Ligat and Bet Yair have won an Israel Lands Authority tender, and bought a plot for 112 apartments in Mahane Allenby in Jerusalem. The companies will pay $43,000
for the land for 100 sq.m. four room apartments, plus development expenses. The results of the tender indicate a sharp decrease in prices of plots in Jerusalem in general, and the Allenby land tract in particular.
In August 1996, the Israel Lands Authority issued tenders for the sale of five plots in Mahane Allenby, two of which (plot numbers three and four) were designated for 112 apartments each. The Rassco (75%) and Brachfeld Brothers (25%) partnership submitted the highest bids. The tender committee decided that the partnership had won plot number four, for $6.2 million, which represents $55,000 for the land per apartment, excluding development expenses. Only two bids were submitted for plot number three, and the highest was from Rasco and Brachfeld, for $7.7 million, which represents $69,000 for the land per apartment.
Despite the high price, the committee decided not to sell the plot to the partners, since only two bids were submitted. The second bid was from Mordechai Aviv, who offered $5.7 million.
However, in the meantime the market changed and the tide turned. The Authority re-issued the tender recently, receiving, as stated, only $4.8 million, representing $43,000 for the land per apartment. This means that within a year and a half the price of the land decreased 38%.
The latest tender results ought to cause Shlomo Nehemia receivers to reconsider: the main asset of the company, which has fallen into difficulties, is a plot in Mahane Allenby for 51 apartments. The receivers recently issued a tender to sell the plot, and has hopes of receiving $7 million, representing $137,000 for the land per apartment, including development expenses. The expected price is double that paid by Ligat and Biton.
A similar fate befell two smaller plots, for 12 and 18 apartments, in the same neighbourhood. In August 1996, contractors Yonatan Ela and Assaf Golan won the tender for the two plots, and offered to purchase them for $164,000 and $181,000 for the land per apartment respectively. Shortly afterwards, Ela and Golan discovered that they had committed themselves to record prices, and returned the plots, absorbing a loss of NIS 400,000. The Authority has now re-issued a tender, and sold them for $100,000 and $80,000 respectively. Here too, the price decreased double digit percentages.
Published by Israel's Business Arena January 18, 1998