Shikun & Binui: Expanding horizons

 Tomer Cohen (photo credit: PR)
Tomer Cohen
(photo credit: PR)

Shikun & Binui is one of the oldest building and development companies in Israel. Since its establishment in 1924, it has been at the forefront of the construction industry. To a large extent, it has been responsible for providing housing for the country’s growing population.

Four years ago, Naty Saidoff acquired 47% and control of the company. Saidoff is the founder and principal owner of Capital Foresight, a closely held commercial real estate holding company, the national chair of IAC and member of the American Jewish Committee’s board of governors.

Under his leadership, Shikun & Binui is undergoing big changes. Through a network of subsidiaries in businesses such as infrastructure, real estate, energy, and concessions, it operates in more than 20 countries.

Tamir Cohen, chairman and CEO of Shikun & Binui, says,“We have become a leading business group in Israel. We have increased our business activities overseas and are promoting long-term rental residential projects in Israel.”

Q: Why the interest in operations overseas?

A: Our company has been involved in overseas activities since the 1960s. Our current daughter company Solel Boneh was heavily involved in overseas projects in Africa.

We have currently increased our overseas activities largely because our links with the companies of our major shareholder have allowed us much leeway in increasing our activities in the US. We are now involved in major infrastructural projects there. For example, we are building a canal in North Dakota that will divert the flow of melting snow. The project is valued at $1.5 billion. We are also constructing a toll road in Houston, Texas , that is valued at a billion dollars. And we are involved in solar energy projects as well. That is in addition to our building projects in Europe, especially Eastern Europe.

In that case, are the company’s main activities still in Israel?

Our main economic activities are still in Israel. Three of our daughter companies are the largest of their kind in Israel. Shikun & Binui is the largest real estate developer; Solel Boneh is the largest construction company in Israel; and Shikun & Binui Energy is the largest energy company in the country.

Having said that, I want to point out that we are well aware of the vast economic potential in the US. Consequently, a large part of our business strategy is based on the dictum ‘Westward ho, the land is bright.’

What are some of your real estate activities here, and what are the main stumbling blocks?

We have building land sufficient for 25,000 apartments in a country where available building land is at a premium. That is an excellent advantage. We are now in the process of constructing some 3,000 dwellings.

As for the stumbling blocks. they are not our stumbling blocks but the problem sof the industry as a whole. The main problem is bureaucracy. Specifically, the inordinate amount of time it takes to obtain the authorization to begin construction..

From the moment a developer has obtained the necessary building land, it takes up to four years on average to acquire the authorization. Add to that the two to three years it takes to construct an apartment building. Overall, it takes seven years to complete a residential building project.

If the authorization stage took less time, the whole process would take less time. That would be reflected in the time it took to build and in the number of apartments that would be available.

Do you think that real estate prices will decrease in the foreseeable future?

Unless something dramatic happens. I doubt that prices will stabilize, let alone fall. That is why we are promoting long-term rental projects.

The rise in real estate prices makes it very difficult for many people to purchase a home. These people have to live somewhere, so they have no other option but to rent.

At present, there are practically no apartment buildings in Israel that are built for renting. The rental market is based on individuals renting dwellings on a short-term basis. Since tenants don’t have security of tenure, they often have to move frequently.

We are constructing apartment buildings that are designated for rental. This will give tenants the security of tenure as long as they pay the rent. And the rent will be more or less fixed or linked to the cost of living. As it stands at present, landlords can increase rents at will.

This article was written in cooperation with Shikun & Binui