Trying to sell land nobody wants won't lower housing prices in Israel

From his first day on the job, Housing and Construction Minister Ariel Atias has vowed to step up the sale of state land to the public. He says he aims to lower housing prices. In interviews he reiterates his vision of freeing up vast tracts of land for sale. But reality is at odds with the promises: The Shas minister is working hard to create two new cities for the religious community while trying to offer inferior land with various encumbrances elsewhere.

Specifically, Atias has promised to sell land for 35,000 apartments to developers. But Ronen Cohen-Shor, head of marketing at the Israel Lands Administration, says the amount of land zoned for residential development is only enough for 12,700 apartments. Worse, at this stage, various obstacles prevent much of that land from being sold, Cohen-Shor says.

Meanwhile, the Housing Ministry is aggressively pursuing plans to build two new cities for the ultra-Orthodox community - one in the south and one in the north - with tens of thousands of apartments. For the general public its plans consist of recycling land tenders that failed. Nobody wanted the land, at least not at the prices the state demanded.

Although Atias has said the ILA published tenders to sell land for 6,000 housing units, so far the number is actually 3,321. Moreover, an investigation by TheMarker found that out of the land for 3,321 housing units, 1,000 of the lots are considered unattractive by builders, for various reasons.

For example, 400 of the lots in Jerusalem haven't undergone planning yet, and the same goes for another 400 lots in Orgim, a dilapidated neighborhood in Be'er Sheva, where development costs would be particularly heavy, including the need to redo infrastructure. In Rehovot there are lots of 336 apartments for the religious public in the Weisgal neighborhood, but again the location is not considered attractive.

Builders refuse to get excited about Atias' promises, and point at the growing pile of tenders for land that failed. The tender for land in Weisgal, Rehovot, for instance, is a tired beast: The ILA already published it three times, in November 2006, 2007 and 2008. Now it's trying for the fourth time.

Land for building 144 apartments in Amitzur, a neighborhood in Ashkelon, failed to attract when first released in August 2008. Land for 284 apartments in Be'er Sheva was first offered in June 2003, then in November 2005 and now it's on the block again.

The same goes for land to build 420 apartments on Hebron Street in Jerusalem. The ILA tries but the land won't move. "It's a slum," says Jacky Avisror of the construction company Avisror & Sons, referring to Be'er Sheva and nailing the problem on the head.

Four-room apartments sell in the area for NIS 750,000 and the development costs would lift the price by NIS 100,000 per apartment, at least. "People won't pay NIS 850,000 for a four-room apartment in Be'er Sheva," he says.

As for the repeated efforts to hawk land in Weisgal, Rehovot, another builder notes that "the socioeconomic level of the population there is low. Even if you build a whole new neighborhood, who'd want to send their kids to a low-quality school?"

Vered Sarfati-Zvulun, of the construction company S. Sarfati, adds that again, development costs in Weisgal would be sky-high. Builders don't want to go there.

Other blocks of land that Atias is trying to sell, all in peripheral areas, won't help relieve the housing-prices problem either. He's hawking land for 151 apartments in Tirat Hacarmel, 140 rent-controlled apartments in Ramle, 28 apartments in Or Akiva, 212 in Acre, 36 in Migdal, 30 in Kiryat Tivon and 180 in the Arab and Druze sector.

Maybe each town wants the new housing, but none of this will help lower housing prices.

Speaking at a conference of the Builders and Contractors Association in Israel two weeks ago, Cohen-Shor said that currently the inventory of land available for housing would suffice for 12,700 apartments, but there were bureaucratic and infrastructure-related obstacles. In other words, much of the land is not available to be sold and developed. Construction can't start, not for a long time.

Even if the ILA meets Atias' goal of selling land for 35,000 apartments for the public, it's smoke and mirrors. It will take years before bricks are laid.

Meanwhile, when it comes to the Haredi community, Atias is moving much more vigorously. The program to expand the religious town of Harish-Katzir is being handled by a special committee that's bypassing the statutory planning process of the local and district planning committees.

Harish-Katzir was the brainchild of Ariel Sharon, who in 1992 was serving as housing minister. It was supposed to be for secular people.

Originally Sharon thought to build 10,000 housing units. Now Atias wants to expand the town's area by 5,000 dunams by expropriating land from adjacent towns and to build 25,000 housing units for 150,000 Haredim.

One of the towns from which Atias would expropriate land is Al-Qutuf. The people of Al-Qutuf are not enthused.

"I don't even want to remind you that Earth Day arose because of private Arab land expropriated to build Jewish towns," Tawfique Jabareen, a lawyer representing Al-Qutuf, reminded the Boundaries Committee two weeks ago. (The Boundaries Committee operates under the auspices of the Interior Ministry.

It addresses issues regarding the boundaries of towns.)

Jewish towns around Harish-Katzir are equally opposed to losing their land. "We aren't kept in the loop," the head of the Menashe-Alon local council, Ilan Sadeh, told the Boundaries Committee. "They don't cooperate with us. They hide information and are accelerating the plan like there's no tomorrow."

According to Sadeh, "every day they tell us something different. Every day the plan [for Harish-Katzir] changes. I never saw conduct like this in my life."

He says that "plans are sent by mail rather than being presented at the committee. A week later another plan arrives and they brazenly write on it, 'At the request of the Housing Ministry.' Two weeks later another Housing Ministry request arrives. Is that how a ministry should function? Is that how a plan is prepared? That isn't how. It isn't serious. It's aggressive."

This week the National Planning Council will discuss a further expansion at Harish-Katzir, and the plan to build the Haredi city of Kasif, next door to Arad. The surrounding towns don't like that plan either. Neither does the Arad municipality. Atias isn't about to allow them to stand in his way, it seems.

The ILA commented, "The fact that the lands were marketed in the past and were not sold doesn't mean it won't try to sell them again."

The Housing Ministry said that it and the ILA are working together to realize the housing minister's policy to increase the supply of land for housing development to lower housing prices for all. All sectors suffer from a shortage of housing, it added. "The plans for Harish haven't been approved yet," the ministry said.

"Designated marketing for the Haredi sector [in Harish] is planned only for the end of 2010, if the plans are approved. Regarding Kasif, the plans haven't been approved yet and the ministry has no intention of advancing them. For the general populace, the ministry is planning tens of thousands of housing units, saturated construction and houses too in the periphery and the center."