Gazit Globe will establish a long-term rental project, the first of its kind in Israel

Gazit Globe will establish a long-term rental project, the first of its kind in Israel. The company won a tender from the government company to rent an apartment for the construction of 247 apartments for rent in Ramat Gan, south of Sheba Tel Hashomer Hospital, north of Road No. 461 and west of Mota Gur Road. Gazit Globe will pay NIS 430 million for the project.
On paper, the price of land per apartment is about NIS 1.8 million, but there is a possibility that the Ramat Gan municipality will approve the company as a facility in which it can increase the number of apartments in the project by 20%, so that it can build about 290 apartments. If this possibility materializes, the cost of land for the apartment will be about NIS 1.5 million.
The project includes four 17-15-storey buildings that will be built in two adjacent complexes and will have 5- to 5-room apartments. The company is obligated to put the apartments for rent for at least 20 consecutive years, at the end of which it will be able to sell the project in its entirety or the apartments in it. It is estimated that at the current market price, Gazit Globe will generate a return of about 4%. But the complex will be built next to Sheba's Health City project, which will include not only medical centers, but also an academic campus, research institutes and technology incubators.
In addition a station of the purple line of the light rail is expected to be built near the complex where Gazit Globe will build the project, so it is likely that its value will increase over the years and so will the company’s return.
According to the terms of the tender, half of the apartments will be rented to those entitled to the construction ministries at a supervised price lower than the market price by 20%. The other half of the apartments will be rented at market prices. The tenants enjoy a five-year lease, a period in which it is not possible to increase the rent other than index-linked, as well as an option to renew the contract for another five years.