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Wednesday, October 26, 2011

Short term rentals in vogue

The protest against sky-high housing prices in Israel inevitably took aim in part at nonresidents. Foreigners own thousands of apartments in prime areas, dwellings that stand empty throughout most of the year. Jews living elsewhere bought themselves homes in the Holy Land and keep them available for their convenience, exacerbating the housing crunch in the best areas of Israel, claim the protesters. The result is even more upward pressure on home prices, they conclude.

Yet a market has been developing in which these apartments are rented out for short periods of time. Brokers who mediate these short-term rentals say it's a win-win situation - for the owners that get some income from their property that otherwise stands fallow and costs upkeep, and for tourists who may prefer independence to hotel life. Israeli renters, however, are not appeased by the benefits to the foreign homeowners and tourists. What they see is a stifled housing market and rental prices that keep spiraling up." In the last year or two, more and more Jews living abroad decided to take advantage of property they own here," says Kfir Zohar, co-manager of the Anglo-Saxon Tel Aviv branch. He estimates the potential for short-term rental in Tel Aviv alone is 2,000 to 3,000 such foreign-owned apartments, whose nonresident owners spend, at most, a few weeks a year in occupancy. He also estimates that only about 15% of those apartments are rented out, while the rest stand unused most of the year.

The concept is gaining momentum: In the last two months, his agency closed 40 to 50 short-term rentals of foreign-owned apartments, Zohar says.Annual returns from short-term rentals are about 30% higher than long-term ones. At peak times, such as the Passover season, the rent can run double. Of course, at non-peak times the apartments may revert to standing empty. The potential clientele for short-term leases are business travelers and tourists. In addition, the apartments need to have features that meet the needs of transient dwellers. In Tel Aviv, for instance, the apartments should be no more than a 10-minute walk from the beach, and in Jerusalem, about the same distance from the city center. Business users would prefer apartments near the Tel Aviv business center or Ramat Gan Diamond Exchange. The apartments must be fully equipped and comfortable, too.

Yoni Shapira founded an Internet site, home4trip.com, which links tourists and homeowners. A three-room apartment in Tel Aviv, fully furnished and near the beach that can host up to four people, will run at $150 to $180 a night in a short-term rental, on average, he says. During peak summer season, in August, prices rise to $200 a night, he says. "Exclusive" apartments with a swimming pool in the building and that sort of thing can command three times as much, he adds. A visit to home4trip.com shows hundreds of apartments available for short-term rent in Tel Aviv, Jerusalem and other top cities. The ads cite the apartment's size, number of rooms, the furnishings and the price per night. A sign of the times is that the number of visits to the site has grown threefold in two years, Shapira says.

He came up with the idea of the site after living in Milan and meeting Italian Jews who owned apartments in Tel Aviv that they'd agree to rent out to people they knew. There were the apartments standing empty and there were the Tel Aviv hotels charging through the nose, Shapira explains. The rest is history. He began three-and-a-half years ago with a site targeting Italian Jews. Today, the site serves Jewish communities all over the world and has about 200 apartments on its books, belonging to about the same number of owners. It's worked: The apartments are rented out for almost all the year, Shapira says. The Anglo-Saxon real estate agencies in Tel Aviv and Jerusalem have started to work with the site too, he adds.

Source Haaretz

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