The property: A two-room apartment with an area of 48 square meters on the fourth floor out of four, without an elevator, was sold on Modi’in Street in Dimona for NIS 380,000. The apartment is in poor maintenance and needs renovation so that it can be used as a residence.
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the hood: Modi’in Street is in the Giora Yoseftal neighborhood in the center of Dimona city. The buildings in the neighborhood were built in the 1960s to the 1980s and most of them are three to four stories old.
Zohar Tishler, Keller Williams franchisee in Dimona who brokered the deal, says that “the population in the neighborhood is usually young couples, and most of the renters and buyers come from the Gor community – that is, Hasidic.” Tishler says that the neighborhood attracts interest from investors from all over the country. According to him, “It is impossible to rent unrenovated apartments in the neighborhood. Renovated apartments with 3 rooms are rented for about 2,400 and renovated apartments with 4 rooms, which are almost non-existent in the neighborhood, can be rented for 2,500 shekels per month.”
Tishler points out that next to the building there is a “kind of ‘Hades in the desert’ hotel. It’s a building that was once intended for residential apartments and became a hotel.”-
the city: One of the factors that “awakened” the real estate activity in the city is the roof agreement that was signed in January 2018. A new neighborhood called the Hashahar neighborhood was also established in the city. According to Tishler, the Hashahar neighborhood “belongs to socio-economic cluster 7, ahead of well-respected neighborhoods in Beer Sheva and Ashdod and attracts couples to the city In addition, there are also tax benefits and the credit rate in 2023 is 16%.-
employment: Tishler says that the apartment was not marketed at all. According to him, “We had a client who purchased an apartment in the city and was interested in another transaction. After we received the property, we presented it to him and the transaction was closed within two hours. The seller is an investor from Jerusalem and the buyer is an investor from Holon. This apartment was worth about NIS 280,000 a year ago, and the increase in price was due to The reduction of supply in the area. A few years ago there was a stigma on Dimona that it has many ghost apartments, but today it is more difficult to get investment apartments there.”
The renovation: Tishler estimates that the buyer will have to invest about NIS 75,000 in the renovation, after which it will be possible to rent it out for 2,000-2,200 shekels per month.” That is, the annual return on the apartment is 6.3%, based on rents of 2,000 shekels per month. According to Tishler, “the potential of The apartment will only become visible after the renovation, which will include the replacement of the kitchen, the plumbing – and basically everything. The renovation is designed to allow those looking for an apartment in a central location in the city to not invest anything and only enter with luggage.”
The risk: When the apartment needs a comprehensive renovation, it is possible that an investment of NIS 75 thousand in renovation is an underestimation. In addition to this, Eliyahu Ben Zaken, an economist and real estate appraiser who works in the southern region and in Dimona in particular, believes that Dimona has a “fake” real estate boom: “When we built the city of Habadim (at a distance of 25 km from the city) there was an influx of investors, who believed that the city would develop , but expectations were not fully met. In the area of the old neighborhoods (including Modi’in Street) prices have risen but reached the limit. Most of the buyers there are investors. The yield is high but the bank interest offsets the difference, especially for those who took out a mortgage.
When you ask me, I say it’s not for sure profitable.” According to him, unrenovated apartments are almost impossible to rent. Another issue that limits the city’s demographics is the limited employment opportunities, says Ben Zaken: “Sderot has industrial, commercial and college areas that generate traffic, but in Dimona There is nothing, and right now every new project that is built will cause another flood of apartments.”