Israel wants to make it big in fashion too

After two years of preparation and strong support from Italy, the first Israel Fashion Week in thirty years came this week to Neve Tzedek, the hip neighborhood in Tel Aviv. For three days, media, models, and designers highlighted Israeli and Italian fashion.

It’s not that Israeli designers are unknown to the world’s fashion mavens. Some of them are known, but more on an individual basis than as a collective. Just as Italy and France are known as fashion countries, aside from the kudos given to individual designers, so Israel is known as a hi-tech country, as Tel Aviv Mayor Ron Huldai mentioned at a reception hosted by Italian Ambassador Luigi Mattiolo to mark the launch of the project. The Italian ambassador was involved because Tel Aviv and Milan are twin cities. Also, the creator of of the garments in the gala fashion show paraded on Monday night at the old Jaffa Railway Station, which has been turned into a lifestyle hub and a major tourist attraction, was one of Italy’s leading fashion luminaries, Roberto Cavalli.

Three decades ago, when Israel fashion weeks were the glitz and glitter of the industry, they were held in hotels – primarily in Tel Aviv, but also in Jerusalem and Eilat. Asked if there was a special reason for holding the Tel Aviv Fashion Week at the rail station, Lev said that in a previous era hotel rooms were turned into showrooms, but fashion is much more than that. It lends itself to lifestyle and lifestyle includes tourism. Indeed, the Ministry of Tourism is a major partner in the venture and brought 60 leading international fashion and lifestyle journalists to Israel to not only cover the fashion week but to tour the country and see how different it is to what is portrayed on television screens back home.

This is in line with the ministry’s new focus on lifestyle and niche tourism. Without the publicity that will be generated abroad by these journalists, Fashion Week would be a flop. Many visiting journalists were already busy with their laptops on Monday morning. At the reception at his residence Sunday, Mattiolo expressed heartfelt appreciation to Tourism Minister Stas Meseznikov. Silvan Shalom, minister for the development of the Negev and the Galilee, who was the guest speaker at the reception said “Fashion Week gives us a chance to show the other side of Israel, which we would like the world to recognize.”

Future Tel Aviv Fashion Weeks will also have an Italian star component. There will be two Tel Aviv Fashion Weeks each year – one spring/summer and the other fall/winter. And plans are already afoot to show the fall/winter creations in April 2012.

Tel Aviv's Silicon Boulevard

Israel is a juggernaut of R&D: 4.5% of its economic output is immediately reinvested, making Israel number one in the world for R&D as a percentage of GDP. The Holy Land is home to R&D departments of some of the world’s most important tech companies, including Google, Microsoft, Oracle and Intel. And since Israel is such a small country - it takes just 50 minutes to drive from Jerusalem to Tel Aviv - it allows startups and established tech companies to choose office space on cost rather than location.

That said, there are clusters of high-tech industry in the town of Herzliya, north of Tel Aviv, and in Ramat Gan and Ramat Hachayal in the city's northern suburbs. The country has a thriving tech-camp scene. TechAviv, a startup founders' club, has 2,000 members and meets monthly in Tel Aviv, New York, Silicon Valley and Boston, to showcase new work.

But the real buzz can be found in the cafés of Tel Aviv's Rothschild Boulevard. Stretching from Neve Tzedek in the south roughly to midtown, Rothschild is an elegant, treelined avenue popular with pedestrians, cyclists and rollerbladers enjoying the city's almost unending sunshine. On the pedestrian walkway that runs down its centre, a strip of hip, outdoor cafés is home to creative types on their laptops, thanks in no little part to the city's free, widespread Wi-Fi network.

This is why Rothschild Boulevard - also known as the Silicon Boulevard -- has transformed itself into the home of many hot start-ups such as Face.com and Soluto. Some of them do not mind following in the footsteps of ICQ, 5Min, LabPixies and others, who have been scooped up by international tech giants.

Take the Gifts Project, for instance, set up by a handful of young enthusiastic employees sharing a tiny office with a balcony that looks out to Rothschild Boulevard and sports a huge logo of a pink pig. They've just been bought by the world's biggest online store eBay. Others want to strike out on their own. One of them is Soluto, a firm that aims to make computers more user-friendly and crowdsources technical support that helps computer users anywhere in the world, for free. Whatever their strategy, it seems that they are here to make an impact.

