Zim Urban’s Ayman Saif and Yoav Kaplan are putting up open-air malls that will cater to Arab Israelis’ modern tastes, but it’s their plans for housing that will particularly help close gaps with the Jewish community
What do you do if you’re a real estate developer working in a market where the people who own property aren’t interested in selling? Where there’s a desperate need for housing but little being built. And where people have money but few qualify for mortgages. These are the types of conundrums encountered by Rani Zim Shopping Centers, a largely Jewish-owned land developer, as it aims to expand into both commercial and residential construction in the country’s Arab towns.
To most rational people, the proper response to such conditions would be to run in the opposite direction. To Rani Zim – a company whose eponymous head has gone from owning a discount supermarket chain to running a business empire encompassing not only real estate development and management but also finance and renewable energy – the answer has been to open an Arab division and let it come up with solutions. The expectation is that profits will follow.
‘Social entrepreneur’
I am sitting in a branch of Café Greg in the newly opened Seven from Zim Urban shopping center in Tira, an Arab city of 27,000 about 30 kilometers (20 miles) northeast of Tel Aviv. This is the so-called Triangle region of central Israel, which is dotted with Arab municipalities. The Seven in Tira is the third in a chain of “power centers” – open-air malls that combine small shops and restaurants with one or two big-box stores – that Zim Urban is building and operating in Arab towns. Another five are on the way.
My hosts are the two men leading Rani Zim’s Arab division – Yoav Kaplan, a veteran developer, a Jew who speaks Arabic fluently and describes himself as “a social entrepreneur who makes a living in real estate”; and Ayman Saif, who for a decade headed the department in the Prime Minister’s Office charged with improving the integration of Israel’s 1.2 million Arab citizens into the economy. More recently, Saif served as the “coronavirus czar” for that same population.
During most of the time he headed the Authority for the Economic Development of the Arab Sector, Saif answered to then-Prime Minister Benjamin Netanyahu. There’s an irony in that: Even though many members of Netanyahu’s successive governments, including the premier himself, incited regularly against the Arab community, they also deserve credit for taking seriously the OECD’s repeated warnings that Israel would face economic catastrophe if it didn’t get more of its sizable Arab minority (and also its ultra-Orthodox population) into the workforce. Without much publicity, they channeled billions of shekels into well-thought-out programs coordinated by the authority.
Saif, born in 1968, is tall and trim and tends to dress in a button-down shirt so that with the addition of a tie and jacket, he would be instantly presentable in a formal business meeting. He has gentle, deep-set eyes, and a candid manner of speaking accompanied by a tendency to use his interlocutor’s first name frequently. Kaplan, born a year earlier, is compactly built and gives the impression he would wear the same outfit of T-shirt and jeans to a high-powered meeting that he does meeting a journalist over coffee. He exudes a cheerful, confident energy that makes it easy to imagine that he has found his purpose in life.
In its first phase, the Seven center in Tira, open only a few months, has some 20 stores, but Zim Urban plans a second phase, twice as large, for the adjacent lot. Right now the lot is quiet, but every Shabbat it bustles with crowds who pour in from around the Sharon region to visit an open-air market whose stalls offer food, cheap clothing and domestic goods. “The quality isn’t high,” Saif says, but according to Kaplan, “It really is a local institution.”
Understanding that the crowds that frequent the market might not appreciate seeing it replaced by a modern shopping center, Zim Urban came up with a plan to preserve the traditional shuk – upgraded, but greatly reduced in size and confined to one corner of the lot. The rest is to be taken up with new construction meant to house another 35 businesses.
If today Shuk Tira “resembles a market in India,” Kaplan says, “we want to transform it into something like the Boqueria in Barcelona” – the fresh food market in the Catalonian capital whose origins date back to the 12th century.
Even Kaplan acknowledges that this grandiose comparison is “a combination of a marketing gimmick and [a desire to] preserve a local tradition.” It also allows the entire project to be branded as Seven-Shuk Tira.
