Alarming decrease in construction starts of urban renewal projects

The latest data published by the Central Bureau of Statistics (CBS) reveals that in the third quarter of 2023, there was a 22% increase in new apartment construction in Israel, marking the strongest quarter since early 2022. However, further analysis of the data shows that the proportion of construction starts in urban renewal projects is on a downward trend.

According to the Urban Development and Renewal Company, only 17% of all construction starts in the third quarter of 2023 were for urban renewal projects, with a total of 2,915 units in "Demolition and Reconstruction" (Pinui u'Binui) and Tama 38-2. In comparison, during the same period in 2022, there were 3,163 urban renewal units started, accounting for 21% of all construction starts. 

This represents an 8.5% decrease in such starts compared to the previous year's third quarter. On an annual basis, from October 2022 to September 2023, there was a 6.2% decrease, with 11,949 units started in urban renewal projects compared to 12,734 units in the same period the previous year.

Rise in northern "Demolition and Reconstruction" Initiatives

Examining the data by districts, there is a positive trend of increased construction starts in urban renewal projects in Haifa and the North. The North District experienced a 37.7% increase, with 471 units started this year compared to 342 units in the previous year. Similarly, the Haifa District saw a 31.8% increase, with 1,067 units started. The Central District also showed growth with an 11.8% increase. However, the Tel Aviv District recorded a 15.9% decrease in construction starts.

Despite this decrease, the highest number of apartments were started in renewal projects in Tel Aviv, with 6,309 apartments accounting for 52% of all construction starts in Israel. There was a 28.7% decrease in the Jerusalem District and a 34.3% decrease in the South District compared to the same period last year. Only 94 units were demolished as part of urban renewal in the South District.

"Supervisory approval required for urban renewal projects"

Nir Shmol, CEO of Shanir and the Urban Development and Renewal Company, expressed concern about the decrease in urban renewal construction starts, stating that it reflects a lack of government support. He emphasizes the importance of urban renewal, particularly in light of recent events, such as the war in Gaza, which highlighted the need for safe and affordable housing options. 

Shmol notes that according to CBS data, there has been a decrease in the number of old housing units destroyed for urban renewal projects, from around 4,600 last year to approximately 4,000 in the same period this year. He highlights the urgency for the Israeli government to approve and accelerate urban renewal projects, streamlining planning and licensing procedures, removing barriers, and providing economic incentives for entrepreneurs involved in renewal efforts.

While the slight increase in construction starts of urban renewal projects in the North is a positive trend, Shmol believes that more needs to be done to meet the demand for them. 

The Society for Urban Development and Renewal has called for the advancement of lawsuits for the evacuation of construction in three municipalities in the northern area, working in collaboration with willing authorities to drive these processes forward.