This week, the Israel Land Authority's tenders crossed the NIS 1 billion mark.
The auctions continue to soar, and there seems to be nothing stopping them.
In a tender published in recent days for the construction of 1,574 apartments in Sde Dov, 4 real estate companies won to pay almost NIS 4.5 billion. Government.
Anyone who has been following the tenders of the Israel Land Authority in recent months is surprised to find that land tenders throughout the country reflect increases of tens of percent of the price of the assessment.
Another huge tender worth about NIS 1 billion for an apartment rental company closed a few days ago in the Triangle Stock Exchange complex in Ramat Gan.
The winning companies, Besser and Canada Israel, paid NIS 936 million, 70% more than the tax price, for the construction of about 750 rental housing units and student dormitories.
The winning bid reflects about NIS 1.3 million for land for a housing unit.
Two days later, the results of two additional tenders were published in the Ein Hatchelet neighborhood of Netanya.
These results also devastate all forecasts, having closed with a calculation of NIS 1.4 to 1.8 million for land per housing unit, not including VAT.
"In the last 10 years, apartment prices have doubled, and we are facing a significant further increase soon," explains Yaakov Siso, co-founder and co-CEO of Keren Yesodot. Above the appraiser of the government appraiser, and they reflect an expected increase in apartment prices by 15 to 25 percent.
This reality does not make sense and this madness must be stopped. "
Entrepreneurs pounce
This is a significant number of tenders that have closed in recent months and reflected significant price increases, as revealed in a series of investigations in real estate today.
The tenders in Lod reflect about NIS 800,000 for land per housing unit, while in the city today 4-room apartments are sold at an average price of about NIS 1.6 million. In Or Yehuda, Shikun VeBinui won a tender for the construction of 159 apartments for rent at a price of NIS 1.36 million for land per housing unit, not including VAT. . In addition to the cost of developing the price, it reflects about one million shekels for land per housing unit. In Kiryat Bialik, a tender was recently closed for the construction of 134 apartments for NIS 126.6 million, with a calculation of about NIS 1 million for land per housing unit, including development.
"We checked and found that for every tender, 20 to 30 bidders compete, even in esoteric tenders," Siso notes.
"It is clear that after a long period in which there were no tenders for the free market, the developers are bidding on the tenders and buying plots at all costs, among other things through association with other companies, to increase the chances of winning. "Israel. I anticipate a difficult social problem, which will continue to develop when young people will not be able to purchase an apartment. The problem will reach every home in Israel."
The responsibility of the banks
The Bank of Israel, for which its approach is not responsible, is giving the green light to banks to provide financial support to real estate companies. "Risks are unreasonable and build on the price increases of apartments to justify the purchase prices of land. Who said buyers could afford the price increases? What if prices did not rise as developers and financiers expect? Or there would not be enough purchasing power for the expensive supply to reach the market?" .
Data from the Bank of Israel published in June and July this year show that the mortgage market beat all forecasts and recorded an increase of more than 20% compared to the previous record broken in May.
The total volume of mortgages reached NIS 11.5 billion in July, a figure that is 76% higher than in July last year, which indicates a step up in terms of apartment prices.
The average mortgage amount in Israel is close to NIS 1 million.
The writing on the wall
Nir Mesika, former deputy director of the National Housing Headquarters: "Despite the explicit warnings we have issued in recent months that any land tender using the highest price method flies land prices (and with them the entire real estate market), the Israel Lands Council has not yet convened to change the tender system. The results of the latest auctions in the central region (billions of shekels!) Leave no shadow of a doubt - if you want to stop the rise in land prices immediately, stop marketing land using this method. The country and swept away an entire country. "
"If the supreme interest of the state is to make money, then the policy of RMI tenders is certainly understandable," says the CEO of Bamuna, Israel Zeira. Zeira, through a company in Faith, competed in 2 tenders. One in Carmei Gat in Kiryat Gat for leasing land for the construction of about 300 housing units. The company submitted a proposal calculating about NIS 350,000 for land for a housing unit. The winning bids ranged from NIS 450,000 to NIS 500,000. Another tender was in Beit Shemesh for the construction of 44 housing units. The company submitted a bid of about NIS 600,000 for land for a housing unit, but the winning bid was NIS 760,000.
"The proposals we submitted reflected entrepreneurial profit of about 14% and moderate price increases in relation to market prices," Zeira explains. "The winning bids in the 2 tenders reflect wild price increases of about 25%, and this is what will happen to apartment prices in the next two years. In Rami tenders.