What about that brand name, “Seven,” I wondered. According to Kaplan, the English was by design. The branding people, he says, spent a lot of time on both the moniker and the logo – a name that’s neither Hebrew nor Arabic was designed to make both Jews and Arabs feel welcome. Also, seven is a lucky number for both groups, and in the logo, “The stylized letter V looks like an upside-down 7, which is like the number 7 in Arabic.”
I was also dubious of whether Israel really needed more shopping centers featuring branches of chain stores or restaurants – which in this case include Body Shop, Super-Pharm, Mega Sport and McDonald’s. According to Saif, though, that’s precisely what consumers in Arab towns lack. “Arab society is modern, for the most part, and its consumer patterns are completely Western. Our young people want [designer] labels and the best service possible.” And if they don’t find them in their own town, they’ll drive to the mall in a nearby Jewish one.
The first phase of Tira’s Zim Urban Seven center opened earlier this year, but ground is yet to be broken for Phase II. These things take time. In this case, Kaplan says, the woman who owns the adjacent lot “didn’t have the slightest intention of doing business with us, because she was making a lot of money from the shuk.” That changed, however, with the arrival of the pandemic, when the market had to shut down for nearly a year.
But when Kaplan and Saif finally sat down to negotiate with the landlord, it wasn’t over the sale of the land. Arabs tend to hold onto their real estate, and certainly aren’t anxious to sell it to Jews. “Our experience with the question of land,” Saif explains, “has been a traumatic one. Someone who sells his land is someone who is in severe economic straits.” For example, he may intend “to send his children to study in Jordan, where tuition can be 100,000 shekels” – $30,700.
Instead, Zim Urban offers to lease the land and enter into a “partnership” with the owner. As Saif explains it: “He provides the land for development, and then he receives a percent of the revenues” yielded by the shopping center, which is operated by Zim Urban. “The more the project earns, the more he will earn, and if it loses, then he loses money too,” though the owner is guaranteed a minimum return. (In fact, as additional shopping centers open, the rents are playing an increasingly large part in the parent company’s revenues.)
Throughout the period of the lease, the land is to remain registered in the landowner’s name, and when it expires after 50 or 75 years (none of the centers has reached this point yet), “the land together with the properties that have been built on it will revert to the landowner at no cost.” This way, Saif says, “we preserve the principle that’s so important in the Arab community: not to sell land.”
High-rises are good, too
Last year, Saif was appointed chairman of Rani Zim’s new Arab division and given a 4 percent stake in it. His appointment coincided with the strategic decision of the parent firm (which went public in 2018) to expand into Arab towns and cities, and to add residential construction to the commercial projects that were already underway. The plan is for the company to dip its toes into the Arab housing market with a pilot project in the town of Fureidis, next to Zichron Yaakov, south of Haifa.
The Fureidis project is tiny – a mere 36 housing units in what is intended to be a larger new neighborhood of 800 apartments on the town’s eastern edge – but it’s meant to be just the beginning. It’s a big deal, both for Rani Zim and the Arab community, which faces a serious and worsening shortage of affordable housing, even more dire than in the Jewish community.
Although the highly congested Fureidis, a town of some 27,000, desperately needs housing, when in 2019 the Israel Land Authority first invited bids for the same plot of land – which had been rezoned to high-density housing from agricultural land – no developer bid. The assumption was that Arabs wouldn’t want to live in multistory apartment buildings. A similar pattern has revealed itself in Kafr Qasem and other towns, where Rani Zim has been the lone bidder for a project.
But if today Arabs in Israel don’t buy or rent apartments in elevator buildings, it may be because that’s not an option for most of them. According to Saif, Arabs “don’t have a ‘cultural’ problem with dense housing. Look at the Gulf states, at Amman, and in Ramallah. They all have high-rise housing. At the moment, though, this product isn’t available in Israel’s Arab towns.”
