As Israel Grows More Crowded, State Plans Incentives for More Underground Building

Officials plan regulations to make it more financially viable to build below the surface in what is the third most densely populated developed country in the world

File photo: A construction site in Rosh Ha'ayin.
Ofer Vaknin

Already crowded, Israel’s population density is destined to grow in the decades ahead. That’s led to developers building ever taller buildings to squeeze more and more people and functions onto the same piece of land. Some forecasters are predicting that by 2050, 98% of Israelis will be living in apartment towers.

But the government has other plans in mind, too, to deal with the increased density – not just building higher but digging deeper and putting more and more functions underground.

The challenge is how to incentivize property developers to dig deeper and build more underground. Two arms of the government – the Treasury’s National Planning and Building Administration and the Israel Lands Authority – have begun working on plans to do just that.

“The main obstacle to underground development in Israel lies with the fact that these kinds of projects aren’t financially viable for the builders,” Ronit Mazer, an official with the National Planning Administration.

The solution is to create a planning regime that gives builders financial incentives. “For example, instead of the developer building a shopping mall on the land, because that’s the lowest-cost option, we’ll incentive him by awarding extra building rights for building the mall in an underground space,” she explained.

Already the third most densely populated developed country in the world after the Netherlands and South Korea, by 2035 Israel will be No. 1. The reason is that Israel’s population is growing so quickly – about 2% a year versus an average of just 0.5% for countries belonging to the Organization for Economic Cooperation and Development.

The Forum for Population, Environment and Society said in a report last year that open land was being developed at a rate of 7,000 dunams annually, a pace that will leave Israel with between 600,000 and 700,000 dunams (150,000-175,000 acres) by the time Israel marks its 100th anniversary in 2048.

While people will be living in apartment towers, it predicted that nearly all other activity from shopping to manufacturing to road travel would be taking place underground.

Yigal Guvrin, chairman of the Building and Infrastructure Engineers Union, said there are no serious technological obstacles to more underground construction, just financial ones that only the government can surmount.

“Even though the technology exists, companies are moving in that direction, because no one is being forced to do it. Regulations in transportation, water and infrastructure need to be uniform and clear on the matter of land usage when the resources is so scarce and will be scarcer is the years ahead.”

The National Planning and Building Council wants to focus on how to move commercial and public functions underground, unless there is some specific reason why they have to be located above ground.

The top candidates rights now are warehousing cinemas and theatres, malls, sports facilities and hospital functions underground. Housing isn’t on the list right now, but officials don’t rule out that possibility in the future.

To get the country’s builders on paper for this future, TheMarker has learned that last month the treasury’s National Planning and Building Committee decided to amend the national plan for underground construction, known as Tama 40, to provide those kinds of incentives.

Tama 40 started to take shape more than a decade ago, but without any sense of urgency. The work was never completed and most of its provisions were inserted into Tama 38. An expert team is now developing a detailed plan for how the incentive should be structured to present to the cabinet by next year.

“Renewing Tama 40 and departing it from Tama 38 is technical process. Nevertheless, but the fact that it is being done shows how important the planning council sees in exploiting land more efficiently, including land underground,” said Mazar.

Meanwhile, TheMarker has learned that the ILA has undertaken an initiative in a similar vein in the last several months, with a team examining the legal and economic aspects in Israel an around the world involved in underground construction.

The background for the ILA’s initiative was an amendment to Israel’s Land Law approved by the Knesset in December that for the first time defines land in three dimensional terms. That should better enable planning that makes it easier to build underground.