Constructing a building in central Tel Aviv costs twice as much as in the Negev, 50% more than in Ramat Gan and Givatayim, and 25% more than in Tel Aviv neighborhoods north of the Yarkon. The figures emerge from a new product launched by the Real Estate Appraisers Association in Israel today, designed to provide estimates of construction costs by geographical area and type of building. The Association explains that the estimates are intended as a tool to serve planning authorities, banks, finance companies, and developers.
The Association says that large gaps in the pricing of construction per meter had emerged between its members and planning committees, and that these had widened in the wake of the war. The differences in estimates of construction costs have in many cases led to projects becoming economically unviable, or being delayed, precisely at a time when there is an understanding of the need to boost new construction, and that construction of protected spaces is required throughout the country.
Nehama Bogin, chairperson of the Real Estate Appraisers Association in Israel, said: "The Association, as a professional, objective, and credible body, took upon itself to create an up-to-date pricing mechanism that will serve the relevant parties, reduce disputes, and lead to significantly shorter planning processes and improve planning certainty for vacate-and-build projects throughout the country."
The Association divided the country into fourteen regions, and buildings into three categories: low buildings (up to 9 meters high); high buildings (9-27 meters high); and multi-floor buildings (above 27 meters). Each region is also assigned a price list for constructing underground parking. The building costs are estimated per built square meter, but comprise direct costs only, and not elements such as design and consultancy, project management, fees and levies, and finance costs. The prices listed do not include VAT.
The lowest construction costs are in the Samaria region, ranging from NIS 5,000 per square meter for low buildings to NIS 5,400 for multi-floor buildings. The most expensive location is central Tel Aviv, where construction costs per square meter range from NIS 10,400 for low buildings to as much as NIS 12,000 for multi-floor buildings.
It was found that differences between parts of Gush Dan, and even within Tel Aviv, can be wide. For example, construction costs per square meter in Tel Aviv north of the Yarkon range from NIS 8,100 for low buildings to NIS 10,500 for multi-floor buildings. In south and east Tel Aviv, the range is NIS 7,500 to NIS 8,900.
Outside of Tel Aviv, costs fall further, to NIS 6,700-7,400 per square meter in Herzliya and Ramat Hasharon, and NIS 6,400-7,900 in Ramat Gan and Givatayim. The large gaps between Tel Aviv and neighboring cities could be part of the explanation for the gaps in apartment prices between these places.
The Association says that the estimates were compiled by twenty of the leading financial consultancies in Israel. Data were gathered from the past year, including from regular construction supervisors’ reports, that show actual costs, rather than relying on agreements only. The differences between regions are partly explicable by regulatory constraints, costs of transporting materials, manpower costs, different work times, and other factors.
Published by Globes, Israel business news - en.globes.co.il - on July 17, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.