Experts: Ariel Set for More Growth, Thanks to its University

By David Lev, INN Sept 14,2012

After a decade with a rather quiet real estate market, the city of Ariel, “capital of Samaria,” housing prices are on the move – up. The city, which is set to celebrate its 35th anniversary next year, has seen its population grow to nearly 20,000 residents, not including thousands of students studying at Ariel University, which has turned out to be a major locomotive to attract people to not just study, but to live and even work in the city. The government earlier this week gave its final authorization to naming the city’s institute of higher education as a university, culminating a process that has gone on for several years.

With the housing freeze in Judea and Samaria only recently lifted, construction has begun anew in Ariel, and new housing stock is desperately needed, according to city officials. They cite data from the Central Bureau of Statistics that says that rents for four room apartments are about NIS 4,500 per month – not much less than satellite cities and suburbs around Tel Aviv. To cash in on demand, many homeowners have carved out apartments from basements and storerooms. The large demand for rentals comes largely from the student community, which, at its largest, includes up to 13,000 students.

Prices for four room apartments are around NIS 900,000, slightly less than in places like Petach Tikvah and Rosh Ha’ayin. The relatively reasonable apartment prices and the relatively high rentals has attracted a rush of Israeli investors buying up homes in Ariel for the purpose of renting them out to students. Real estate experts say the average annual return for investors, after appreciation of the apartment and rental income, comes out to about 6.5% a year – far better than any bank or other financial institution is currently providing.

Ariel has plenty of room to grow; its municipal boundaries include about 12,000 dunams, only a quarter of which is currently in use. With prices in neighboring towns along Route 5 westwards hitting record highs, city officials said, there has been a marked interest over the past year by home-seekers and investors, with a subsequent increase in prices. Experts said that Ariel appeared to be at the beginning of a virtuous cycle of real estate appreciation and growth, similar to the growth in cities in the Sharon and Tel Aviv suburbs earlier in the decade.