Luxury Tel Aviv Tower Faces Over $1 Billion in Mutual Lawsuits

Electra Ltd. announced on Sunday a major business and legal dispute surrounding the "Bereshit Tower," a high-profile and delayed luxury residential project in Tel Aviv's Bavli neighborhood. Electra Construction, a subsidiary of Electra Group, and the project's developer, Migdalei Bereshit Daniel Ltd. (owned by the Kozenoff family), have filed massive, reciprocal lawsuits as part of an arbitration process initiated last Friday.

Electra Construction's lawsuit claims approximately 270 million shekels for work performed, changes to execution plans, delays caused by the developer, and compensation for alternative returns and lost profits. Electra also cited external factors contributing to the project's delays, including a fire that occurred in the building during construction.

The developer, the Kozenoff family, has countersued for 900 million to 1 billion shekels. This claim focuses on alleged delays by the construction company in meeting work deadlines, which they argue impacted apartment sales and Electra's contractual obligations. Electra noted that some of the financial figures claimed by the developer are identical to those in a separate lawsuit the developer is pursuing against the insurance company Migdal for 480 million shekels.

"At this preliminary stage, it is not possible to assess the chances of the mutual lawsuits," Electra stated. The Bereshit Tower, standing at 156 meters with 43 floors and 174 apartments, has faced difficulties since its inception. The project, built on land previously occupied by the Givat Amal Bet community, involved a publicized struggle and criticism over the residents' eviction.

Construction began in 2018 with an initial occupancy target of summer 2023. However, a series of events led to significant delays. A major fire in January 2023, reportedly caused by an electrical short, further hampered progress. These delays have resulted in lawsuits from apartment buyers, including a 46 million shekel claim filed in March 2024 by four buyers for significant delivery delays, and another claim in February from a buyer citing a two-year delay from the contracted date.

The developer has previously attributed delays to the fire and the security situation in Israel. Despite the setbacks, demand for apartments in the tower remains strong, with prices significantly increasing since initial estimates in 2016.