Casso Real Estate Cancels Contract with Main Jerusalem Project Contractor
Casso Real Estate terminated its contract with main contractor Neta Lipschitz for a major Jerusalem pinui-binui project, citing severe labor shortages and a fundamental breach after a halt in construction.
Casso Real Estate notified the Tel Aviv Stock Exchange that it has officially terminated its agreements with Neta Lipschitz, the main contractor for the Yovel Hatzaira pinui-binui project in Jerusalem, citing a fundamental breach of contract.
Project Scope and Status
The project involves the demolition of five old buildings containing 67 apartments on Avraham Stern Street in the Kiryat Yovel neighborhood, making way for five new residential buildings with 226 apartments. Of these, 159 units are designated for market sale, and 67 are for the original property owners. The development also includes commercial spaces, public areas, and parking.
Casso Real Estate holds a 50% stake in the project company, partnering with Kidmat Yovel. Construction is slated for completion in the second quarter of 2027, with approximately 92% of the units already sold as of the first half of 2026.
Contractor Struggles and Labor Shortages
According to the corporate filing, Neta Lipschitz unilaterally halted construction work on the project several weeks ago. Although extensive discussions took place to find a compromise, the contractor notified the project company on September 24 that it could no longer continue the work, leading to an eviction notice on September 26.
Industry sources indicate that the project faced severe delays due to a heavy reliance on Palestinian laborers. Following the outbreak of the war on October 7, 2023, the cessation of work permits for foreign workers created an acute labor shortage, delaying construction by six to seven months. Although Casso Real Estate previously agreed to increase compensation in June 2026, dropping the project's expected profitability to around 12%, the contractor ultimately failed to resume operations.
"The project faced significant challenges due to the labor crisis, and despite financial adjustments, the contractor could not fulfill its obligations," industry sources told Calcalist.
Next Steps and Replacement
Neta Lipschitz is a long-standing Jerusalem-based construction and entrepreneurial firm managed by Yaakov Lipschitz. With the engineering completion rate currently standing at approximately 80%, Casso Real Estate has already approached alternative contractors to take over the site and complete the remaining construction.
