Ra’anana land in demand

From Globes:

“After many years in which the Israel Land Authority (ILA) issued no tenders for high-density construction in Ra’anana, tenders were closed yesterday for the construction of 188 new housing units on four lots in the Neot Sadeh neighborhood in Ra’anana. Competition for each lot was intense, with an average of nine bids each.

An analysis of the entire tender shows that the average value of the land, including development costs, is NIS 827,000 per land per housing unit. Neot Sadeh is a new neighborhood in northern Ra’anana located near Weizmann St. and the industrial zone. ILA will receive over NIS 150 million from the winning bidders for the four plots just for the land.”

On these figures, and with a back of a fag packet calculation, that’s a base cost before construction of around 138,000 pounds (Sterling) per unit. Or about $213,000 (US). I dread to think what the sale prices are likely to be.

To put matters in perspective, there’s a three block development near to us in Ra’anana that completed about three months ago. By my reckoning, there has been an average of one owner moving in per month… that’s roughly three or four flats occupied out of sixty. The word is that the price rose too far, and people dropped out. However, there’s no sign of any concerted sales effort. For example, the sales office has gone. And yet, other developments continue, on top of which there is this release of new land.

Every so often, there’s talk of a property bubble. So far, each time it has been talked about, that is all that has happened. Just talk. Presumably the buyers (and developers) of the new land are optimistic that if there is a bubble, it will not burst. But that optimism, not to say belief, may be tested if the next set of housing developments to complete in Ra’anana, also lie largely empty for a while. Yes, there are incoming residents – mostly from France, the USA, and the UK – but quite a few of the newcomers are choosing to rent. I am told you cannot get a decent return on rented property at today’s prices, so the buy to rent market isn’t there just now. That would need prices to drop by at least 10-20%. Suffice it to say, we’ll be keeping an eye on things.