Tel Aviv Real Estate - July 19, 2005

People in Tel Aviv and other parts of Israel want to buy apartments but are hesitant. This has arison as many contractors either do not give the apartment as promised, or go bankrupt and the apartments are seized to pay the debt. Also uncertanity regarding the location of schools is a growing concern. Many buyers today choose to personally examine the apartment, the project and the entire area before making a purchase. Trends show that fewer apartments are being sold before they are being built. While this benefits buyers in more ways than one, contractors are needing to take higher risks as they need to build first.

As per market estimates, 75 percent of the apartments in the first stage of the Tel Aviv Yoo project of Habas have been sold for NIS 300 million. It is said that 40% of the buyers were from overseas. This prestigious project is a joint venture between Habas, the Yaski-Sivan architects and international designer Philippe Starck. It includes two towers (37 and 41 stories) on a nine-dunam plot. The first stage of the project involves construction of one of the towers, and is stipulated to be complete in two years. Prices of the apartments range from $4,000-8,000 per square meter. Prices are based on the height and view of the property. Many apartments of 800 sq.m. were bought for several million dollars also.

In December 2004, the Association of Contractors and Builders in Israel (ACBI), the Finance Ministry and the Industry, Trade and Employment Ministry signed an agreement to reform the employment of foreign workers in the construction industry. The reforms were meant to stop foreign workers from being tied to their employers, increase competition over workers cause an increase in wages and encourage the employment of Israelis in this industry. While the reforms went into effect on June 15, 2005, they did not have desired results. Contractors claim that these laws have made it even more financially unfeasible to employ foreign workers. Also these have removed less professional workers from the work market and have not encouraged Israelis to enter this industry. Contractors further claim that the cost of employing a foreign worker has risen almost 35 percent, from $7 per hour to $9-$10 per hour in the past few months. They say that this may mean having to raise apartment prices.