The result of the second round of buyers price tenders in Rishon Lezion were published on Wednesday by the Israel Land Authority. The tender included three separate lots, each with the potential for 90 residential units.
Despite being one of the few tenders published in central Israel, bids were not submitted for all the lots and only one property was awarded, to M.I. Dvir Ltd, for NIS 9,494 per square meter. The maximum price for the tender was set at NIS 9,788 per square meter meaning the winning bid was only 3% off the ceiling.
The terms of the tender dictate a 100-square-meter apartment can be sold to those eligible for the buyers price starting at NIS 1.11 million and at NIS 1.33 million for a 120-square-meter apartment. Furthermore, as opposed to other buyers price tenders, the Rishon Lezion tender allowed the developer to sell any additional apartments approved by the local council beyond the number of apartments set by the tender without restriction.
The other two lots, each zoned for the construction of 90 residential units, did not receive a single offer; the lot that was awarded attracted four separate offers. The unique nature of the tender with the ability to sell any additional apartments for a market price left analysts puzzled as to why the other lots did not garner a single offer.
A source familiar with the details of the tender was also surprised by the lack of bids on the remaining lots; he said the difference between the properties was the size of the lot and the cost of constructing the underground parking garages required by the zoning plan.
The “wanted” property was 3,262 square meters while the smaller lots stood at 2,022 square meters and 2,305 square meters. Contractor sources said the bigger lot allowed greater flexibility in the construction of the underground garage, because such costs were inversely proportional to the size of the lot.
However, a review of the full list of lots including those already sold showed similar properties received offers in the previous round. Thus, one of the most notable tenders in the buyers price program was unable to close and it may force the Ministry of Finance to take another look at the numbers and the maximum price before the next round.
Meanwhile, the Ministry of Finance said Wednesday that as in each buyers price tender not acquired by a developer the two Rishon Lezion lots will be placed on the market again soon.
Published by Globes [online], Israel business news - www.globes-online.com - on January 7, 2016
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