The Subcommittee for Urban Renewal in the Southern District is expected to discuss the deposit of two significant plans - one in Beersheba and the other in Eilat. These are two initiatives of different scales, yet both present economic challenges and illustrate the growing dependence on complementary land and government subsidies to get such projects off the ground.
In Beersheba, the plan involves a large-scale renewal of D Neighborhood, including the demolition of hundreds of old apartments and the construction of a new residential complex with more than 1,600 housing units, along with public institutions, commercial areas, and workplaces.
The financial feasibility of the project relies on 1,000 apartments built on complementary land provided by the Israel Land Authority (ILA). In contrast, in Eilat, a smaller-scale project plans to demolish 75 apartments and build 216 new ones, but financial reports indicate that it would be unprofitable and could only proceed with government subsidies totaling tens of millions of NIS.
Over 1,000 Apartments on Complementary Land in Beersheba
In Beersheba’s D Neighborhood, ten old buildings of 3–4 floors comprising 232 apartments, along with several shops, are slated for demolition. In their place, 1,645 new housing units are planned: 618 within the site itself and more than 1,000 additional apartments to be built on complementary land provided by the Israel Land Authority at a 20% discount from its market value.
The proposed construction combines mid-rise buildings of up to 9 stories with towers reaching 28 stories, over an area of about 136 dunams. The plan also includes public facilities - a 24-class elementary school, approximately 4,000 square meters of commercial space, and 4,200 square meters for employment. Additionally, the plan grants rights to 33 existing private houses within the site’s boundaries.
The economic report for the project shows that without complementary land, costs (NIS 865 million) would exceed expected revenues (NIS 818 million), leaving the project with a loss of tens of millions. With the inclusion of the complementary land, however, profitability is expected to reach 15–16%, making the project viable.
Eilat: A Loss-Making Project Without Subsidy
At the same time, the committee will also discuss an urban renewal project in the “Simtat HaMe’arot” area of the Dekel Neighborhood in Eilat. This plan calls for the demolition of 75 old apartments and the construction of 216 new ones - some in a 7-story mid-rise building and others in a 25-story tower. The plan also includes about 400 square meters of commercial space.
The apartment mix is highly diverse - from very small 30-square-meter units to large ones exceeding 140 square meters, with the option to add accessory units. However, the appraiser’s report determined that the project is not economically viable: construction costs are estimated at NIS 323 million, while expected revenues are only NIS 319 million. To reach a standard profitability level of 16%, a government subsidy of between NIS 33 and 56 million would be required, depending on the compensation offered to the residents.
Thus, a dual picture emerges: while in Beersheba, the complementary land serves as a powerful lever to advance the project, in Eilat, direct government intervention is required to make the initiative financially feasible.