Urban renewal is the only way out of the real estate market. Nice words abound, but supply is dwindling
Urban renewal is not progressing
Photo:
Envato Elements
Produced by the Department of Special Supplements
Recently, data on construction starts in Israel for 2020 were published, which shows a clear picture - the real estate market is at a crossroads. The volume of residential construction starts in 2020 was 51,600 apartments, a decrease of 3.5% compared to 2019. This is despite the fact that the real estate industry was defined for all The last year as an industry is vital, and work has continued on it regardless of the state of corona restrictions and closures.
Another figure published is that the volume of building permits issued by local authorities for the construction of new dwellings decreased by 7.8% compared to 2019 and amounted to 51,660 dwellings.
These two figures, together and separately, are a bright red warning sign for the real estate market in the near future.
With the demise of the TMA 38 plan, and before the enactment of a new law that is supposed to replace it, in a political crisis known to the state, we look at the reality where the supply of apartments decreases on the one hand, the authorities are deeply politically paralyzed and dessert The urban renewal to the ax to dig into, in the way that urban renewal projects become uneconomical and unworkable.
Despite the kind words, the big announcements and the vision of urban planning of the Israeli governments, which places the emphasis on urban renewal (and even a unique government authority was established 5 years ago), in practice we witness the failure of promoting renewal in Israel as a major tool for solving supply problems.
Decline in construction
According to CBS data, the volume of construction in the field of urban renewal decreased by 6.5% in 2020 compared to the previous year. This figure is a low of the last 3 years. In the field of construction additions under TMA 38 plans, 3,598 dwellings were built in 2020, a decrease Of 3.6% compared to 2019. Alongside these, in 2020 there was a 27% decrease in the volume of marketing of residential land by RMI compared to 2019.
These data prove one main claim - the chaos in which Israeli politics has been conducted for the past two years causes a lack of budgets in favor of renewal and is a stick in the wheels of planning in Israel.
This is one of the most difficult economic years in the history of the country, when real estate prices continue to rise, demand is not small and supply continues to fall.
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Although the Government Authority for Urban Renewal makes great efforts to advance the issue, it does not receive adequate government attention in terms of budgets and collaborations.
During the current events, with a plausible scenario in which a stable government is not formed after the election and the state goes to a fifth election in two years, the only thing that can be expected at a constant rate of population growth is a continued rise in real estate prices and tens of thousands of young couples.
While a price-per-tenant program has lost its father, and is likely to fade away, and a huge economic crisis significantly reduces the risk margin that homebuyers are willing to take, the next government must position urban renewal as a key and strategic tool in policy in the Israeli real estate market.
While tens of thousands of residential buildings in Israel need renewal and refreshment, we, as a developed country, have no privilege to treat urban renewal as a boutique sub-sector.
The majority of the cities in Israel were established about 60 years ago, and entire aging neighborhoods are becoming a real threat.
Urban renewal is the solution to upgrade and renew the planning and social aspects in the various cities.
Shahar Perry is the CEO and co-owner of
GSH-GROUP
, a company that markets real estate projects and strategies.
Produced by the Department of Special Supplements
