Tel Aviv Luxury Tower Faces Sales Slump Amid Legal Battles

The "Prime Tower" in Tel Aviv has sold only 76 of its 168 apartments after a decade of marketing, a significant shortfall attributed to ongoing disputes and a major fire. The developers, the Kozenoff family, also own 15 additional apartments in the building. Despite the slow sales and difficult real estate market, the family has no intention of lowering prices significantly, though they acknowledge some flexibility is necessary.

The tower, once considered a prime marketing prospect, has been plagued by problems. A large fire in 2023, caused by an electrical short, resulted in extensive damage and accusations between parties involved. This has led to a series of lawsuits. "Migdalei Bereshit Daniel Ltd.," managing the project for the Kozenoff family, and Electra Construction have filed mutual claims totaling hundreds of millions of shekels as part of an arbitration process. Electra Construction claims it is owed 270 million shekels for work performed and due to execution plan changes, as well as compensation for lost profits, citing external factors like the fire as delays.

In a counterclaim, "Migdalei Bereshit Daniel" is suing Electra for approximately 900 million shekels, alleging delays in completing work that have impacted apartment sales. Market estimates suggest that despite receiving an occupancy permit last April, many apartments are not yet ready, contributing to a slow move-in rate. These disputes add to a separate 480 million shekel lawsuit filed by "Migdalei Bereshit Daniel" against the insurance company Migdal for allegedly delaying insurance payouts for fire damage repairs and contributing to Electra's departure from the site, delaying the project by at least 15 months.

These issues have severely hampered apartment sales. While 76 units have been sold over the past decade, the family also holds 15 units, and several buyers have canceled contracts, with about seven lawsuits pending from purchasers. The total damages include physical damage from the fire, incomplete construction, and the impact on sales and occupancy. Despite the slow pace, recent sales of four-room apartments on higher floors have fetched high prices, around 15.7 million and 14.2 million shekels, equating to approximately 110,000 shekels per square meter, among the highest in Israel.

Company CEO Moti Kozenoff acknowledged the marketing challenges due to the general market conditions and project execution issues. He stated the family, being wealthy, can absorb the significant damages and is not desperate to sell at any price, viewing the tower as the most luxurious in Israel. The family is reportedly making price concessions, but the project has missed out on the rapid sales boom experienced by the rest of the Israeli real estate market in 2021.