Haifa must wake up and exploit its advantages

Haifa has been branded in negative terms in recent years with pigs roaming the city’s streets, and pollution from Haifa Bay, when all the time it is something of a ‘sleeping beauty.’ Until 20 years ago, the city had a strong, growing economy but in recent years Haifa has failed to halt negative migration of young people in particular and it has become an “aging city.”

Yet Haifa has competitive advantages and strong economic anchors that are not being fully exploited. These include the Technion, University of Haifa and other academic institutions, three seaports, an airport, five hospitals, a science park, industry, culture, a seafront and beaches, the Carmel National Park, as well as downtown (the lower city) and its markets.

Haifa has the second densest commercial market in Israel with 5.9 square meters of commercial space per household. But over the years purchasing power has decreased due to a lack of attractive locations, with the exception of downtown and the German Colony. Much of the has spilled over into the money spent local authorities such as Nesher, Tirat Hacarmel, and IKEA and Re-Design in Kiryat Ata.

The city’s population is aging

Haifa’s economic development is in good shape allowing it to invest in its residents, infrastructures, and economic and business development. According to the municipality’s financial report from 2019, the city invested NIS 8,000 per capita, almost double the national average of NIS 4,400, and it was ranked fourth overall among Israel’s cities in investment per resident.

The city has 23 square meters of income producing property per resident and receives average municipal tax of NIS 2,600 per resident for that incoming producing property – both figures higher than the national average of 22 square meters and NIS 1,200 per resident. Haifa invests NIS 875 in education per resident, and is only ranked 23rd among Israeli’s cities.

Haifa has a population of 287,000 residents in 115,000 households. The average family is 2.4 people, below the national average of 3.3. The annual growth of the population is the lowest of Israel’s major metropolitan areas – just 0.3% compared with a national average of 1.8%.

21% of Haifa’s population are over 65, the highest such percentage in Israel and more than double the national average. The aging of the city’s population is also reflected in the lowest number of aged people between 20 and 29 – 13% compared with a national average of 15%.

In terms of socioeconomic status, Haifa is ranked in the seventh decile with an average monthly salary of NIS 10,200 compared with the national average of NIS 9,200. 8% of employees are self-employed compared with 12% in Tel Aviv and the national average of 9%, demonstrating a lack of business orientation in the city.

Low level of new construction

Between 2016 and 2020 only 7,000 square meters of new income producing property was built in Haifa. This shows how the city is not developing and cranes are rarely seen on the Haifa landscape. Between 2016 and 2020 an annual average of 1,100 new apartments were built, of which 45% were four-room apartments and 34% five-room apartments.

The average value of housing per square meter in Haifa in 2020 was NIS 14,400 compared with NIS 12,600 in Tirat Hacarmel, NIS 12,200 in Kiryat Bialik, NIS 11,700 in Kiryat Motzkin, NIS 11,700 in Kiryat Yam and NIS 11,000 in Kiryat Ata. These figures support a trend of homebuyers moving out of the city to the Kraiot (Haifa Bay), Tirat Hacarmel, Nesher and the Carmel Coast. The city needs to provide a more diverse range of apartments for all requirements.

Haifa’s overall masterplan sees the population growing to about 330,000 by 2025 but the addition of 43,000 residents by then is not realistic at the rate of new construction over the past five years and taking into account the negative migration of residents. 47,000 new homes are planned in urban renewal projects. It is hard to see the rate of demand for new homes unless there is a sharp rise in business activity over the next decade.

A dispersed commercial market

Haifa’s topography has created five separate cities. Downtown, a great place for eating out and leisure with the flea market on its edge; Midtown Hadar with the Talpiot market, which has become a culinary attraction; Uptown Central Carmel, more of a neighborhood center, which has seen many of its restaurants depart for Downtown; South Haifa; and the Checkpost Interchange region, which has seen many of its furniture and design stores eclipsed by IKEA and Re-Design further to the north in Kiryat Ata.

In a survey conducted before the Covid crisis, we asked Haifa residents where they shop for food and household good. 90% responded that it was close to home with the Talpiot market attracting negligible custom. For non-food purchases 70% of custom remains in Haifa, with 30% leaking out to Nesher and the Kraiot, while Kraiot residents only do 7% of their shopping in Haifa.

The bottom line is that Haifa attracts little custom from outside and that mainly for night-time eating and entertainment.

Economic attractions

Haifa has 650,000 square meters of commercial space of which 250,000 square meters is in street stores. The city is ranked second in Israel for its amount of commercial space per capita – 5.9 square meters per resident.

The Grand Canyon is the leading shopping mall, mainly serving Haifa’s residents, with 49,000 square meters of commercial space, offices and services. The mall captures about 15% of the purchasing power in Haifa.

With 23,000 square meters of commercial space, including a 3,000 square meters supermarket, the Azrieli Haifa mall serves mainly residents of south Haifa, Tirat Hacarmel and the Hof Hacarmel region.

The nearby Cinemall, next to the railway station, which is anchored by the 23-screen Yes Planet cinema multiplex, is a major entertainment center and the third floor is given over to the Assuta Medical Center.

Hutzot Hamifratz is a mall to the north of the Checkpost Interchange and its 55,000 square meters of commercial space attracts 14% of the city’s purchasing power.

Major commercial centers along the streets of Haifa exist only in the Downtown area, German Colony, Sirkin in the Talpiot Market and the areas around the Horeb Center and Wadi Nisnas. Other streets that once bustled in Hadar, Carmel and Moriah, have been abandoned and the municipality has not striven to enhance them.

Business leadership required

Haifa’s image and economic activities are at a low point. The city suffers from surplus commercial space and is losing purchasing power and visitors to the Kraiot, Nesher and Tirat Hacarmel. Haifa needs business and economic leadership, which will fulfil its strategic plan and take advantage of the city’s outstanding competitive advantages.

At the same time, the Talpiot market is expected to grow and become a major regional and culinary center, helping to enhance the Downtown area while Midtown Hadar continues to shrink to a neighborhood center. Restaurants, bars and places of entertainment will continue to open along the seafront and the Yefe Nof-Moria Street area will attract more custom especially along its pedestrian walkways and cycle lanes.

Despite having golden Mediterranean beaches, quality entertainment districts like Downtown and the German Colony, and international attractions like the Bahai Center and its dramatic hillside gardens, Haifa has realized very little of its national and international tourist potential.

Haifa, the sleeping beauty, can wake up.

The author is the CEO of economic consultants Czamanski & Ben Shahar Ltd.

Published by Globes, Israel business news – en.globes.co.il – on February 7, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

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