Changes in Israel real estate tax law

Real Estate scarcity and increasing prices has prompted the Israeli government to change many of the existing rules in 2011. Here is a summary of what has changed this year:

Purchase tax change

Purchase tax for single apartments was lowered while purchase tax for an additional apartment was raised. This helps young couples and families purchasing a home (where this is going to be the only apartment they own) as it greatly reduces the purchase tax they will have to pay. Indeed, if the apartment is less than 1,350,000 NIS there won’t be any purchase tax to pay at all. However, anyone who already owns an apartment and would like to invest in real estate by purchasing an additional apartment will pay a much higher purchase tax. Indeed, if the additional apartment that they buy is 1,000,000 NIS they will pay 5% of this - a whopping 50,000 NIS! Anyone who enjoyed in the past a partial exemption from purchase tax (such as new immigrants and disabled people) should crunch their numbers first. After these changes the difference between the purchase tax paid by a new oleh for example and that paid by the purchaser without this exemption is negligible and in some cases the new oleh will pay more if he asks for this partial exemption!

Capital Gains Tax modifications

In all real estate transactions the sellers are liable to pay capital gains tax. In the case of residential apartments the existing law allows for several types of exemptions from this tax. Examples of this are: If a person owns more than one apartment then he can sell one of his apartments with an exemption from capital gains tax every four years. If the seller has only one apartment then he can get an exemption from capital gains tax once every year and a half. This means someone (who only has one apartment) can buy an apartment, sell it and get an exemption and then buy another apartment instead of the one he just sold and sell that apartment in a year and a half and get an exemption from capital gains tax on that apartment too. There are also exemptions for the sale of apartments gotten through inheritance, giving apartments as gifts between close family members, the sale of two small apartments in order to buy one large one etc. Under the new law (which will be in effect for a period of two years only, unless extended) sellers will be able to get an additional two exemptions in addition to any exemptions they could have gotten under the existing law. This means that people with multiple apartments can sell some or all of them and get exemptions from capital gains tax for these sales without having to wait the four years between sales with exemptions.

Limit to the exemptions from capital gains tax

The additional exemptions in the new law are limited to a price of 2,200,000 NIS. This means that if the price of the apartment sold is less than 2,200,000 NIS then the seller will get a full exemption from the capital gains tax. If the price of the apartment sold is more than 2,200,000 NIS then the seller will get an exemption from the capital gains tax for the amount of the price up till 2,200,000 NIS and he will be taxed for the amount of the price above 2,200,000 NIS.

Tax planning

The changes in the law make it necessary for sellers to do some tax planning with their real estate attorney. For example, if a seller has an apartment that is worth 3,000,000 NIS and an apartment that is worth 2,000,000 NIS he can get an exemption now for both apartments without waiting four years between sales. He should use the previous law for the exemption from the capital gains tax for the apartment selling for 3,000,000 NIS because the previous law did not have a price limit and only apartments that sell for more than 2,200,000 NIS can get a full exemption from the capital gains tax under the previous law. For the apartment selling for 2,000,000 NIS the seller should ask for the exemption under the new law. This is just a simple example of how a little tax planning can save a lot of money.

Back to old rules in 2012

The new law is in effect until the end of December 2012. The purpose of this law is to encourage people with several apartments to sell them now, thereby flooding the market with more second hand apartments which may bring down the prices. In order to put pressure on all apartment owners to sell their apartments now, another change in the law was enacted in August of this year. According to this change, starting from 2013 the law pertaining to the exemption from capital gains tax will revert to what it was before, but the exemption from capital gains tax will only be allowed once every 8 years for people who own more than one apartment. However, people who only own one apartment may sell once every year and a half and get the exemption from capital gains tax just as they did under the previous law.

The new law has brought with it many legal and technical problems as well. We will have to wait and see if the changes in the law bring about the desired effect of bringing down the prices of apartments in Israel or at least of stopping the rise in prices.

Source Buy Property in Israel

Fischer predicts 4.7% GDP growth in 2011

Stanley Fischer told the Finance Committee this week: we are far from recession, but the effects of the crisis in Europe will hurt Israel.

"As far as the economic situation is concerned, there is a slowdown in growth. We're growing more slowly than last year. The slowdown began in the second quarter of this year," Governor of the Bank of Israel Prof. Stanley Fischer told the Knesset Finance Committee. "The reported growth does not meet our prior estimates, but it does fit the average growth rate of the past 30 years. It is respectable growth that we should get used to." Fischer added, "We are not in a recession; we're far from that."

Fischer warned, however, "There is a very serious crisis, especially in Europe. If the Euro Bloc does not wake up, it's impossible to know what the repercussions will be, but they won't be good. We already see the effects of the crisis in Europe on Israeli exports. "A crisis in Europe will affect us, at both the financial and non-financial levels. If European banks crash, that will affect us too. The financial climate will be a lot worse, and we'll be a lot less optimistic. It could happen." Fischer said that the Bank of Israel now predicts 4.7% GDP growth in 2011 and 3.2% growth in 2012. "The Ministry of Finance's projections are too optimistic, and that's why we're missing the targets," he added.

