Sde Dov land prices down over 40%

Four huge tenders in Sde Dov in north Tel Aviv, on land that is currently considered the most prestigious in Israel, have been successfully marketed with total bids of NIS 6.3 billion for almost 4,000 housing units. The average price of land per housing unit is significantly lower, by tens of percent, than the price set in the tenders marketed in the area in 2021 and 2022, when bids were submitted at record prices.

The largest of the four tenders in the central part of Sde Dov is for high-density construction of 2,606 apartments, which was marketed for over NIS 5 billion, including development expenses. Alongside it, two tenders with 966 housing units for long-term rental, and another tender for 350 housing units for assisted living, were also closed. Among the winners: Gindi Israel, Electra Housing and Nahor (a subsidiary of Dan), Luzon Ronson, Hagag Group, Prashkovsky Group and more.

Surprisingly enough, the company that offered the highest amount for a single lot is a lesser-known company, Israel Brothers Co., which will pay almost NIS 850 million, including development costs, in a tender for high density construction, for a lot to build 424 housing units. Palace Raanana Senior Housing, part of the Azrieli Group, won the tender for 350 senior housing units for about NIS 595 million.

One of the five tenders, for about 269 housing units, failed and was not marketed. This is the only tender in which the state has partial rights to the land, about 62% of the entire area, while the rest is privately owned – a fact that discourages most developers from submitting bids. The tender is expected to be re-marketed later.

A total of 33 bids were submitted for the four tenders that were successfully marketed – a number that indicates considerable interest, even in the challenging economic times in the market.

At the end of next month, five more tenders with 2,967 housing units are scheduled to close in Sde Dov, in the northern part of the district. Last December, another tender was marketed in the district, for commercial and office space in the southern section, the “Eshkol Plan”, for about NIS 561 million, including development expenses.

The results of the tenders will only officially come into effect at a later date, when the plan for central Sde Dov is approved, which should be at the beginning of next month. According to a statement from the Israel Land Authority, “Only after the plan is approved will the winners in the tender be declared.”

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A fall of over 40% compared with previous tenders

Studying results of previous tenders that were successfully marketed in the southernmost part Sde Dov – Eshkol Plan – reveals a significant decrease in winning bids, up to a difference of more than 40% in amounts bid by the developers.

Thus, while in the large tender for high density construction that is currently being marketed, the average price of land per housing unit is NIS 1.9 million including development expenses, in all the tenders marketed in the “Eshkol Plan” in 2021 and 2022, which were boom years in the industry, the average land price per housing unit exceeded NIS 2.5 million in the regular public tenders, and in some cases even reached a peak of NIS 3.3 million including development expenses, 42% more than the average in the tenders that have now closed – an average set in the infamous bid of the Hanan Mor Group in the large tender in August 2021, which ultimately led to the company’s collapse last year.

NIS 12 billion for the state’s coffers

Around the publication of the ten new tenders in Sde Dov, industry professionals estimated that the price of land per housing unit would be around NIS 2 million, meaning that the revenue that the Israel Land Authority and hence the state coffers would receive from all ten tenders would be around NIS 14 billion.

The results of the five tenders show that the estimates, at least with regard to the high density construction, were not far from the final results. According to a calculation of NIS 1.6 million on average for land per housing unit in the five tenders that have now closed, an estimated NIS 11.5 billion will flow into the state coffers from marketing the land in all ten tenders, assuming that the failed tender will also be successfully marketed at the next attempt.

Winning bidders must transfer the full amount of the bid within 90 days, so that the full amount will only enter the state coffers at the end of June, three months after the closing of the last tenders.

Israel Land Authority CEO Yaakov Kvint said, “The tenders that were successfully closed today are a game-changer for the housing market in Tel Aviv. The increase in supply and the many marketing campaigns have also led to a fall in prices in the prestigious area. During the entire process, we have insisted on providing a solution for all populations in Israeli society, and this program includes hundreds of affordable housing units, long-term rentals, and senior housing. The high level of response from developers to the tenders indicates the degree of trust of the business sector and the public. Sde Dov is the best example of the advantage of centralized land management. We are currently working on similar moves, such as vacating army bases and relocating hospitals.”

Published by Globes, Israel business news – en.globes.co.il – on February 20, 2025.

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