The Ministry of Construction and Housing is reporting a 23
percent reduction in the number of apartment units marketed
overall in Israel from February to May 2005. During this
period tenders were publicized for 1,519 housing units at 37
sites and winners were selected for 1,134 units.
Approximately one-fourth of the apartments offered in the
tenders were not sold to developers.
During this same four-month period last year tenders were
issued for 9,694 housing units compared to 11,053 during
this period the previous year (2003). Winners were named for
4,905 housing units compared to 7,280 during the same period
the previous year — a decrease of 32 percent.
During the first quarter of 2005 land designated for the
construction of 1,900 housing units was marketed by the
Construction and Housing Ministry and by the Israel Lands
Authority, a 53 percent drop compared to the first quarter
of last year. In 2004 the number of housing units marketed
rose by 4 percent to 23,345 for the year, but the numerous
cancellations — only 17,000 were actually marketed
— attests to the weakness in the industry and
contractors' reluctance to take risks.
Constructing and Housing Director-General Shmuel Abuav warns
that the stock of new apartments left for sale in the
industry continues to decline steadily. "As of March 2005
the stock of apartments under construction went down to
17,905, a decrease of 7 percent compared to December 2004.
This stock is enough to last for just over a year on average
based on the rate of sales, which toned down at the
beginning of 2005."
A portion of the tenders of the past months are in chareidi
areas in Beit Shemesh and Elad. In Beit Shemesh two land
tenders with a total of 407 housing units in Ramat Beit
Shemesh Alef were issued. Eight different contractors bid
for one tender for the construction of 64 units at two
At seven other sites 31 bids were submitted for the
construction of 343 housing units. Winners have been
selected for all of the sites. Contractors submitted between
13 and 21 bids for each site. The winners bid maximum costs
at a rate 350 percent to 1,133 percent of the land costs,
and they plan to build luxury homes at the site.
The Housing Ministry stresses that areas for bid in Ramat
Beit Shemesh Alef are located near an inhabited area with
religious and communal institutions already in operation.
The construction companies assessed the potential buyers'
market and found that there is indeed demand in the well-to-
do chareidi sector. Marketing and sales campaigns have been
aimed at affluent chareidim living abroad.
R' Yigal Brazman, an apartment salesman in Beit Shemesh,
says chareidi buyers in Eretz Yisroel are also showing some
interest in the project, despite the relatively high
In Elad, two land tenders with a total of 479 housing units
were issued. Winners have been selected at two 36-unit
sites. At a site for the construction of 11 housing units no
bids were submitted. The tender, which calls for attached
ground-level homes, has been issued three times. During the
first sales drive 72 units were offered and, due to the high
cost of developed land that the tender demanded, the project
was not financially worthwhile for the construction
companies. The site was divided into smaller sections based
on the assumption if the financial risk was reduced
companies would be more interested. The assumption proved to
Four bids were made for a tender for the construction of 302
units at four sub-sites. Winners have been selected for all
The Housing Ministry says the Local Council is not granting
permits for building startups due to the lack of educational
facilities, causing difficulties for the winning companies.
The Ministry also notes that these are the last sections
available in the town (with the exception of a few other
apartments) since Elad does not have any room for further
development. To the north is a quarry, to the south is an
Army firing zone, to the west is a forest and to the east is
Highway 444. Possibilities for expansion are still under
assessment, either by adjusting the municipal borders of
Rosh Ha'ayin and Elad or possibly by altering the work
arrangement at the quarry.