The Jerusalem apartment king

Bureaucracy spurs a veteran Jerusalem contractor to search for opportunities abroad.

By ELAZAR LEVIN
March 8, 2007 15:32
The Jerusalem apartment king

zion hasid 298.88. (photo credit: Courtesy)

 
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After 40 years in the industry, contractor Zion Hasid is considering looking abroad to expand his business for the first time. Over the years, the veteran Jerusalem builder has repeatedly stated that he builds only in Israel and that he has no interest in doing business abroad. Now, it seems that he has had enough. "Until half a year ago I didn't even think about building overseas. But government red tape and bureaucracy have gotten the best of me. I can't continue like this any longer. Getting municipal building plan approval takes years. The Construction and Housing Ministry, the municipality, the banks, the Standards Institution of Israel - every time, each one has new requirements and regulations," says Hasid, who also serves as vice chairman of the Jerusalem Contractors' Association. Hasid, a soft-spoken and courteous man, becomes agitated when he recalls one example of administrative red tape: "A year and a half ago I applied for a building permit for our prestigious project in Katamon, and I have only received an excavation permit. I inquired as to why that was, and found out that the file had reached a certain clerk who needs to sign the permit, but she went on vacation and is unavailable, and no one will sign instead of her." "Gihon, the municipal water company, is suddenly demanding NIS 700,000 from us for water," he continues, "and just you try and prove that you could not possibly have used such an amount of water! The Income Tax Authority decided, all by itself, that we, like other contractors, earn 25 percent on building apartments. That's absurd - I wish we made 5%! Then, we have to go negotiate with the assessing officer and prove to him that we earned less that what he claims. They have succeeded in driving me to the point of throwing my hands up in despair, and perhaps others as well." Last month, he visited Turkish Cyprus in order to get a sense of the place. That neglected part of the divided island got a boost when Greek Cyprus jointed the European Union but refused (by referendum) to unite with the Turkish portion, and the EU, angered, sent hundreds of millions of euros flowing into the Turkish side. Hasid's impression of the place is mixed. On the one hand, he says, Turkish Cyprus does not have a sophisticated banking and mortgage system, and a developer must bring most of the equity capital from home. On the other hand, "There is no bureaucracy there. They showed me a section of land for 500 cottages. They said to me: You want it? Pay us the [Cypriot pound equivalent of] NIS 30,000, take the plot and start building. They also showed me other plots. I'm checking them out," Hasid admits. As part of this examination process, this week he will also travel to Romania. He may also make a quick visit to Poland to study an additional offer, and the company has also received offers to build in the United States. Hasid, who founded his company about 30 years ago, serves as the chairman and controlling shareholder. Daily management is in the hands of his three sons, who followed in his footsteps. Hasid Brothers Ltd. currently has about 700 apartments in various phases of construction at a number of sites, both in Jerusalem and in the haredi city of Betar Illit. The company takes special pride in its prestige project, 196 apartments on Rehov Rabbi Eliezer in Katamon. Currently 46 initial apartments are being built in two, six-story buildings. Construction and sales began about eight months ago. According to Hasid, 30 apartments have been sold thus far, and in the meantime prices have risen by 10%. Five-room apartments were sold for $380,000, while four-room apartments went for $320,000. The buildings will also have eight penthouses of 150-170 sq.m. which have not yet been sold. The company hopes to sell them for $500,000 and more per unit. "About half the buyers are foreign residents, from France, the UK and the United States. From conversations with the European buyers, it turns out that they are purchasing apartments not just out of Zionism, but also due to the strengthening of the euro and the pound sterling against the shekel, which from their standpoint makes the apartments even cheaper. I sold two apartments to rabbis from France. Israeli buyers include attorneys and judges," Hasid says. "We are selling apartments at bargain prices, if you take into account the high quality of the finishing and the project's proximity to the desirable German Colony." He doesn't foresee problems selling the rest of the apartments in the tower. "The prices of high-end apartments in Jerusalem have risen a lot, and there is great demand for apartments at reasonable prices, like ours. Recently, I was approached by representatives of a group of religious families who are looking to buy the entire tower in a single transaction. Speaking with them, I realized that this is a group of 200 families, and my tower is not big enough for them. I told them: 'You will not find a 200-apartment project under construction in Jerusalem at reasonable prices. You'll wait a million years until you find something like that.' "I believe that they will examine the situation in the market, and then return to me to buy apartments for part of the group. If not, we'll sell the apartments individually. "The haredim, who have large families, look for inexpensive apartments - and there are currently none of those to be found in Jerusalem," Hasid explains. "Once, they bought apartments in Givat Shaul and in Ramot, but prices have risen. Until recently, it was possible to get apartments at reasonable prices in Har Homa, and indeed I built 200 apartments there, and sold nearly all of them. I am currently building 50 apartments in Betar Illit, and selling a four-room apartment, at a standard level, for just $97,000; they might just be the cheapest apartments in the country. Of course, demand is great and I have no problem selling them."

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