Rothstein Advances Gilo Urban Renewal Project Worth NIS 1.87 Billion
Rothstein Real Estate is advancing a massive urban renewal project in Jerusalem's Gilo neighborhood to replace 166 old units with 874 new apartments. The venture carries estimated revenues of NIS 1.87 billion and construction costs of NIS 1.62 billion.
Rothstein Real Estate is advancing a major urban renewal project in Jerusalem's Gilo neighborhood, involving the demolition of 166 older apartments and two commercial units to make way for approximately 874 new apartments and 900 square meters of commercial space.
The company, operating through an equal partnership, announced that it has secured agreements with over 67% of the property rights holders in the complex, located on HaAyala and HaShalev streets.
Project revenues are projected at approximately NIS 1.87 billion, against estimated development and construction costs of NIS 1.62 billion. This points to a projected spread of roughly NIS 250 million between revenues and costs, with Rothstein's share accounting for some NIS 127 million. The figures represent an initial estimate based on projected selling prices and construction costs, rather than guaranteed net profit.
Project Mechanism and Scope
Under the proposed initiative, existing apartment owners will vacate their homes in exchange for new units under signed agreements, while the developing firms finance construction through the commercialization of the additional housing units. Out of the 874 planned apartments, roughly 708 fall under the joint venture.
This initiative follows a September disclosure regarding another urban renewal venture by Rothstein in Jerusalem's Pat neighborhood on Berl Locker Street, where 64 apartments are slated for demolition to construct 237 new units, yielding projected revenues of NIS 438 million against costs of NIS 368 million.
Profitability Margins and Pricing
A comparative look reveals that the Berl Locker project features a projected revenue-to-cost margin of roughly 16%, compared to approximately 13.4% for the Gilo venture. Although the Gilo development is significantly larger, its estimated gross profitability ratio is lower.
Projected selling prices in Gilo range between NIS 27,000 and 30,000 per square meter, compared to NIS 31,000 and 32,000 per square meter in the Pat neighborhood. For instance, a 100-square-meter apartment in Gilo is priced between NIS 2.7 million and 3 million, compared to NIS 3.1 million and 3.2 million in Pat.
Despite securing initial tenant signatures, construction remains on a lengthy horizon. The project requires a new city building plan approval, finalization of property rights conditions, building permits, and banking accompaniment agreements. Rothstein estimates permits will take three to five years, placing execution between 2029 and 2031.
