Housing shortage exacerbated by offices set up in apartments

Some 100,000 residential units around the country are being used as offices instead of living spaces.

THE TEL AVIV skyline (photo credit: REUTERS)
THE TEL AVIV skyline
(photo credit: REUTERS)
Some 100,000 residential units around the country are being used as offices instead of living spaces, Construction Ministry director-general Shlomo Ben-Eliyahu said Wednesday.
“In Israel there is a surplus of office buildings and a serious shortage of residential apartment buildings,” he said at a real-estate conference in Tel Aviv.
The misuse of residential space is contributing to the high cost of housing, Ben-Eliyahu said, adding that some 55 percent of those units are in the country’s center, where the highest demand is.
To put that number in comparison, the Bank of Israel says Israel needs to build about 40,000 new residential units each year if housing prices are to stop rising (a target the housing market has met the past two years to no avail).
Instead of the mad rush to build new apartments, those being used by businesses should be vacated and put back on the residential market, Ben-Eliyahu said. The next government will impose penalties on both tenants and local authorities that don’t crack down, he said, and various policies to promote that goal were being discussed in coalition talks.
Some of the businesses using apartments as offices do so legally, Ben-Eliyahu said, and certain municipalities gave them five-year permits to do so. That practice should end, he said. He also suggested taxation, permitting and city planning as avenues of addressing the problem.
But Tal Alderoti, the Justice Ministry’s chief government assessor, warned against new regulations in commercial real estate.
Speaking at the same conference, Alderoti said the commercial real-estate market was “functioning reasonably well in the last few years, such that the regulators would do well not to intervene in this branch.”