The Valley Train and its impact on property pricing – Hold

Real estate mavens expect the restored Valley Train’s arrival to have a positive effect on values in Tiberias and other stops along its extended route.

By Avishai Shklar
December 2016

valleytrain

The Valley Train, known in Hebrew as Rakevet Haemek, is both part of Israel’s history and its future. The original line, built by the Ottoman Turks in the early 20th century, ran from the port of Haifa to Dera’a in Jordan, where it connected with the historic Hejaz Railway between Damascus and Medina. Israel has restored a large segment of the line, which had been shut down since 1948, through the Jezreel Valley from Haifa to Beit She’an near the Jordan River.

The new Valley Train, which stops in Kfar Yehoshua, Kfar Baruch and Afula on its way east from Haifa, opened for passenger service in October 2016, after several years of construction work at a cost of over $1.1 billion. Real estate experts expect the service to have a positive effect on prices of real estate in communities along its route.

There are now approved plans for a new branch of the line, from Afula, the “capital” of the Jezreel Valley, nonstop to Poriya Hospital, just outside Tiberias. Announcing the extension in June 2016, Transport Minister Yisrael Katz called the extension part of his vision for connecting northern Israel and other outlying areas of the periphery to the center of the country and would provide a big boost for Tiberias, located on the western shore of Lake Kinneret (the Sea of Galilee). In the future, Katz said, another extension of the line would provide a high-speed rail connection from the Poriya station to Ben-Gurion International Airport and Tel Aviv. Katz said the new lines, due to open in 2023, would “turn Tiberias into the metropolis of the eastern Galilee.”’

The arrival of the railroad is likely to the value of real estate in the communities it serves, industry experts predict. Haim Mesilati, an attorney and real estate appraiser, says prices in localities with rail service tend to be up to 20% higher than communities without a train station. “For example, “ says Mesilati, “prices in Netivot surged when the train station was opened in Netivot,” a city on the Tel Aviv-Beersheba line.

Some of the data from Mesilati’s study of new and second-hand 3-bedroom apartments in a number of cities in the periphery: In Ofakim, which does not have a train station, average price of a 3-bedroom apartment rose by 83% from NIS 300,000 to NIS 550,000 in the five years between 2010 and 2015. The increase over the same period in Netivot, which does have a station, was 100%, from NIS 450,000 to NIS 900,000. Similarly the average 3-bedroom apartment price in Pardes Hana, with no train station, was up 61% from NIS 680,000 in 2010 to NIS 1.1 million in 2015. Hadera, which is nearby and does have train service, saw a 75% increase in similar apartments (NIS 690,000-NIS 1.2 million) over the same time frame. The principle is confirmed by Haim Feiglin of Haifa, an official in the Israel Builder’s Union, who notes that prices in Afula and Migdal Ha’emek, both near Valley Train stations, have exceeded those of the rest of the country in the past year. Arrival of a train is more pronounced in localities where accessibility previously has been limited. David Rom, a real estate assessor, says that the change is progressive – first felt in residential properties, followed by commercial real estate. “Investors’ expectations play a major role in the economic world. That’s why the effect of the Valley Train has already been felt in Afula, due to the expectation of investors. The effect is less significant so far in Beit She’an, where the project has still not reached maturity.”

A similar effect was registered with the construction of the high-speed Trans-Israel highway to the north some years ago, real estate sources say. All that bodes well for Tiberias, where the train will cut travel time from the current three hours by car or bus to just one hour on the train. Yehuda Shuali, an attorney, sees the Valley train as “the main engine for rising real estate prices,” noting the involvement of many entrepreneurs in projects along the Valley Train route.
The precedents seem to indicate promising investment opportunities in Tiberias, where the train is due to arrive in 2023.

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