"If the state waives taxation, apartment prices in Israel will drop by 60% to 70%"

In a new episode of the Re:Israel podcast from Reichman University and Calcalist, Dr. Yossi Maaravi, Dean of the Adelson School of Entrepreneurship, and student Galia Samson hosted Ronit Ashed Levi, CEO of Africa Israel Residences. In the conversation, she presented the three main barriers, according to her, to lowering housing costs in Israel - taxation, bureaucracy, and uncertainty - and proposed a series of moves that could help.

Ashed Levi's path to the real estate world was not obvious. She grew up in Beit Shemesh, studied Arabic in high school, and was slated for service in intelligence, but chose to serve as an operations officer in a fighter squadron. According to her, she learned there to make decisions and function under pressure. After her discharge, she studied law at the Hebrew University, specialized in real estate taxation, planning, and construction, and later became a partner in a law firm. Her original ambition was to be a judge, but the desire to "sit next to the driver's seat and not in the passenger seat" led her to move to the business and entrepreneurial side.

Another turning point came from her personal life. In 2010, she and her husband purchased an old apartment in Herzliya. During Operation Protective Edge, when she was with three small children and her husband was in the reserves, she found herself going down again and again to an old shelter in the building. "There I understood that this situation is simply illogical and that it is possible to change reality," she said. She began going between the tenants, established a representative committee, and led a process that eventually promoted a large Pinui-Binui (evacuation and construction) project. This experience, according to her, taught her that real estate is done first and foremost with people and at eye level.

The three barriers: taxes, time, and uncertainty

Ashed Levi identifies three factors that increase the price of an apartment:

1. Taxation and land costs. According to her, a very large part of the price of an apartment in Israel consists of direct and indirect taxes, levies, fees, and the cost of land that the state markets. She claims that in a theoretical world where the state would waive these components, apartment prices could drop by 60% to 70%.

2. Duration of time. Approval of plans, design plans, and building permits can take years. During this time, the developer bears financing and interest costs, and eventually, part of this cost is rolled into the price of the apartment.

3. Uncertainty. In urban renewal projects, municipal policy, planning requirements, and the betterment levy (Heitel Hashbacha) may change along the way. "When you don't know what will be required of you in a few years, you must also price in the risk," she explains.

Fixed levy and shelf contract

One of the main solutions Ashed Levi proposes is a fixed and pre-known betterment levy for every new housing unit instead of a mechanism that changes according to the value of the land and the time of realization. According to her, such certainty will save disputes with appraisers, legal proceedings, and delays of years, and will allow both authorities and developers to know in advance how much money will be available for schools, kindergartens, and infrastructure.

Another proposal is to create a uniform shelf contract for Pinui-Binui. Instead of every project starting with long negotiations between the lawyers of the tenants and the developer, the state could set a uniform basic wording that protects both sides. Thus, according to her, tenants will be able to choose a developer mainly based on experience, quality, reliability, and execution capability - and not based on who manages to conduct the most exhausting contractual negotiations.

Long-term rental housing as a Game Changer

Another solution in which Ashed Levi sees significant social potential is long-term rental housing. The model allows young people and families to rent a new and protected apartment for a long period, while the rent update mechanism is known in advance. Thereby, it reduces the uncertainty that characterizes the private rental market and allows families to build a community and plan ahead. "It is a solution that creates social mobility," she says. However, according to her, the main problem today is that demand is much greater than supply, and therefore a significant expansion of the scope of projects is required.

AI also in the municipality

Ashed Levi believes that technology can also dramatically shorten the way to an apartment. Using 3D models and AI tools already allows identifying collisions between water, electricity, and sewage systems at the planning stage. If similar tools are implemented in local authorities, she argues, it will be possible to check plans and permits faster and with higher accuracy, without significantly increasing manpower. Alongside this, she proposes holding "round tables" where all relevant municipal factors - engineering, education, infrastructure, and environment - sit together and make decisions, instead of passing the file from department to department for months.

Thinking differently about housing solutions

Ashed Levi is also open to less conventional ideas: regulated splitting of large apartments for the benefit of young people, creating incentives for operating apartments that stand empty, and even modular and fast housing solutions in areas where this is planning-wise possible. From her perspective, the common denominator for all ideas is one: stop accepting existing processes as a decree of fate.

"Don't look for shortcuts".

In the management of Africa Israel Residences, Ashed Levi says, about half of the managers are women. In her eyes, the goal is broader than gender representation: to create a decision-making table that is as diverse as possible - women and men, religious and secular, and people who bring different experience and perspectives. To the younger generation, she suggests adopting Steve Jobs' "connecting the dots" approach. "Don't look for shortcuts, because they eventually lengthen the way," she says. "Be present at every station, learn, deepen, burn soles on the production floor, and build relationships and reputation. Even if at a certain moment it seems that you have deviated from the path, in the end, the dots connect."