After years of delays, construction work resumed several months ago on the 800-room, 47-floor Sarona Hotel in Tel Aviv. The high-rise will have 40,000 square meters of hotel space, 2,000 square meters of commercial space, up to 20,000 square meters of over-ground service areas, and 39,000 square meters of underground parking and service areas.
Nitsba Group, controlled by Airport City (TASE: ARPT) won the Israel Land Authority (ILA) tender to build the hotel on the six dunam (1.5 acre) South Kiryat lot in Tel Aviv way back in 2011. Nitsba paid NIS 30.6 million for the land and NIS 24.2 million in development costs. The tower was designed by Moore Yaski Sivan architects.
The project received a building permit in 2014 and construction began in 2015. Over the years the project faced many problems that resulted in a halt in construction work. These included a dispute between Nitsba and Electra Construction, the company building the project. Work was reportedly stopped twice because of this dispute. In 2020 the ILA fined Nitsba NIS 14 million for not completing construction within five years.
In addition to this work dispute, the Covid pandemic and then the outbreak of the war all delayed construction and according to Nitsba even work on the Tel Aviv light rail hampered progress. There were even reports before the outbreak of the war that Donald Trump was interested in buying the building, although following his election as president this is now off the agenda.
Ten years after receiving the building permit, when will the story end
The underground work is being carried out by Danya Cebus (TASE: DNYA) and the above ground work by Electra Construction, which built the concrete core of the tower before work stopped. The most recent halt in construction was at the start of the war when the entire building sector came to a standstill due to a lack of workers. At the end of March 2024, Nitsba parent company Airport City reported, "The five underground floors and five foundation floors, which include the hotel's public areas, including limited commercial spaces, have been cast. In addition, the 'core' of the building has been cast up to the 36th floor."
Airport City offers no date for completion of the project.
ILA says, "Currently, completion of construction on the site is progressing and ILA is monitoring the stages of execution in accordance with its procedures. ILA operates, and will continue to operate, in accordance with the decisions of the Israel Lands Council, the management's decisions and the provisions of the lease contract, including regarding payments, if required."
The Tel Aviv-Yafo Municipality said regarding delays and the possibility of imposing sanctions on the company: "Every building permit is valid in accordance with the law and regulations. In the project in question, there are several building permits that have been issued, and they are legally valid.
"If construction is carried out on a construction site without a valid building permit, the municipality's inspectors will enforce the law and stop the work. The municipality, or any other body, has no legal option to expedite construction on construction sites, but only to impose nuisances if there are deviations from the permit's provisions and municipal bylaws."
Published by Globes, Israel business news - en.globes.co.il - on March 3, 2025.
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