Checking land designation before you buy

Before investing in land, it is important to understand the significant factors to examine:

• The State of Israel owns 93% of the land within its borders, with the remaining 7% in private ownership.
• Buying land at an advanced status – also known as “orange land” – is a highly worthwhile investment option.
• This investment is entirely passive, as there is no need to deal with maintaining an apartment or tenants.
• Investing in land offers a unique advantage in that market price is not a determining factor.
• Land investment can provide a suitable answer for young couples who struggle to buy an apartment of their own.
• Regardless of fluctuations in the housing market, the value of the land will continue to rise as the improvement process advances.

How is land designation determined?

The designation of land is dictated by the land law that applies to it, which sets out the permitted use of the land in accordance with the provisions of the law. When assessing a potential real estate transaction, the land’s designation status is a critical factor in deciding whether to proceed. This is especially significant where the success and profitability of the deal depend on changes in the use of the land. A land-designation check must therefore be among the very first steps taken when examining a real estate transaction.

A city building plan (TABA) is a set of regulations and guidelines governing the development and designation of urban areas. Typically, a TABA consists of a map or outline of the area in question, with streets, blocks and plots marked and coloured according to their intended land use. In addition, it contains detailed regulations specifying building rights and building percentages for different areas of the city. These guidelines provide a clearer, more comprehensive understanding of the city plan. Most local authorities in Israel have an approved TABA setting out the planning situation within the city. The local planning and building committee is responsible for regulating and overseeing the various construction and licensing processes in accordance with the TABA’s provisions.

What designations are given to land?

The Ministry of the Interior has set rules for planning city plans that require them to designate various areas within their jurisdiction. The law states that no land may be built on without appropriate planning approval. The local planning and building committee must assess the suitability of a proposed project to the land’s designation before granting approval. Common land designations in Israel include:

• Residential land refers to property intended for housing. This may include areas designated for detached homes, shared buildings or apartment blocks. Residential use is subject to local regulations and building laws, which may impose restrictions on the size, height and density of the structures that can be built. In addition, the availability and accessibility of infrastructure such as utilities, roads and public transport can affect the desirability and value of residential land. The most sought-after land is that designated for residential use, on which residential buildings can be erected; as a result of their popularity, prices for such land are usually higher than others.
• Agricultural land is a valuable resource that provides the space needed for growing crops and raising livestock. Its use is essential for food production, employment opportunities and economic growth. It is important to manage this resource efficiently to ensure its continued availability for future generations. Land designated for agricultural use should ideally be capable of supporting the crops chosen for cultivation under the initial plans. Over time, however, there have been cases of agricultural land whose designation changed during the land-release process.
• Industry and craft land is a significant resource for economic growth and development – land designated for the construction of industrial and workshop buildings, including factories and workshops.
• Commercial and office land refers to plots located mainly in urban areas and intended for commercial use, such as retail shops, office buildings and other kinds of business.
• Open spaces refers to vast tracts of land unobstructed by any form of physical barrier. These areas may include, but are not limited to, fields and grassland. Open spaces are often home to diverse flora and fauna and play a vital role in the ecosystem by providing habitats for a wide range of animal species and allowing various plant species to grow and spread. Such land is designated to serve as green lungs or a nature refuge, with the intention of not building on it.

The categories set out in the outline plan are only a small part of the possible designations that can be included, such as “residential, commercial and public buildings” or “transport and employment”. There are several sub-categories and potential combinations, and the plan’s policy will provide a more comprehensive breakdown of each classification. It is also advisable to work with the city’s engineering department, as well as experts in planning, construction and real estate.

A land-designation check must precede every land deal – how is it done effectively?

When examining a real estate transaction, it is crucial to prioritise checking the land’s designation and planning status. These factors carry enormous weight in the overall plan for the land and should be the first point of inspection for anyone involved in the deal.

To verify the designation of a particular plot, you can check the plan number together with the block and parcel numbers. This can be done by visiting the local authority’s engineering-department website, the State’s Planning Administration website, or by contacting the department’s offices by phone or in person.

It is worth noting that in many areas across Israel, land checks can be carried out using the information available on the Israel Land Authority website, along with other relevant details.

To fully understand the value and future status of a particular plot, it is essential not only to identify the land in question but also to investigate the planning requirements surrounding it. This allows a comprehensive understanding of what is expected for the land in both the immediate and distant future.

1. Before investing in land, what checks are needed?

To assess the transaction costs thoroughly, it is essential to examine all associated expenses, which may include taxes, brokerage fees, legal fees and other related costs.

There are several aspects to consider when assessing a deal, including potential risks, exit pricing and the actions necessary to finalise the agreement. It is crucial to determine the optimal time to enter and exit the deal, as well as any contractual obligations that may exist during the sale.

Checking the company’s track record is critical. This involves examining its past achievements, satisfied clients, completed projects and more. It is essential to avoid being tempted by flashy online advertisements and to research every deal thoroughly.

2. Why invest in land?

Our profit in land is not based on housing prices but on the improvement of the land. Whether apartment prices rise or fall, our profits are determined by the quality of the land we have improved.

3. The question at hand: who is responsible for developing the land?

You must ensure that the company whose services you seek – whether lawyers or appraisers – is a professional company rather than a purely commercial one. To ensure rapid progress and an increase in building rights (where the money lies), it is important to verify that the company you are buying from holds legal rights to the land.

Our company, Connection Group, acts as an active partner in every purchase and retains a substantial share of ownership in the project. Every deal undergoes thorough analysis from every perspective, which effectively reduces the investor’s risks.

4. At what stage should the land be sold?

We can help find a buyer for you, but we recommend selling the land only at advanced stages of the project’s planning.

5. Can I both buy land and register for the government “Buyer’s Price” (Mechir LaMishtaken) programme?

Of course. You can buy several plots and still be eligible to register for the government’s “Buyer’s Price” programme.

6. What dangers are involved in the deal?

Time is the ultimate gamble when it comes to real estate transactions in Israel. The abundance of bureaucracy causes delays that make time anything but sacred. While we provide rough timelines for our projects and account for possible delays, it is entirely reasonable that unforeseen disruptions will occur beyond the estimated timeframe.

7. How is your company different from others in the market?

Our company is made up of lawyers who specialise in real estate, an engineer engaged in planning and construction who represents a second generation of building and doing, and real estate investment advisors and strategic-development specialists, all working together as partners in advancing and improving land. Unlike other companies, we prioritise cooperation and professionalism in our approach.

8. Do I get a guarantee on my money? And how can I be sure you will not sell my share to someone else?

Every time a transaction is carried out, our law firm accompanies it and is present to oversee it. In addition, a caution note is registered in your name in the Tabu.

9. Why do I need you?

When it comes to yellow land, a mortgage cannot be guaranteed for financing. As a result, when we buy land we invest in 25% of the area. The remaining 75% is divided among partners according to the minimum area required to be entitled to an apartment. This is why we bring in partners to join us in this effort. Using this method, we can finance the purchase of the property from the sellers and also strengthen our influence in the wider arena, including the municipality and those responsible for making decisions.

10. Where are your projects located?

Our projects are spread across several locations, including Rishon LeZion, Bat Yam, Herzliya and more.

Interested in investing in land? Leave your details and we will get back to you as soon as possible.