An analysis by "Globes" found that the disqualification by the Israel Land Administration of the haredi (ultra-orthodox) charities' joint bid in Harish lots cost the government NIS 113 million - the difference between the disqualified highest bids and the lower bidders which were declared the winners. The highest bids by the haredi charities, which were disqualified, totaled NIS 248.5 million, resulting in sales proceeds of NIS 135.1 million.
"The government gave up NIS 113 million so that Harish won't be haredi, Z. Landau Contractors and Engineers VP Yaki Reisner told "Globes". "Contractors can now sell apartments for less, even with a 15% profit. The question is whether haredim will forget about the prices promised them all these years, and will buy apartments from the contractors. With the grants offered to Harish homebuyers, the final price won't be far from the prices offered by the charities."
After the highest bid of NIS 32 million for a lot zoned for 504 apartments was disqualified, the lot was won with a bid of NIS 12.18 million. The disqualification of the NIS 29.4 million bid for a lot zoned for 490 apartments was disqualified, the lot was won with a NIS 1.72 million bid by Ashdar Building Co. Ltd. (TASE:ASDR). YH Dimri Construction & Development Ltd. (TASE: DIMRI) won a lot zoned for 94 apartments with a bid of just NIS 1,000. Another lot was sold for NIS 2.08 million, after the highest bid of NIS 6.17 million was disqualified.
Bidding was heavy, with an average of eight bids by companies or charities for each lot. The subsidies for the lots in Harish unquestionably attracted bids, again proving that government land subsidies drive the market. It now remains to be seen whether expanding these subsidies, which cost the government more than NIS 100 million in Harish, will result in lower apartment prices.
Since the disqualification of the haredi charities, secular buyers groups have been in talks with the winning contractors. An example is the buyers group Our Harish, organized by Assaf Hovra and Israel Avital. Hovra told "Globes", "We're in talks with the winning contractors, and we'll close a deal with the contractor who offers us the best price. The contractors will sell to us, the general public, and not to the haredim for the simple reason that we have stronger purchasing power."
Hovra added, "We've have dozens of calls from people who were sitting on the fence, and realized after the results of the tenders that it is worthwhile buying in Harish because it won't be a haredi town, but a town for the general public.
Published by Globes [online], Israel business news - www.globes-online.com - on January 23, 2013
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