Fischer reiterated his position enunciated at yesterday's press conference that Israel must act responsibly in view of the global economic crisis, notwithstanding the social protest. "I advise that we continue to manage the economy responsibly, and not to capitulate to populism." He advised the Finance Committee not to breach the budget framework or to raise tax rates. Fischer than changed the topic to the need to amending the Banking Law. "The system of controlling cores in Israel is not prevalent in the world. Banks are not usually controlled through a controlling core, but in Israel that is how it is."

Rents up more than 10% in last two years

The Central Bureau of Statistics reports that the percentage of renters rose from 27% of the population in 1995 to 34% in 2008. High home prices, and the fact that most Israelis prefer to live in the center of the country, have caused renting to become increasingly prevalent. The low supply of homes, including rental homes, is driving up rents. Moreover, Minister of Finance Yuval Steinitz's so-called "sledgehammer plan" to temporarily exempt the sale of second apartments from the betterment tax, is inadvertently liable to aggravate the shortage of rental apartments by reducing the inventory of second apartments that are rented out by their owners. The supply of public housing has fallen over the years as the result of government campaigns to sell these apartments to their tenants, while building no new ones.

MNA Real Estate Research CEO Anna Vasserman carried out an analysis of the Israeli rental market. The study was based on data from 113 classified ad sources, including leading online sites Homeless, Yad2,Winwin, Madas, and Lagur. The survey covered 25 cities nationwide: Tel Aviv-Jaffa, Ramat Gan, Givatayim, Herzliya, Petah Tikva, Ra'anana, Hod Hasharon, Kfar Saba, Netanya, Hadera, Ariel, Jerusalem, Haifa, Kiryat Ata, Ashdod, Ashkelon, Beersheva, Sderot, Netivot, Eilat, Kiryat Shmona, and Katzrin. The study compared summer rents in June-September in 2009, 2010, and 2011.

The highest rents for all types of apartments during this period were in Tel Aviv. The average rent for a three-room apartment rose from NIS 4,358 in the summer of 2009 to NIS 4,835 in the summer of 2011, which may help explain why Dafni Leef launched the tent protest. The average rent of a four-room apartment rose from NIS 5,569 in 2009 to NIS 6,082 in 2011, and the average rent of a five-room apartment rose from NIS 6,981 to NIS 7,634.

The average rent in Jerusalem rose 8% to NIS 3,677 for a three-room apartment in 2011, to NIS 4,454 for a four-room apartment, and NIS 5,740 for a five-room apartment. The average rent in Haifa rose 6% to NIS 2,710 for a three-room apartment in 2011, to NIS 3,278 for a four-room apartment, and NIS 4,162 for a five-room apartment. The average rent in Beersheva rose 9% to NIS 2,200 for a three-room apartment in 2011, to NIS 2,992 for a four-room apartment, and NIS 3,832 for a five-room apartment. The study found that the greatest increase in rents occurred in 2010-11 and mainly affected five-room apartments. The average rent for five-room apartments rose by 10% in Ramat Gan, Ra'anana, Givatayim, Hod Hasharon, Hadera, Eilat and Ashdod. The average rent for three-room apartments rose by over 10% only in Ariel and Ashdod.

The study sought to establish whether the summer's social protest caused landlords to freeze or lower rents. Despite media reports about specific initiatives to lower rents, they have not fallen anywhere in Israel. On the contrary, rents rose more between the summer of 2010 and the summer of 2011 than between the summer of 2009 and the summer of 2010. "In general, it is possible to see a rising trend over the years," says Vasserman.  "Although we expected to see a drop in rents in the summer of 2011, due to the social protest, we were surprised to discover that not only did rents not fall, they actually rose." The reason may be that, in contrast to companies that sell goods, landlords who rent out their apartments are not amenable to boycotts. The residential rental market is a rigid market, the number of rental apartments available in the short and medium term is more or less stable, while demand only increases as the population grows, resulting in rising prices.

The survey found that Tel Aviv had the highest proportion of rental tenants among Israeli cities at 41.2% of its residents. 30.5% if Haifa's residents live in rented apartments, and 29.8% of Jerusalem's residents. The proportion of Israelis who rent drops as families grow. 42.1% of Israelis without children rent, compared with 34.6% of families with one child, and 9.1% of families with four children. Jews rent more than Arabs: 25.2% compared with 11.8%.

Source Globes

New Tel Aviv Architecture Guide

A new Architecture City Guide of Tel Aviv is available at Arch Daily. Created by Justin Kilger it offers a nice selection of the various architectural styles you will stumble upon while visiting the White City.

And for an exhaustive visit make sure to check the photo gallery at Architec.tour.a.