A recently signed real estate deal illustrates how the Buyer Fixed Price program is pushing up prices of privately owned land for residences. The Reality Investment Fund, headed by founder and partner Dr. Michael Vardi, and its partner in the property, Nadlans, controlled by diamond trader Izak Levavi, acquired a property in the Shikun Dan neighborhood in Tel Aviv zoned for offices in equal shares from a group of South African investors for NIS 37 million in December 2013. The two companies sold the property in the past few days to Shikun & Binui Holdings, controlled by Shari Arison, for NIS 87 million, sources inform "Globes."
In recent years, no substantial land reserves zoned for high-density construction have been sold in the Dan neighborhood, which features houses with gardens.
The 2.5-dunam (0.625-acre) lot, located at 5 Tevuat Haaretz Street, is bordered by Even Sapir Street on the north and the Ironi Alef 14 school on the east. The lot is currently occupied by an office building with 5,000 square meters of built space, most of which is leased to the Adam Milo Institute.
The South African owners offered the lot with the building for sale a number of times without success, mainly because of the large number of owners, most of whom were foreign residents, which made the sale process very complicated.
Since the lot was sold, Reality Investment Fund and Nadlans promoted a new urban building plan to rezone the land for residential and commercial construction. Under this plan, scheduled for discussion soon by the Tel Aviv Local Planning and Building Commission, the office building on the lot will be demolished and three seven-storey residential buildings with 90 apartments, 15 of them long-term rent-controlled apartments, will be built in its place. The plan also includes 300 square meters of commercial space on the ground floor and 350 square meters of public buildings. The plan, which has a total of 10,000 square meters of construction above ground and underground parking lots and is being promoted through architect Gidi Bar Orian, complies with Tel Aviv outline plan 5000. Shikun & Binui is likely to pay betterment tax on the property.
Since almost all state land marketed recently by Israel Land Administration has been for the Buyer Fixed Price program in accordance with Minister of Finance Moshe Kahlon's policy, prices of the small amount of private land reaching the market are soaring, especially in areas with a low supply of new housing units. The current deal, in which the buyer is Shikun & Binui Real Estate, which specializes in the construction of large neighborhoods and does not take part in Buyer Fixed Price plan auctions, is a prime example. There has been no substantial new construction in the Shikun Dan neighborhood in recent years other than a project now being marketed by Akro Real Estate on the Kitan center site, which will have 190 housing units.
Published by Globes [online], Israel business news - www.globes-online.com - on May 14, 2018
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