1,000 penthouses stand empty

More than 1,000 new penthouses have no buyers, up from 600 penthouses a year ago, according to a survey of contractors by the Israeli Building Center on the eve of its Penthouse World fair at Airport City on Friday.

In Tel Aviv, Netanya, Rishon LeZion, Petah Tikva, and Ashdod, contractors have apparently stretched the concept "luxury apartment" a bit too far. In place where is already hard enough to imagine that an ordinary apartment costs more than NIS 1 million, it is even harder to find potential buyers with millions of shekels in equity needed to buy a penthouse.

At the fair, Neve Gad Ltd., a subsidiary of Nochi Dankner's IDB Holding Corp. Ltd. (TASE:IDBH) held through Property and Building Ltd. (TASE: PTBL), will try to sell a 177-square meter penthouse under construction in Holon for NIS 5.5 million - after the discount. Africa-Israel Investments Ltd. (TASE:AFIL), controlled by Lev Leviev, will ask NIS 5.6 million for a 149-square meter penthouse in south Tel Aviv. In Yavne, an hour's drive from Tel Aviv during rush hour, Guy and Doron Levy Engineering, Construction and Investments Ltd. and Rami Shviro Engineering, Construction and Investments Ltd. will ask NIS 2 million for a 162-square meter penthouse.

While the real estate market is seeking cheap and modest housing solutions, contractors are stuck with monstrous high-rises and penthouses. They look wonderful in the imagination, help create buzz about the luxury that is spreading to Petah Tikva and Ashdod, but there is no real market for them.

Shikun & Binui Holdings Ltd. (TASE: SKBN) this week demonstrated the difficulties facing developers in selling their high-end units. In a statement that almost reads like it was written by a liquidator, in tiny print surrounded by a black border, the company announced an offer for bids for a five-room rooftop apartments under construction in its Ir Yamim project in Netanya. The minimum bids for the cheapest five-room apartment in the project is NIS 4 million, including VAT.

Published by Globes [online], Israel business news - www.globes-online.com - on September 6, 2012