Israel’s Finance Minister Moshe Kahlon now wants the help of foreign construction companies from the U.S., Europe and the Far East to help solve the country’s housing crisis and bring down prices that have doubled since 2008 and rose 8% last year—out of reach for many Israelis.
In a plan approved March 7, the ministry will select six foreign construction companies based on large-scale residential building experience and annual revenue of at least $750 million, and allow them to operate in Israel for up to five years, working jointly with local firms. The foreign contractors would be able to import up to 1,000 workers for housing projects.
“Our aim is to increase productivity and substantially reduce the amount of time it takes to build new apartments,” said Finance Minister Moshe Kahlon, who added that he is planning to approve a record 145,000 new housing units in 2016 and build 55,000 new apartments.
The Finance Ministry believes that the involvement of foreign companies will help speed up the construction process. At present, only one foreign construction company, Turkey’s Yilmazar Group, is active in Israel and employs some 1,200 construction workers from Turkey on a number of commercial and infrastructure projects.
Not everyone is happy about the decision, especially local construction companies. The Israel Builders Association said it would fight the government move.
But The Bank of Israel supports the move as do many private economists. “Israel has among the most inefficient construction industries in the developed world and the introduction of sophisticated construction technologies will greatly improve efficiency,” said Shlomo Maoz, chief economist at M.S. Tel Aviv Investments Ltd, and a former senior Finance Ministry official.
According to Israeli business publication Globes, the government also approved creation of a new training center to boost worker productivity and expand use of modular construction techniques.