2024-02-05 16:14:00
The finance plan published yesterday allocates an important part to the field of urban renewal. The Treasury knows that there is not enough land and to increase the supply we must build higher. In 2022, the urban renewal market reached its peak and in 2023, following the aggressive increase in interest rates and the war, but also against the backdrop of growth the year before, construction starts fell compared to it.
There is reality, even in Tel Aviv. Urban renewal (Tamar Metzafi)
The people of the city company obtained the necessary majority and will soon build over 1,300 apartments in Tel Aviv, 1,100 in Kfar Shalem (Neva Eliezer project) and another 260 in Neve Sharet (Almagor project). They took advantage of the momentum in the market and signed the tenants relatively quickly. In a time of war, they know, there are not many tenants who will refuse the protection of their home, certainly when they know very well that it affects the price of the apartment dramatically – up to 20%.
“The processes in Neve Sharet and Neve Eliezer started long before the war, but what happened in the meantime? Neve Eliezer was hit directly by a rocket during the war and the Neve Sharet neighborhood was also affected by this, because there are old railway buildings there without MMD. I have no doubt that it contributed to people coming and signing. Those who hesitated or feared – signed. It should be understood that not everyone who refuses to sign is a refusenik. There are elderly tenants, or people who are afraid of the process.”
One can understand an 85-year-old tenant who does not want to enter this process.
“That’s exactly why the state passed an amendment to the Binui Eviction Law, especially for the elderly: it gives him alternatives to go through it smoothly. You can sell the apartment to a developer, you can get 2 apartments or one less apartment for taxation purposes.”
As discouraging as it may sound, the rocket that fell in Tel Aviv only helped you.
“I’m sure she prompted some of the undecided to come and sign. In the end, it’s a project we’ve been working on for two years and I remind you that it’s not just MMD, but also strengthening against earthquakes, improving lifestyle. It is true that the shielding has manifested itself in a significant way in recent months, but the residents are looking at a set of things that improve the quality of life, such as an elevator and balconies, and of course shielding.”
Let’s talk numbers. What are the prices in Tel Aviv? It is known that there is a big difference between the neighborhoods.
“Tel Aviv is not a city of 60-70 thousand shekels per square meter, but ranges from 30-100 thousand shekels per square meter. It is divided into districts. District 3-4 is the area of Madinah Square to the sea and is priced at the high level, around 60- 80,000 shekels per square meter, but there are neighborhoods like District 9 – Yad Eliyahu, Kfar Shalem, Neve Eliezer, Nachalat Yitzhak – where they sell from 35,000 per square meter to 50,000. And what about District 2 of the Neve Sharet area? Around NIS 40,000 per square meter. Tel Aviv has a wide price range. Most of the new apartments in Tel Aviv are not built in the areas of NIS 70,000 per square meter, but more in the east of the city, an area that is developing more in urban renewal. And in the south of the city.”
What will the prices be for new apartments in Kfar Shalem?
“We estimate that the prices will range between 38-45 thousand shekels for the small apartments. In Almagor the prices will be higher, 44 thousand shekels per square meter on average.”
Even before the war, there were reports of construction stops in urban renewal in Tel Aviv. why did this happen?
“What didn’t happen last year: a legal revolution, a war, and also an increase in interest rates. These 3 factors have a great impact in areas with relatively expensive apartments, and Tel Aviv is expensive. It affected the sale of apartments and also the start of construction in projects. I saw that a figure was published on the number of unpaid permits, and Tel Aviv Spring comes first, but you have to understand that entrepreneurs don’t pay fees for a number of reasons. Sometimes you can’t find an execution contractor or there’s a delay, so why pay millions now? Sometimes you wait a little to treat a reluctant tenant. There are many considerations why not start building and pay fees. There’s no doubt that the main factor He is the stoppage in prices. From the beginning of the year, 2024, there is a very significant awakening in interest in purchasing apartments.”
Have we learned to live with the war?
“The mentality of the Israeli is to get out of the crises very quickly. People waited and now they finally want an apartment in Tel Aviv. They realized that the prices did not drop by 20%. They are also optimistic about the rest of the year regarding the end of the war and the lowering of interest rates. They go back to buy and take advantage of the sales period and see the recovery in January. I can tell you in percentages that there is a hundreds of percent increase in the amount of leads and as a result – also in the amount of meetings.”
Did you see the finance plan yesterday? are you cheering
“I have been claiming for years that the State of Israel has a planning crisis and not a housing crisis. As long as they do not solve the problem of bureaucracy for the planning of housing projects and the issuing of building permits, and shorten the times by at least 50%, the problem will not be solved. A building permit should take half a year, TBA between a year and a year and a half and as long as this does not change, projects of 10-12 years will receive a building permit and the execution will come after 6 years.”
On the other hand, the Treasury is doing the right thing and rewarding local authorities, about NIS 50,000 per apartment.
“This is not the solution because it is giving paracetamol to a patient in a serious condition. It will not help. The solution is dealing with the bureaucracy of issuing permits. You increase supply through plans and building permits. It will not help if the authorities also receive a greater incentive. You need people and a system that promotes. You have to wait Half a year, like abroad, to get a building permit and another year and a half for the construction plan. Without these, and unfortunately they will not happen in the coming years, we will not salt. I don’t see prices rising as fast as in recent years, but I see them passing the index. I expect a 5% increase this year in apartment prices, especially in the second half of the year, also following the expected interest rate cut.”
How about a long term rental?
“We are entering the rental market because the plans for Tel Aviv require us to build 10% of the apartments for long-term rent, there are 39 such apartments in Almagor, and 100 such apartments are expected in Neve Eliezer. In our opinion, this is a welcome issue, but the state must intervene in the economic aspects.”
There is the subject of VAT deferral, doesn’t that make it easier?
“It’s not enough. The state needs to give additional benefits, because today it’s a losing business. The interest rate is high, there are other alternatives.”
Why do you only work in the central area?
“There is no building in the center today that is not in one way or another, if it meets the category. Tens of thousands of apartments can be renovated. We are always asked this question, why only in the central Tel Aviv area and Givatayim. My answer: because there is work here for another 20 years. Regeneration is not only strengthening, but many surrounding elements – including protection and preservation of green spaces. When the cities are renewed, they won’t build any more neighborhoods.”
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