Tel Aviv Luxury Tower Faces Lawsuits, Slow Sales After Fire
The Genesis Tower in Tel Aviv, once considered a prime development, is now embroiled in significant legal battles and struggling with slow sales, with only 76 out of 168 apartments sold over a decade of marketing. The developers, the Kozenoff family, also own 15 additional units. Despite the challenges, the family has no intention of lowering prices significantly, citing the current difficult real estate market.
The project, which suffered a major fire in 2021 due to an electrical short, has seen its reputation tarnished. This incident led to extensive damage and accusations between involved parties. Recently, the project's management company, "Migdalei Bereshit Daniel Ltd.," and the construction firm Electra Construction filed mutual lawsuits totaling hundreds of millions of shekels as part of an arbitration process. Electra Construction is suing for approximately 270 million shekels, claiming unpaid work, changes in execution plans, and compensation for lost profits, partly due to external delays including the fire.
In response, Migdalei Bereshit Daniel filed a counterclaim for about 900 million shekels, alleging delays by Electra Construction that have impacted apartment sales. These disputes add to an existing lawsuit filed two months ago by Migdalei Bereshit Daniel against the insurance company Migdal for 480 million shekels. The company claims Migdal delayed insurance payments for fire damage repairs and contributed to Electra's departure from the site, delaying the project by at least 15 months.
These issues have severely hampered apartment sales. Although the occupancy permit was issued in April of last year, a significant portion of the apartments are reportedly still not ready for occupancy, contributing to a low occupancy rate. Despite the slow sales, recent transactions for four-room apartments in higher floors have fetched high prices, around 110,000 shekels per square meter, indicating that buyers willing to overlook the issues are prepared to pay a premium. The Kozenoff family acknowledges the marketing difficulties but emphasizes their commitment to the project and its residents, noting their financial capacity to absorb the substantial damages without being forced to sell at a loss.
