Contractors: Loft industry collapsing
Inquiry conducted by Association of Contractors and Builders in Israel reveals 75% drop in renovation of loft apartments in south Tel Aviv since start of 2009. The reason, they say, is significant rise in property tax payments to municipality
The loft industry became fashionable more than 10 years ago, but according to the association's data, a rise in the demand for this type of apartments was recorded mainly in the past four years, and was followed by the renovation of some 1,500 flats in four years.
Meanwhile, following the change in the classification of property tax for some of the lofts from residence to industry areas, property tax payments have increased significantly, making them unprofitable for renters.
According to an owner of several lofts in the southern part of the city, for a loft measuring 450 square meters (4,834 square feet) in size, the rental payments rose from NIS 2,000 (about $498) to NIS 10,000 ($2,490) a month.
The municipality, which first encouraged the phenomenon, he said, has begun fining loft owners and filing lawsuits against them. He added that entrepreneurs and owners of industrial areas are now refraining from investing money in renovations.
"It's not that there is no demand. If I had 1,000 more lofts they would be rented, but the municipality's policy is unclear and entrepreneurs prefer to wait for developments."
So far the loft owners mainly purchased areas housing workshops and light industry in the southern part of the city, on streets such as Florentine, Montefiore and Shoken. The renovation of the lofts created a sub-industry inside the renovation industry, as well as the development of additional sub-industries in fields like architecture suitable to lofts.
Different type of renovation
According to Eran Siv, chairman of the Association of Contractors and Builders in Israel, "The renovation of a loft is a lot different than the renovation of an apartment. In a loft the beautiful thing people love is the open space and the height which apartments almost never have. Working up high requires a skilled handyman and is accompanied by tools like a scaffolding, tall ladders, etc."
According to Siv, there are handymen who mainly specialize in renovating and upgrading lofts. Working in a loft requires accurate architectural planning and changing all the plumbing and electricity systems according to the client's needs, he says.
The owner of some lofts in southern Tel Aviv says that the cost of renovating lofts ranges between NIS 1,000 ($249) per square meter in the most basic form, which includes new water and electricity systems, as well as tiling and doors, and another sum of about NIS 2,000 ($498) per square meter for a renovation which also includes new Triplex windows and a higher quality finish.
The Tel Aviv-Jaffa Municipality said in response that "industry areas are not designated for residence for safety reasons as well. The municipality enforces the law according to planning and building laws, but we would like to clarify that following discussions held by the municipality recently, we are looking into changing the policy by checking different compounds in the city individually."
