The Marker, Gili Melnicki, 26.04.2020

Only about one-third of the apartments in Tama 38 projects continue to be built these days, according to recent estimates from the Israel Builders Association. Evacuation projects, most of them in demand areas. This is the case, while the activities of TAMA 38 projects in the reinforcement and thickening track (38/1) are markedly slowing down in terms of performance.

The main reason for the dramatic slowdown in execution is related to the severe shortage of manpower and construction workers , which affects the entire construction industry, and its results are estimated to fall by about 70% in the industry's output in the last month. In the case of the urban renewal sector, this seems to be a dramatic situation: a combination of the shortage of working hands and a deadlock in sales means that many projects are at risk, and contracting and entrepreneurial companies are likely to suffer serious injury.

Danger to small entrepreneurs

Ofer Engel, VP of Business Development at Anglainvest, which specializes in urban renewal projects, says: "Manpower is about 20% of the regular workforce, down about 80%, due to restrictions related to the Corona epidemic, and it directly affects the rate of progress. The projects . We are now doing a game of chairs between projects and moving projects from project to project to maximize activity - but we will not be able to pull that off for a long time.

"We expect that there will be weeks of delays in delivering apartments and as the economy does not return to activity, it will continue accordingly. These delays may seem marginal for companies with a steady flow, but for developers who have been waiting with the sale of apartments and have been facing a frozen market for a month and a half. It can be a danger. "

Tzuri Bar, a partner and manager of Epagad Construction and Environment, addsthat the costs of rent payments to tenants are also evacuated in construction evacuation projects, as the rental period takes longer, as a result of the slowdown in construction.

"We were supposed to embark on a project that was granted permits and begin demolition in about two months - and informed the tenants that we were postponing an unknown date. Many construction workers returned to the territories after a week or two due to basic needs and concerns for their families. We recruited Bulgarian workers - but we pay them twice per workday.

Ofer Engel, VP of Business Development at Angloinvest Photo: Dudu Bachar

The risks and delays in the projects also come from the local authorities: "In Ramat Gan we have an evacuation project and a building where we have already evacuated the tenants and given the permits to demolish before the work started in March, but the municipality asked us not to start work until the end of April so as not to harm the neighboring tenants and their quality of life." , Engel number. "This means absorbing a monthly rent payment of eight families, for a period of time that I did not move a stone on the site. This is without talking about the potential delay for new home buyers."

According to Bar and other contractors who spoke with TheMarker, obtaining permits and population is delayed in some local authorities. "In Jerusalem, I completed a project, but the municipality told me it was only possible to receive a residence permit in June. Economic meanings that cannot be ignored, ”says Barr. Tzahi Ginsburg, CEO of Landscape Engineering, also says he is awaiting Form 4 in two TEMP projects in Givatayim, claiming that there is no adequate response from the local authorities.

Humane considerations

Another cause of the slowdown, which is unique to TAMA 38/1 projects, concerns the nature of construction sites: tenants in quarantine or isolation are at home most of the day - without the possibility of evading noise and building hazards. In the home space - there is still dirt and workers who are occupants between the legs. It is true that such projects do not have dozens of site workers, but there is still concern about the virus and there are nuisances for tenants, "Engel says.

Nana Chen, Deputy CEO of Refaeli Group Photo: Eyal Toag

Nana Chen, Deputy CEO of the Raphaeli Group and responsible for the arm of urban renewal , indicates that while the company's construction sites manage to maintain a regular pace of work and do not anticipate any delay in the delivery of apartments, they were required to consider tenants in the Tama 38/1 projects. "It's not just a matter of rising material prices in the industry or labor shortages - it's a humane matter that requires us as entrepreneurs to stop projects to maintain the quality of tenants' lives.

"There are elderly people with disabilities and families in our structures who have been taken to the IDF, and their distress and fears cannot be ignored. Even in TAMA 38/2 projects where we received a permit, we realized that it is wrong to send people now to look for apartments and sign leases in the current situation. It is better to delay projects for a few weeks, even if it hurts us. "

Sales are stuck, funding is hurt

Itzik Simon, CEO and owner of a contracting insurance agency that specializes in TAMA 38 work insurance, indicates that projects that received bank assistance and depended on financing at the rate of sale of apartments are a problem. "Contractors testify to stagnant apartment sales, and those whose sales are stalled - will not be able to get the escort, and in some cases will be forced to halt construction. At present, these are not large-scale damages, but for small contractors the schedules and delays can be devastating. Back to normal - then the damage will not be so great and most contractors will be able to recover.

A senior entrepreneur in the industry adds: "Stagnation can cause a temporary drop of 5% to 6% in real estate prices . Such a situation could bring the entire urban renewal market to the brink of collapse. The small contractors who specialize in TAMA 38 will not be able to absorb such damage, and the economic viability of the projects will be completely eroded. That contractors won't go home. "

Ayelet Rusk, CEO and owner of Complex Photo: Credit

Construction may be frozen, but opportunities are created

Ayelet Rusk, CEO and owner of a complex company that specializes in financing real estate projects, indicates that there is a great deal of uncertainty, but there are opportunities. "The slowdown in the rate of buying apartments is on the brink of stagnation . Looking at the day after, in terms of financing, we anticipate that there will be some toughening demand for early sale of apartments, and that higher volumes of sales or higher equity will be required. We have signed contracts for months, and we are receiving indications of multiple inquiries and interest in proposing new projects in the industry. "

Attorney Naama Schiff, a partner in the firm again and again, also points out that while there is a temporary slowdown in the area, the preparation stages for projects have been accelerated, and tenants and tenants' representatives are taking advantage of the period to promote projects that have already begun the process. "2022 causes all parties to advance procedures and stages of contract signing and planning - to mature," Schiff notes. "You could say that the Corona crisis has created a different atmosphere in the market: there is more willingness to compromise and move forward and less competitive, which also contributes to the promotion of the projects."