Tel Aviv real estate bubble bursting
Entrepreneurs freezing numerous building projects, others steer clear of tenders. 'Prices in Tel Aviv are unreasonable; this isn’t Manhattan or London, with all due respect,' city engineer says
Many Israeli entrepreneurs have halted plans to construct luxury apartment complexes in Tel Aviv or have alternately withdrawn from real estate tenders due to the sharp drops in prices and demand.
Yedioth Ahronoth has learned that due to the situation, the Tel Aviv Municipality is considering a plan to encourage the construction of upscale building projects, in the framework of which it would permit contractors to build 20% more than originally planned, with the additions designated for subsidized housing units for young couples.
Among the frozen construction projects are the luxury towers that were set to be built on the site of the old Elite factory in Ramat-Gan, the three towers that were planned at Tel Aviv's Kikar Hamedina (State's Square) and 12 more towers at the Halacha intersection.
In addition, the tender for the construction of a chic neighborhood on the grounds of the old retailers' market is also expected to be delayed by a few months. Citi Bank, which published the tender, hoped to raise $1.5 billion towards the project, but some of the five groups that qualified for the tender's final stage announced that they wished to reassess the situation due to financial difficulties. The Azorim development firm and Africa Israel both decided to drop out of the tender entirely.
Numerous companies have opted to steer clear of Tel Aviv real estate bid altogether. Capital Group, for instance, which is currently constructing 100 housing units in the city's southern end, is one of them: "It's a buyers' market now, and there is no reason to comply with the unrealistic demands of a tender," CEO Alon Hertzog said.
City Engineer Hezi Berkowitz said, "It was a real estate bubble. I claimed this all along, but everyone laughed at me and said I was wrong.
"The prices in Tel Aviv are unreasonable; this isn’t Manhattan or London, with all due respect," he said.
