Israel's Housing Ministry Offers Dozens of Rental Property Tender Offers

Israel is facing a severe rental housing crisis, with a significant shortage of available units driving up prices. The government's company, 'Dira Le'Haskir,' tasked with increasing the supply of rental properties, has struggled to meet demand. While planning authorities are involved, the core issue appears to be a bottleneck in the process from planning to execution. Developers were hesitant to bid on tenders at the start of the war due to high interest rates, opting for other investments instead.

In response, the state is now promoting more long-term rental housing tenders. The Israel Land Authority has accumulated 25 such tenders, intended for contractors to build long-term rental units, with most slated for release by year-end. However, a review found that only four of these tenders have released tender documents so far, representing a mere 120 units in Tayibe, 89 in Pisgat Ze'ev, Jerusalem, 118 in Herzliya, and 96 in Jaljuliya. Notably, about half of these units are in Arab communities, with the other half in high-demand areas like Jerusalem and Herzliya.

Additional tenders are expected for December, including plots for 510 units in Netanya's Gold Coast, 256 in Bnei Ayish, 645 in Sderot, 157 in Tel Aviv's Beit HaYarok, and 180 in Tel Aviv's Makor Yisrael area. However, one recent tender was canceled. The state was also supposed to release two new tenders in Tel Aviv's Ramat HaChayal neighborhood for approximately 600 units, but these have not been postponed. It remains to be seen if the government will fulfill its commitment to increase rental housing supply in central Israel.

The rental shortage is evident nationwide, with Ashkelon experiencing a roughly 40% decrease in available rental units, leading to price hikes. Tel Aviv is also seeing a decline in rental supply, and further tender cancellations could exacerbate rising rents and consequently increase demand for purchasing properties.