Sde Dov Airport land sold at a record price for the construction of more than 1,500 apartments

The state issued the first land tender for the new neighborhood which will be built on the grounds of the former Sde Dov Airport near the beach in North Tel Aviv. Developers paid a record NIS 4.4 billion – close to around NIS 3 million just for the land on which each apartment will be built – meaning that the prices for the residential units will start at NIS 4.5 million each. The plans for this new district include a total of 16,000 new apartments. 

Located along Tel Aviv’s northern coast, the Dov District, one of the most talked about neighborhoods in Israel in recent years, is officially getting off the ground. This new urban district will be constructed on the grounds of the former Sde Dov Airport, which was shut down and evacuated two years ago.

At the end of last month, the Israel Land Authority, which manages all State land, announced the companies that won the first land tenders issued for the long awaited residential neighborhood. These tenders were for the first 1,574 apartments out of a total of 16,000 that are expected to be built as part of this plan. 

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Sde Dov Airport
Preparing for construction on the grounds of the former Sde Dov Airport

In the current reality of Israel’s real estate market, characterized by a shortage in supply of land and fierce competition for every plot that enters the market, everyone knew the bids offered by the contractors would be high, but the final price still managed to surprise many. In total, the developers will pay NIS 4.4 billion for the land, which comes out to an average of NIS 2.8 million for land for a housing unit. In order for the developers to make a profit, the apartment prices will start at about NIS 4.5 million each. 

After the results of the tenders were published, a discussion arose in the economic press as to whether it would ultimately be possible to sell the apartments at prices of NIS 4.5, 5 and 6 million. Although the location of the former Sde Dov Airport is one of the most sought-after in the country, the apartments themselves are not particularly spacious, averaging at about 75 square meters each. Furthermore, these apartments will not hit the market until early 2024 – roughly 2.5 years from now.

Because there is such high demand and low supply for apartments in central Israel, and those working in hi-tech earn such high salaries, many assume that developers will be able to get almost any price they ask. However, some commentators warn that in the 2.5 years between purchasing the land and selling the apartment units, a lot can change. If an economic crisis hits that sends the economy into a recession, developers may find themselves without demand for their expensive projects.

Sde Dov Airport

From the establishment of the State until recently, the land in question housed the Sde Dov airport, which was used both by the Israeli Air Force and for domestic civilian flights, mainly on the Tel Aviv-Eilat route. In 2012, against the background of the growing housing shortage in the central region, the government signed an agreement to evacuate the private lands of the airfield, which constituted 70% of the field area. The original eviction date was set for 2016, but a large-scale public struggle against the evacuation led by the Eilat Municipality managed to postpone it for several years. 

A year ago, the District Planning and Construction Committee approved the master plan for the entire Sde Dov Airport district. It covers an elongated strip of 1.3 square kilometers along the coast, bordering the Reading Power Station and the North Star neighborhood to the south and Levi Eshkol Street to the east. According to the plan, 16,000 apartments will be built in this area, as well as 330,000 square meters of office space, 125,000 square meters of commercial space, and thousands of hotel rooms. There will also be a park of 365 acres along the coast.

The neighborhood will consist of three types of buildings: low-rise construction of 6-7 floors, high-rise residential buildings of 16 floors, and towers up to 41 floors high. The neighborhood is located near the Green Line of the light rail that will connect between Holon and Rishon LeZion in the south up to Herzliya, just north of Tel Aviv. In accordance with the Tel Aviv Municipality’s policy to minimize the use of private cars, the neighborhood is centered around public transportation routes, and many apartments will not have their own parking spots.

Sde Dov Airport
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The contents of this article are designed to provide the reader with general information and not to serve as legal or other professional advice for a particular transaction. Readers are advised to obtain advice from qualified professionals prior to entering into any transaction.

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