ILA and Dira LeHaskir Successfully Market Land for Long-Term Rental Housing

The owner of the Reisdor company, Yaki Reisner, has won a tender for land designated for long-term rental housing in Yavne. Under the terms of the tender, Reisner is set to construct 104 apartments in the complex. The land cost approximately 10.2 million shekels, while development expenses reached 27.6 million shekels. This results in a land cost of approximately 364,000 shekels per housing unit.

The rental apartment market in Israel is currently at a low point. Both Dira LeHaskir and the Israel Land Authority (ILA) are failing to market a sufficient number of tenders. While this is partially linked to the Planning Administration and the scope of land it releases, the ILA is ultimately struggling to market enough land for high-density construction, whether for sale or for long-term rental purposes.

This tender is relatively small in scale. Earlier this month, a tender for 128 apartments in Nahariya failed to attract any contractor bids. The project conditions require the apartments to be rented out for a 15-year period, with 50% of the units offered at reduced rent for eligible tenants, while the remainder will be rented at market rates.

The failure to market rental apartments is significant, as it occurs during a period of rising rental prices driven by a supply shortage. In some cities, supply has dropped by 43%. As interest rates decline, tenants are increasingly viewing purchasing an apartment as a viable alternative, causing the gap between demand for home ownership and demand for rental units to widen.

The Nahariya tender is not an isolated case. Recently, a tender in Jaljulia for 96 housing units failed, and in March, a tender for 196 units in the HaRakafot neighborhood of Be'er Sheva also fell through. Additionally, a tender for 180 long-term rental apartments in Tel Aviv was cancelled in October.