Israel Land Authority Sees Land Tenders Plunge Amid High Development Costs
The Israel Land Authority sees a drop in standard housing tenders while affordable housing rises, evidenced by a Beit Shemesh land tender selling 60% below appraisal.
Standard high-density housing tenders that are not part of discounted apartment programs have become a rare event for the Israel Land Authority (ILA). We are seeing a significant increase in tenders for affordable housing, but the general public—those not eligible for these apartments—is taking a heavy hit.
The Impact on the Housing Market
Their chances of winning tenders for land for private construction across the country or for a discounted apartment are diminishing as time goes on. Reserve soldiers receive the majority of apartments, and they are waiting for the ILA to market as much land as possible so that housing supply will increase in a few years and prices might drop.
However, there is another side to the coin: the drop in land prices. Private land prices for single-family home construction in Israel are on the rise, and it is hard to miss. On the other hand, in ILA tenders, there is a decrease in certain tenders, especially those where only one or two developers submit bids.
The Beit Shemesh Tender Example
This is what happened in a tender in the Neve Shamir neighborhood in Beit Shemesh. This is a high-density construction project with commercial and employment areas tailored to the ultra-Orthodox character. The winning company is Urbana B. Halevi. A total of about 22.7 million shekels will be paid to the authority for the land, and the company will pay over 90 million shekels in development expenses. The appraised land value stood at 59.4 million shekels, meaning the price was ostensibly cut by more than 60%.
"When development expenses are high, developers submit lower bids because they know the total price they are willing to pay per housing unit," market analysts note.
The plots marketed in the tender are part of the Ramat Beit Shemesh - Neighborhood H plan, located in southern Beit Shemesh, spanning approximately 1,060 dunams with a planned 4,659 apartments in buildings ranging from 4 to 9 floors.
