past, a tower was built with 12 floors and today it has dozens of floors, which shows that Israelis are getting used to living at height."

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