Prof. Rassem Khamaisi, a geographer and urban planner at the University of Haifa who has been studying planning in the Arab community for most of his career, agrees but suggests that the change has to be gradual and forward-looking. “You need to build a mix, to understand that the Arab population of 2040 is going to be different than it is today. This requires presenting a blend of housing solutions – spread-out, high-quality – that answers the needs of the population that’s growing up today, which will constitute a market of between 300,000 and 400,000 more apartments.”
Kaplan estimates that today the gap between supply and demand for housing in the Arab community increases annually by some 10,000 units.
There are plenty of explanations for the shortage. Israel’s Arab community has grown more than 10-fold since 1948 and now makes up more than 20 percent of the population, but no new towns have been created for it (other than in the Negev in the south, where the state, in a push to urbanize the nomadic Bedouin, built seven new communities starting in the ‘70s). National planning has always focused on Jewish growth and development while circumscribing expansion of Arab towns. But ideology sometimes has to yield to reality, and today, Kaplan explains, most of the land being made available by the Israel Land Authority for residential development is intended for Arab towns.
Last year, for example, Umm al-Fahm in the Triangle, led by Mayor Samir Mahameed, became the first Arab municipality to sign a package deal with the state that will make available land, funding and permits for more than 12,000 new apartments on seven different plots, some of them on state land, some on private. The land authority has agreed to finance the 800-million-shekel project, a price tag that includes not only the land but also funding for vital infrastructure and even public recreation areas.
Such a major endeavor, which by one estimate could ultimately double Umm al-Fahm’s population of around 60,000, wouldn’t have been possible without the state’s approval in early 2021 of a first master plan for the city. Until recently, most Arab municipalities lacked such a blueprint, even though it’s a prerequisite for any legal construction.
Not coincidentally, Rani Zim is busy in Umm al-Fahm: The company is currently building Phase II of its Seven shopping center – Phase I opened in 2018 – and it’s also in the advanced-planning stages for construction of 700 units in a new residential neighborhood in the city. There are also plans, in various stages, to build in Shfaram in the north and in Rahat in the south, as well as in Tira, Nazareth, Kafr Qasem and Jisr al-Zarqa.
According to Kaplan, since the company went public four years ago, its annual revenues have risen from 240 million shekels to “the vicinity of 1 billion.” To handle the growth, the company snaps up smaller firms. For example, in the week before our meeting in June, “We bought a large contracting company, with more than 30 years in the business, to strengthen our construction in Arab towns,” Kaplan says – a deal worth more than 300 million shekels.
The idealism, or at least the sense of mission, that Saif and Kaplan clearly feel about their work is balanced by methodical groundwork, and also concern for the bottom line, as one would expect from executives at a publicly owned company. Kaplan says the company “spent three or four years doing very detailed studies” of the residential market in the Arab community before taking the plunge.
The proposal for Fureidis – 36 units, a high-end combination of four villas and 32 duplex apartments – will barely make a dent in that city’s housing shortage. The homes are aiming at a small cross section of Arab society: People who might very well buy in a Jewish neighborhood – and could afford to – if they didn’t find what they were looking for in their hometown. Says Kaplan: “This isn’t necessarily aimed at the upper decile, but at two working adults with the ability to get a mortgage.” The company expects to obtain the necessary permits to allow it to begin marketing the project in the coming months.
Saif echoes his partner’s words: “We think that with these particular projects in Arab towns … with high-quality construction that’s adapted for the needs of the Arab public, we can give high-quality housing solutions to this young population.”
Planning is moving ahead for much larger projects in Kafr Qasem, Umm al-Fahm and Tira, where Saif says there’s a clientele just waiting for such a product. According to the market research, even before anything goes on sale, Saif and Kaplan already have “four or five potential clients for each apartment. We believe that with the demographic we want to serve, we won’t need to lower the standard. The near future will show us if we were right.”
Kaplan insists they’re not doing anything revolutionary at Rani Zim, they’re just employing common sense to identify market trends. “Maybe we’re a little ahead of the others, but overall, I don’t think we’re working against the trends.”
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