Jerusalem Bank CEO Warns Contractors Are Withholding Land
Translated & summarized from Ice by baba
Yair Kaplan, CEO of Jerusalem Bank, stated that contractors are intentionally delaying construction by withholding land, despite government claims of high supply. This practice restricts housing availability and could drive up prices. Kaplan urged the government to remove building barriers and streamline processes. Meanwhile, the Director General of the Ministry of Construction and Housing criticized contractors for overpaying for land in government tenders, hindering efforts to lower housing costs for consumers.
The story in 5 lines · by baba
- Jerusalem Bank CEO Yair Kaplan claims contractors are intentionally withholding land and delaying construction.
- Kaplan warns this practice restricts housing supply and could increase prices long-term.
- He urges the government to appoint an official to remove building barriers and expedite permits.
- The CEO also suggested re-evaluating housing assistance programs for potential buyers.
- The Director General of Construction and Housing criticized contractors for overpaying for land.
Yair Kaplan, CEO of Jerusalem Bank, has warned that contractors are intentionally withholding land and delaying construction projects, despite official government reports of high land supply and rising construction starts. Kaplan stated that many developers possess available land, approved plans, and building permits but are choosing to wait, anticipating market changes. He explained that developers are currently prioritizing the completion of existing projects and strengthening cash flow, even while incurring financing costs on land they have already purchased. Kaplan believes the industry is not necessarily waiting for better opportunities but rather for a less risky environment.
This practice, according to Kaplan, is dangerous as it artificially restricts the housing supply, potentially leading to price increases in the medium to long term. He noted that due to rising construction and financing costs, projects that once offered around 18% profit now yield only 11% to 12%. Kaplan cited Israel's Central Bureau of Statistics data showing approximately 86,000 unsold new apartments at the end of August, suggesting that while demand still exists, it has become more selective.
Kaplan echoed calls from contractor association leaders, urging the government to appoint a coordinating official to remove barriers, expedite licensing, and ensure government ministries advance housing initiatives. He advocated for a stable policy rather than fluctuating incentives and suggested that construction should not halt until a new government is formed. Kaplan also proposed re-evaluating housing assistance programs, such as "Price for Tenant," to offer personalized benefits based on income, which could potentially stimulate the market.
Separately, Yehuda Morgenstern, Director General of the Ministry of Construction and Housing, criticized contractors for purchasing land at high prices. He expressed surprise at tender results showing winning bids up to 15% higher than valuations, even with multiple bidders. Morgenstern urged contractors to bid lower on land to enable more affordable sales, emphasizing the national mission to lower consumer housing prices.