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Super-rich Israelis no longer ashamed to flaunt their wealth

Israel, despite socialist roots, now has a huge income gap. Displays of riches, such as a $2-million wedding and a 'Real Housewives'-style show, draw awe and contempt.

December 09, 2011|By Edmund Sanders, Los Angeles Times
  • An ad for the Israeli television show "The Riches," a "Real Housewives" knockoff that underlines the gap between rich and poor in a country founded on egalitarian principles.
An ad for the Israeli television show "The Riches," a "Real… (Alex Lipkin )

Reporting from Tel Aviv —  

Israel's hottest new TV show may be making many viewers feel guilty. But they can't stop watching it.

It's a "Real Housewives" reality-based knockoff about six rich, materialistic women bouncing from personal training sessions in their mansions to Botox appointments to champagne-fueled shopping binges, dishing dirt about one another and generally reveling in their own fabulousness.

Hardly scandalous stuff to American TV viewers. But in the land of the kibbutz — a nation founded on egalitarian ideals, where lawmakers still wear jeans in the Knesset, or parliament, and the flaunting of wealth was once considered taboo — this unapologetic celebration of the lifestyles of the rich and Israeli is hitting a raw nerve.

"The show is just terrible," said Sharon Dushnitsky Etzioni, a Tel Aviv event planner. "It's not the real Israel." Then she adds, sheepishly, "But as much as I hate it, I can't miss it. I'm so angry at myself."

What "The Riches" depicts, though, may be more accurate than many here would care to admit. In 20 years, Israel has whiplashed from being essentially a socialist state to a place with one of the world's biggest gaps between rich and poor.

That's partly because Israel's poor are getting poorer, but also largely because incomes of the super-rich have soared to new levels, bolstered by tax cuts, deregulation and an influx of Russian entrepreneurs who brought money with them when they immigrated.

The number of Israeli billionaires doubled over the last two years to 16 while their combined wealth tripled to $45 billion, according to Forbes magazine. Recently deceased shipping magnate Sammy Ofer led his countrymen with $10.3 billion, followed by diamond mine mogul Benny Steinmetz and Carnival Cruise heiress Shari Arison.

While much of the world struggles with recession, Israel's economy is going strong and is minting new millionaires at a faster rate than just about any other country. The number of Israeli millionaires nearly doubled to 10,153 from 2008 to 2010, according to the Merrill Lynch-Capgemini World Wealth Report.

Those who are super-rich are no longer squeamish about displaying their wealth. One tycoon is building a 60,000-square-foot estate in the ancient city of Caesarea, along the coast between Tel Aviv and Haifa. Plans are underway for a special terminal at Ben-Gurion airport to handle the bustling traffic in private planes and helicopters. The national motor vehicle department said recently that it had to draft new regulations to allow for the import of Rolls-Royces, Lamborghinis and Aston Martins.

"Before, people in Israel were ashamed to be rich," said luxury real estate broker Meir Menahem, sipping a latte at his oceanfront office. "Even if you had money, you lived simply. Today, people are not ashamed. If they are making money, they want to live better."

His firm, Neot Shiran, is helping the super-rich find new places to spend their money by promoting exclusive residential communities along the Mediterranean Sea north of Tel Aviv, where former kibbutz-owned farmlands are being transformed into the Hamptons of Israel.

One of the most desirable spots is tiny, seaside and gated (naturally) Arsuf, where the price of one vacant lot tops $15 million, Menahem said.

If you're looking for that Malibu ranch atmosphere and need space for tennis courts and stables, there's sprawling Bnei Zion, where all you can see from the roads are intercoms and driveways. Land is zoned agricultural, so it won't cost as much to fill the pool or water the putting green.

But Herzliya Pituach, nestled on the seaside bluffs of the north Tel Aviv district, remains the standard-bearer for those seeking the ultimate address. This year the sale of a $36-million home, next door to the U.S. ambassador's house, broke Israel's record for a residential transaction.

It's a high-end, all-cash market that didn't exist when Menahem started in the mid-1990s. Back then, a 2,000-square-foot house was considered big and sales topping $1 million were rare.

Israel began shifting from its socialist roots in the 1980s and 1990s. Deregulation, privatization and tax cuts — which peaked when current Prime Minister Benjamin Netanyahu served as finance minister a decade ago — opened opportunities for a handful of the nation's richest families and recently immigrated Russian oligarchs to take over former state-run businesses. Today, Israel's economy is one of the most concentrated in the world, with about a dozen tycoons controlling a large portion of the country's banks, manufacturers, real estate firms, food producers, media outlets and retailers.

State-owned "corporations were sold off to very wealthy families and this provided opportunities to accumulate a lot of wealth," Hebrew University professor Michael Shalev said.

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