The slowdown in the construction industry is affecting state coffers, but the amount of revenue is still the second highest after the peak reached last year.
The significant slowdown observed this year in the residential construction sector has also impacted the volume of transactions signed by the Israeli Land Authority (ILA), which markets state-owned land to developers, according to data from the Authority, which were recently presented to Finance Minister Moshe Kahlon. In 2018, R & D revenues will reach 8.6 billion NIS, a decrease of 26% compared to 2017, a record year with 11.6 billion NIS. Despite the decline recorded this year, it is the second highest amount of all time, after last year’s revenues.
Revenues from land sales, development payments, and discounts totaled 12.8 billion NIS, a decrease of 20% compared to last year, and 67% of the revenues of the Israeli Land Authority came from the sale of building land to developers and individuals. 12% came from payments received for development (engineering work to prepare the land for construction); 12% are accounted for as discounts given under the “Mehir lamishtaken”; and 9% are accounted for as discounts granted to tenants in confrontation line localities and in national priority areas.
Despite the decline in revenues, the volume of discounts granted this year in national priority areas increased by 20% to reach 1.2 billion NIS. All other parameters recorded a decline compared to 2017. The data also shows that the discounts granted so far for the “Mehir Lamishtaken” program amount to 5.2 billion NIS.
One of the tenders that increased the revenues of the Israeli Land Authority (ILA) in 2017 is for the construction of a project of three towers in Sharona, in which the purchasing group organized by a residential management company won the highest amount ever paid for land in a single tender of 1.06 billion NIS.
“The reason for the decline in revenues is that this year we have fewer transactions,” explained a senior official. “In 2015 and 2016, we exported a lot of land for marketing purposes. Today, the market is already present in seven regions, and developers are not buying everything that is offered to them.”
Last week, for example, a huge tender for the sale of land intended for the construction of 2,000 apartments in Akko was canceled without an offer, raising concerns that, in demand areas, the ILA does not have enough quality land.
In the next two weeks, tens of thousands of tenders will close for tens of thousands of apartments across the country, most of them within the framework of the “Mehir Lamishtaken” program.
The tenders scheduled to close by December 31 include the Maccabi Jaffa tender in Tel Aviv (940 apartments), a series of tenders for the construction of 4,000 apartments in Beit Shemesh, in Mevaseret Zion (523 apartments), Beer Sheva (1,300 apartments), Ashkelon (2,800 apartments), Kiriat Bialik (1,800 apartments), and Modi’in (107 housing units).
