The discount has almost disappeared: industrial land prices in the periphery have jumped 6-fold
Industrial land prices in National Priority Area A have jumped 5.7-fold in nine years. Due to an outdated discount ceiling, the incentives for establishing factories in the periphery have been effectively neutralized.
Industrial land prices in the periphery have jumped 5.7-fold in nine years, and the discount intended to attract factories there has almost disappeared, according to a new study by the Economics Division of the Manufacturers Association that reached Calcalist. According to the study, the average price of land for industry in National Priority Area A rose from 219 NIS per square meter in 2017 to 1,252 NIS per square meter in 2026.
The official policy of the Israeli government is to encourage the establishment and expansion of industrial plants in the periphery (National Priority Area A), and therefore, the policy is to sell plots without a tender and at a reduced price relative to the value of the land. Under this arrangement, a factory in National Priority Area A is entitled to pay only 31% of the land value, meaning the land purchaser is entitled to a nominal discount of 69%. However, the discount is received only on the first 400 NIS of the land value per square meter. The maximum discount value is limited to 276 NIS per square meter, regardless of the actual land price. This ceiling, set in September 2016, has not been updated since and is not linked to any index.
As land prices have risen over the years, the discount has eroded. Since the increase is at a rate of about 22% per year—an addition of about 104 NIS per square meter annually—the discount that a factory actually receives has eroded from 64% to 24%.
The Manufacturers Association examined 82 appraisals in Israel Land Authority tenders for industrial land in National Priority Area A between 2017 and July 2026. The study found that the price increase crosses regions: in the Southern District, prices rose at a rate of about 23.6% per year and in the Northern District by about 11.8% per year. While in 2017 only one in five plots was more expensive than the set ceiling, in 2026 all tested plots, without exception, crossed it.
The Association analyzed the significance for an individual factory seeking to purchase a 10-dunam plot. At the 2026 average price of 1,252 NIS per square meter, the full land value is about 12.5 million NIS. Under the existing mechanism, the factory pays about 9.8 million NIS. If the 69% discount had applied to the full price, the factory would have paid only about 3.9 million NIS, creating a gap of about 5.9 million NIS.
The President of the Manufacturers Association, Avraham Novogrotsky, stated:
"Industrial land prices in the periphery have risen fivefold and more in the last decade, and the ceiling has remained exactly where it was set in 2016. The central incentive for establishing factories in the periphery almost no longer exists. Canceling the ceiling does not require legislation; it is possible to convene the ILA council today and cancel the discount ceiling."
