Bringing the Train to the Mall

To attract customers, developers are financing the construction of train stations close to commercial centers

The development company owned by Moshe and Yigal Gindi recently offered to finance the construction of a train station adjacent to the American City project the Gindis are currently building in Rehovot. Company representatives have already contacted the management of Israel Railways to discuss the particulars of the planned station, which would cover an area of 2,000 square meters (21,000 square feet) and include a parking lot, with the overall building costs for the project estimated at NIS 6-7 million.

This is not the first time that private developers have financed the construction of train stations adjacent to commercial projects. The significant increase in the number of train passengers in Israel in recent years has given train stations the power to increase the number of visitors to commercial centers. A number of train stations have, therefore, been built with full or partial financing from private developers.

The Hutzot Hamifratz train station, which was fully financed by real estate developer Yuli Ofer, is due to open in a few weeks; in June, the Pardes Hannah-Karkur station, financed by Israel Railways and the Caeserea Development Company was completed at a cost of NIS 7 million; and at the beginning of September, the Lev Hamifratz station, fully financed by the A. Dori company, opened in Haifa.

The general manager of Israel Railways, Amos Uzani, says that the financial assistance provided by private developers eases the burden on the railways' budget and significantly reduces the construction time of new stations. He notes, however, that the stations must be located in accordance with the railways master plan and must be built in accordance with the railways' planning guidelines.

"The train station in Rehovot is included in the railways' 2020 plan. If this station is ultimately built by a private developer, it could be opened in 2002 instead of in 2005," he says.

Uzani adds that developers who are interested in pedestrian traffic at their projects do not receive any remuneration from the railway for their investment. He estimates that some 500,000 people pass through a centrally-located train station each month, with a few tens of thousands passing through the smaller stations on a monthly basis. Uzani also believes that train stations reduce the vehicular traffic around commercial projects and hence some of the parking space can be used for construction.

Guy Gindi of the Moshe and Yigal Gindi development company says that the train station will bring many people to American City. He says that thanks to the train station in Tel Aviv, thousands of people come to the Azrieli Towers every day. "The construction of a commercial center adjacent to a train station increases its chances of success and is, therefore, a worthwhile investment," Gindi says. "This is because, among other things, pedestrian traffic is increased by hundreds of percent and, furthermore, there has been an increase in awareness for the advantages of traveling by train in recent years." He adds that his company bought the land five years ago, even before the increase in train travel.

Uzani says that the initiative for a train station alongside a commercial project usually comes from private developers, who quickly identify the huge potential in the construction of the train station. He feels that the more train travel increases, the more the phenomena of private financing of train stations will increase.

"There are currently plans for several more stations adjacent to commercial projects," Uzani says, "including the Bnei Darom train station in Ashdod, adjacent to a large development project, and also the train station at the industrial and technological park in south Netanya."

The station in Netanya will be a part of a comprehensive municipal project covering an area of 15 dunams and designed to serve as a transportation center. Uzani says that the city and the railways are currently involved in negotiations with regard to the construction of the project, while the latter is trying to interest private developers in financing the project.

Israel Railways will initiate the construction of commercial centers around train stations along the lines of the American and European model. Uzani feels that there may be problems in implementing this model because Israel Railways has no rights to land at its disposal and operates in accordance with licenses from the Finance Ministry that are renewed once every three years. Uzani explains that this is why the railways cannot rent land out for more than three years at a time and, therefore, cannot initiate long-term commercial projects.