Tel Aviv Real Estate - July 22, 2005

The residential construction industry in Israel struggles to gather foothold as housing starts fell by an annualized 10.2% in January-April 2005. An analysis by Central Bureau of Statistics and Ministry of Housing and Construction estimates by economic ministries in Jerusalem, show housing completions also fell by 6.2%. While privately built housing starts lowered by 8.9% in January-April, new publicly built housing starts were seen to go down by 17.6%. It was also seen that while publicly built housing completions unexpectedly rose by 2%, privately built housing completions lost by 8%. The first quarter of 2005 was the worst quarter for housing starts and completions in the past three and a half years, since the crisis in 2001. Housing starts fell by 11.1% in the first quarter, and housing completions by 12.6%. Privately built housing starts fell by 5.6%, and publicly built housing starts plummeted 26.9%.

After 75 years, the Zamenhof clinic of Clalit Health Services in Tel Aviv has now been sold to a developer for $5.3 million. When the property was recently offered for sale by tender, it attracted a great deal of interest, although only three bids were ultimately submitted. Under the Urban Building Plan, this property is zoned for public use, with 225% building rights, which are fully used. The developer thus can choose to build a public structure like a community center or rezone the area for residences. Currently the four-storey building had 4,700 sq.m. of built-up space, including a 500-sq.m. basement. While the existing structure probably cannot be demolished, since it classified for preservation without severe restrictions, its internal structures can be changed.