Bank of Jerusalem CEO Warns Developers Are Deliberately Holding Back Construction

Bank of Jerusalem CEO Yair Kaplan warns that developers are deliberately withholding construction despite approved plans and building permits, waiting for market conditions to stabilize amid rising financing and building costs. Speaking on market challenges, Kaplan noted that developer profit margins have shrunk from roughly 18% to between 11% and 12%, while contractors focus on completing existing projects and protecting cash flow rather than starting new ones.

According to CBS data, approximately 86,000 new unsold apartments remained on the market at the end of August. Kaplan stressed that demand remains present but has grown increasingly selective based on location, product quality, and buyer purchasing power. He argued that the market is focusing too heavily on how to lure buyers back while neglecting the urgent need to bring developers back to planning and execution.

Echoing calls from construction sector leaders, Kaplan urged the government to appoint a unifying coordinator to remove bureaucratic barriers, streamline licensing, and enforce stable housing policies instead of shifting promotional campaigns. He also suggested revising state housing assistance programs like the Discounted Apartment scheme, proposing direct income-based subsidies for eligible buyers.

Meanwhile, Ministry of Construction and Housing CEO Yehuda Morgenstern criticized developers for bidding excessively high prices for state land. Pointing out that winning bids often exceed government appraisals by roughly 15%, Morgenstern urged contractors to submit lower bids so they can subsequently offer more affordable housing to consumers, emphasizing that state land sales aim to lower consumer prices rather than generate government revenue.