Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

23 Tammuz 5766 - July 19, 2006 | Mordecai Plaut, director Published Weekly










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Ministry of Housing: All Tenders for Chareidi Areas Were Sold Out

by Betzalel Kahn

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 sites.

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 prices.

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 be correct.

Four bids were made for a tender for the construction of 302 units at four sub-sites. Winners have been selected for all four sites.

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.


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