A comprehensive report prepared recently by the Israel Lands Administration planning and development branch reveals that the ILA has a vast inventory of land designated for residential construction - detailed plans for 315,000 housing units throughout the country and another 50,000 units in early planning stages.
There is currently no evident housing shortage, but a steady drop in the inventory of available apartments indicates that when the economy pulls out of the recession there will be a severe housing shortage that will lead, among other things, to a rise in prices. Industry forecasts estimate that 40,000-50,000 housing units will have to be built each year, a demand that has no chance of being met under the existing plans, including those of the Construction and Housing Ministry.
The ILA's report found that in the highest demand areas there are vast detailed plans, for 38,000 housing units in the Tel Aviv region, close to 43,000 in the Haifa region, 44,500 in the Jerusalem region and for almost 90,000 in the central region.
If there are plans for so many houses, why has the ILA been struggling to market land for the construction of 20,000 housing units, a small number even considering the recession? The answer lies in both the supply and the demand. Most of the land is being marketed in areas where demand for apartments is low. Furthermore, in recent years more obstacles have faced those interested in implementing building plans. Many of the plans mentioned in the ILA's report will ultimately be shelved because it will be either impossible or too costly to implement them. Other plans will be delayed for years, waiting for available land for construction.
The problems are naturally getting worse in the more expensive regions, where there is high demand. In these areas demand for housing is greater than the supply of land, which stiffens the competition over the use of the land. The density of construction has resulted in most of the plans being for land that is already in use, either legally (leased) or illegally (by squatters).
The Negev: More supply than demand
Thus, while the ILA and the Construction and Housing Ministry want to show results and to market large tracts of land, the possibilities have been reduced to a few areas, one of which is the Negev. In recent weeks the ILA published tenders for some 1,500 housing units in the south of the country. The lots in Be'er Sheva have good chances of finding buyers. In other places, the picture is not so clear.
The ILA, by the way, has detailed plans for 24,489 housing units in Be'er Sheva. The Construction and Housing Ministry also has a large inventory of land in the city, which means that even though both the ILA and the ministry each sold close to 1,000 apartments this year, Be'er Sheva has enough available land for several years.
Locations in central Israel where there is available land have other problems. In Modi'in, for example - the main building site in the central region in recent years - there is already a large inventory of apartments under construction. It will be many months before the contractors sell those apartments; thus further marketing of land will not net the desired results.
Another city with a large inventory of land "on paper" is Jerusalem. The ILA's report includes plans for 24,000 housing units in the capital, but more than half of the relevant land is in Har Homa and Givat Ze'ev. Other locations also suffer from their proximity to Arab populations - a factor that reduces demand due to the security situation. A similar example of land that until a few years ago was considered prime real estate is Kibbutz Ramat Rahel.
Even in Tel Aviv the ILA has a relatively large inventory of land, designated for the construction of 13,000 housing units, but almost all of it is in the south of the city, where demand is lower. The large-scale plans for housing are for Jaffa-Givat Ha'aliyah, Ajami, the Maccabi compound, Ness Legoyim and the Clock Tower Square in Jaffa - and in Kiryat Shalom and Menashiya.
In the north of the city the picture isn't much brighter. The ILA, together with the Tel Aviv Municipality, still holds lands that have not been marketed in the Mashtela area, between Tzahala and the Kfar Hayarok interchange. The Mashtela project, however, has been suffering from severe problems for years due to market conditions and the density of the project, which grew from 700-800 apartments to 1,600 apartments.
Despite these numbers, the most important thing that past experience has shown is that only about one third of the apartments on initial-stage plans actually get built. Even when there is a master plan, construction does not always proceed and it is often years before land becomes available.
Two examples of the problematic nature of the ILA's plans are the giant programs for the Pi Glilot compound (9,000 housing units) and plans for thousands of apartments on land currently being used by Israel Military Industries (IMI) in Herzliya and Hod Hasharon. Even though the ILA has already taken this land into account, a lot of work is still needed to ready the land and it will clearly be a few years before construction can begin.
Kibbutzim and moshavim have room for over 24,000 units
Kibbutzim and moshavim (collective and semi-collective agricultural communities) built in Israel's northern region on land leased from the ILA hold the potential for more than 24,000 housing units on agricultural land rezoned for residential housing. These houses would be built as new neighborhoods of single-family homes on half-dunam lots that the collectives would be able to sell to non-members, with a payment to the ILA for the rezoning and the subletting of the land being deducted from the receipts.
In the northern region the required payment to the ILA stands at a few tens of thousands of shekels at most. The expansion of these communities represents the main potential for single-family dwellings in Israel.
Most of the moshavim in the other regions of Israel have already used their expansion rights. Even so, there is still a potential for a few thousand housing units in the Jerusalem, Tel Aviv and Haifa regions, in the framework of the non-collective community neighborhoods in the kibbutzim. The greatest inventory is in the northern region, although there is probably not enough demand for all the lots. A considerable number of the lots, for example, are in the Golan Heights (4,165). Despite massive marketing efforts, including the offer of free lots - there are few takers. The Hermon region and the Merom Hagalil region each have a potential for some 1,500 lots, but the Megiddo region, which is closest to the center of the country, there are only 138 lots, apparently because of past expansions. Other regions with land available are Beit Shemesh, with the potential for 1,500 housing units, Lachish, in the Ashkelon region, with 591 and Shafir, with 1,300.