A major redevelopment plan for Tel Aviv’s Florentin neighborhood appears to be moving forward after the Israeli developer of the project secured funding of NIS 1.2 billion ($350 million) this week through financial corporations rather than going the traditional route of the banks, a rarity for a real estate transaction in Israel.
The neighborhood, known for its art galleries, bohemian vibes, live music, and dive bars, will see the development and construction of four mixed-use buildings including a 17-story tower, a residential complex with 200 apartments of 1-4 bedrooms and a penthouse, as well as 5,400 square meters of commercial and warehouse space.
The buildings will encircle a grassy plaza on the corner of Herzl and Shalma streets within walking distance of Levinsky Market, Rothschild Boulevard and the Mediterranean Sea.
Located in south Tel Aviv, Florentin has lower property prices in older buildings than in some other parts of the city, drawing a younger population.
The backers of the Florentin Square project were announced as Israeli companies Ruby Capital, a real estate lender; Meitav Dash, a leading investment house; and Ayalon Insurance, a large investment and finance group.
While non-bank financing is common across international real estate transactions, it has been extremely limited to date across the country. The ability to bring these kinds of deals together is an indication of a healthy real estate market in which there is real commercial confidence that risks are manageable and returns acceptable. Moving beyond banks for financing also helps expand the pool of capital that is available to developers, and opens up a potential bottleneck that can slow down the development and construction process.
Alongside the new construction of Florentin Square, the development will conserve a building built in 1935 that once housed the headquarters of the Haganah, the largest Jewish underground military organization in pre-Israel Mandatory Palestine. Conservation rules mean that the building cannot be converted to residential use. The structure will undergo restoration, with the addition of workspace and commercial space, delivering a total of 4,245 square meters across six floors.
The redevelopment site is within walking distance of the rail station planned for Har Zion Street and has easy access to public transportation.
The cost of the project is estimated at NIS 900 million ($264 million), the Globes business daily reported.
Gerson Schapiro, co-CEO and a founder of Ruby Capital, said the companies were “proud to be part of a project in Israel’s most vibrant city which has become, for obvious reasons, one of the most popular cities in the world.”