The Israel Land Authority today published the results of tenders for lots nationwide zoned for the construction of 741 apartments. The results indicate strong demand for lots, high prices that buyers groups are willing to pay, and the huge amounts that the government makes on each tender.
The most prominent tender was in Jerusalem, for two lots zoned for the construction of 404 apartments in the old army base of Schneller on Mikve Israel Street, north of the city center. Eight bids were submitted for the first lot, zoned for 182 apartments. The winning bid was NIS 155.6 million, plus NIS 1.78 million in development costs, amounting to a price per land per apartment of NIS 865,000 (not including VAT). The winning bid was NIS 20 million higher than the valuation by the Israel Land Authority assessor and several times higher than the minimum price.
The winning bid in the tender for the second lot, zoned for 222 apartments was NIS 118.7 million, plus development costs, amounting to a price per land per apartment of NIS 860,000 (not including VAT), when development costs are included. The same company Valimar International Inc. won both tenders.
The prices are well above the price per land per apartment in the area. The results of the tenders again demonstrate how the Israel Land Authority's current tenders method allows the government to maximize its profits on land sales, in this case even exceeding the valuations by the assessor.
The Israel Land Authority also announced winners in tenders for eight lots zoned for 149 apartments in Efrat in the Etzion Boc. It also announced winners in tenders for two lots zoned for 170 apartments in the Galilee town of Maalot-Tarshiha.
The Ministry of Construction and Housing welcomed the strong demand in the tenders. "Despite forecasts and misleading remarks by various parties, the data I received from ministry officials shows that the pace of housing starts in 2013 will unquestionably be higher than in 2012, with at least 43,000 housing starts. The successful results of the tenders indicate real demand for land for construction throughout the country, in both high-demand areas and in the periphery," said Minister of Housing Uri Ariel.
"We will market more land for housing in 2014 than in 2013. The data indicate that we must continue the effective marketing of land for construction, which we are doing and we will continue to do, partly through the comprehensive agreements for tens of thousands of housing units in several cities, the solving of infrastructures problems which are blocking progress, and the issuing of building permits."
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2013
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