Head-to-head with Azrieli: Melisron promotes the construction of a giant mall in Jerusalem

Melisron, the mall giant controlled by the Ofer family, is preparing to enter Jerusalem for the first time with a new project. Globes has learned that the company plans to build a mall in the city with an area of approximately 35,000 sqm. The land is located in the Arnona neighborhood, near the Armon HaNatziv promenade, on Daniel Yanovsky Street.

Melisron currently owns 18 malls across the country, with a managed area of about 542,000 sqm and an almost full occupancy rate (99%). Revenue from stores in the first half of the year stood at 5 billion shekels.

Instead of Kanyon HaZahav?

Last month, Melisron withdrew from its intention to purchase half of the control in Kanyon HaZahav in Rishon LeZion from the Migdal insurance company, following signals from the Competition Authority that it would oppose the deal. Market estimates suggest the opposition stemmed from the strong presence of the Ofer Malls chain in the center of the country, despite Melisron's arguments regarding a lack of presence in the Shefela.

Now, the company intends to establish a foothold in the Jerusalem market. Last July, Melisron purchased 75% of the rights to land covering about 29 dunams in Jerusalem from brothers Tzachi and Chen Neuman. Melisron paid 247.5 million shekels, with an additional conditional payment of 120 million shekels to be paid upon approval of a new city building plan (TABA) and achievement of agreed-upon betterment targets.

The current planning designation of the land is residential and hotel, but Globes has learned that Melisron intends to promote a new TABA allowing for large-scale commercial use. If the plan is not approved, the company intends to exercise existing building rights for a residential project. The deal has been completed, and possession of the land has been handed over to Melisron.

First entry into the capital

Entering Jerusalem is a significant move for the Melisron group, which until now has been absent from the capital. The company already owns some of the strongest malls in Israel, including Ramat Aviv, the Kiryon in Kiryat Bialik, and the Grand Canyon in Be'er Sheva.

Melisron's second-quarter reports show that revenue in the company's malls rose by about 11%, following a 5% decline in the first quarter due to closures during "Swords of Iron". The NOI (net operating income) rose in the second quarter by about 5% to approximately 412 million shekels. Total revenues for the quarter climbed to 551.7 million shekels (a 15.1% increase). Net profit stood at 289 million shekels, a 33% decrease compared to last year's 437 million shekels, which the company attributed to a decrease in real estate revaluations.

Kiryon's success and strategy

The Kiryon in Kiryat Bialik remains a standout asset. Following investments of 150 million shekels in expansion and renovation, the asset's NOI rose to 50 million shekels (a 9% increase), and its value reached 3.1 billion shekels. It serves 25,000–30,000 visitors daily and is defined as Israel's largest mall by commercial area (65,000 sqm).

In Jerusalem, the company identified a shortage of a regional mall. Today, the central anchor is the Malha Mall of the Azrieli group (44,000 sqm). Building a 35,000 sqm mall will bring a competitor of similar scale to the capital. Competition may sharpen, as Azrieli has already had a plan approved for expanding Malha.

The Jerusalem Municipality stated: "A planning initiative for the construction of a mall as part of a mixed-use complex was presented to the city engineer. The initiative is welcomed in principle, but requires further planning examination."