A tender published by the Israel Lands Authority (ILA) in the community of Tzur Hadassah near Jerusalem provides another indication of how demand for land is only growing, and pushing the price up along with it. The tender was closed today, with ILA marketing a lot zoned for 46 housing units. No fewer than 17 bids were submitted in the tender, and the winning bid was NIS 11.7 million. With the addition of development fees, the winner will have to pay ILA a total of NIS 21.9 million. The winning bid reflects a land value per housing unit of NIS 476,000, including development.
Since all the state land tenders will henceforth be marketed on the buyer fixed price format, competition for ordinary land tenders is intensifying, as shown by the 17 bids submitted to this tender, while no more than seven bids were submitted for each lot published in a tender in previous tenders in the same community in late 2014. The price that the developers and contractors are willing to pay for the land also jumped.
On a lot on which 65 housing units can be built, the bid in the previous tender reflected a land value per housing unit of only NIS 319,000. On another lot on which 42 housing units can be built, the winning bid reflected a value of NIS 298,000 per housing unit; the price of land in the community has thus soared 50% in less than a year.
The winning bid in the current tender was almost triple the NIS 4 million assessment for the land published by ILA, and no less than NIS 3.5 million higher than the second highest bid. This figure once again shows the enormous pressure generated for "ordinary" tenders still remaining in the market, and the bids contractors and developers are willing to make in order to win land. Needless to say, a higher bid inevitably means that the final prices of the apartments will also be higher.
Published by Globes [online], Israel business news - www.globes-online.com - on October 18, 2015
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