A shell of a cottage in Kfar Warburg sold for 4.1 million shekels
A shell of a cottage with an area of about 290 sq. m, on a half-dunam plot in the moshav of Kfar Warburg, was sold for 4.1 million shekels. According to estimates, 2.2 million shekels must be invested to complete the construction.
The deal: In the moshav of Kfar Warburg, a shell of a cottage with an area of about 290 sq. m on a half-dunam plot was sold for 4.1 million shekels.
Environment: Kfar Warburg is located southwest of Kiryat Malachi, on Highway 3, and is home to about 1,200 residents. It has about 100 estates and a similar number of houses and plots within the expansion areas. The moshav is considered high-quality and in demand.
Property: The structure is located in the expansion of Kfar Warburg, which rezoned 130 dunams of agricultural land into plots for 106 detached houses. On the half-dunam plots, it is possible to build 290 sq. m, including a basement and two floors above it.
The property is located in the south of the moshav's expansion. The registered area of the plot is 500 sq. m, and the shell includes three floors: a basement floor of about 70 sq. m, an entrance floor of about 135 sq. m, and a first floor of about 85 sq. m.
Analysis: Since this is a special deal for a unique property, our analysis includes estimates regarding the value of the land, the value of the land with the shell, and the expected value of the finished structure.
Regarding the value of the plot, about two and a half years ago, the adjacent plot, which is identical in size, was sold for 3.2 million shekels. In addition, a few months ago, a tender by the Israel Land Authority was held for 14 plots of a quarter-dunam on the eastern side of the moshav, located near the route of Highway 3. The value of the plots was estimated by the Authority at 2 million shekels, including VAT.
From these two indications, one can derive the net value of the plot (without the building shell on it) at around 3.2–3.5 million shekels. The fact that its area is double the area of the plots marketed by the Authority does not mean that the price of the plot will also be double.
The remainder of the price paid should be attributed to the shell that was erected, but also to fees and planning.
In the last two years, two cottages were sold in the expansion for about 5.6 million shekels, but both are much smaller in area than the house in the deal. A check of transactions for detached houses in other settlements in the area indicates that 6 million shekels is a "ceiling price" that is difficult to cross. Therefore, we estimate that the value of the cottage as finished may reach a level of about 6 million shekels, and perhaps even a little more.
Broker's word: "Usually, the Israeli buyer wants to see a finished property in front of them, and that was not the case here. We highlighted the buyer's options to receive a house at the shell level, for which all permits have been granted and fees paid, and what they can do now is complete the construction according to their taste and needs," says Miriam Rosenfeld of Daskal Real Estate, who carried out the deal. "Ultimately, the person who purchased the property is a young couple who really wanted to live in Kfar Warburg and knew that the supply of properties here is limited."
"In my estimation, the price paid is fair, considering that the price of such a finished cottage at a reasonable level should reach 6 million shekels. The price reflects all costs (land and construction) without entrepreneurial profit, and this stems from the trends in recent years, where property prices have not risen, but construction costs have increased significantly."
Appraiser's word: "This deal is interesting because it represents a unique real estate product located on the seam between purchasing a plot for self-construction and purchasing a finished house. The buyers did not just buy a shell, but they bought planning and execution certainty," says appraiser Anat Barnir Sternberg. "From an appraisal perspective, this is a property for which there are almost no direct comparison transactions, so it is correct to examine it from a broader perspective."
"The cost of completing the construction is estimated at about 2.2 million shekels, of course subject to the level of finish and the specifications that will be chosen, and this total cost should be compared to the cost of purchasing a new finished house with a similar specification."
In other words, Barnir Sternberg estimates that in the end, the buyers will pay about 6.3 million shekels for the completion of the house. The price can be estimated, but a direct comparison to other transactions cannot be made, as no transactions have been carried out on similar properties.
In light of the rare features of the property, she adds that "one of the significant advantages in a deal of this type is that the complex stage of planning and construction involving time, decision-making, dealing with professionals, and uncertainty throughout the process is already behind them. From a planning perspective, the house was designed with an up-to-date architectural approach, utilizing the building rights and easements approved within the permit, as well as easements that most of which cannot be obtained today. In my eyes, the deal illustrates that there is a demand for this type of real estate product."
Bottom line: This is a deal for a property with a rare specification, which we estimate will eventually also receive a price that is exceptional for the environment. The deal seems good for both parties and testifies both to the existence of demand for such properties and to a meager supply of alternatives.
