Green, yellow, orange - the colour language of Israeli land describes how far a parcel has travelled toward buildable, and how much risk and upside it carries.
Land use in Israel is varied and changes according to location and designation. Some of the common land uses include residential, commercial, industrial, agricultural and conservation.
Residential areas are usually used for housing purposes, while commercial areas are used for businesses and services. Industrial areas are developed for manufacturing and production, while agricultural lands are used for farming and cultivation. Conservation areas are allocated to protecting the environment and wildlife.
The varied use of land in Israel underlines the importance of effective land management and planning to ensure sustainable development and the preservation of the natural environment. In Israel, land classification is based on the national and district outline plans.
Residential land refers to land designated for the purpose of erecting residential buildings and for residential use. Such land is in high demand, which is reflected in its price, depending largely on the area of the land and its designation.
When we refer to agricultural land, we are talking about land designated specifically for agricultural purposes. This means that, ideally, the land is suitable for growing a variety of crops. However, it is important to note that over time, the designation of certain plots of agricultural land can change during the land-release process.
Industry and craft land is intended for the construction of various factories and workshops for manufacturing and creative purposes.
Land reserved for commerce and offices is located mainly in city centres and is intended specifically for establishing a range of businesses, shops and offices.
Open spaces serve as a community’s lungs, providing green space or a nature reserve with no plans for development or building.
Green land refers to agricultural land that is not subject to any planning procedure. While it can currently be used for growing crops such as tomatoes, it is unlikely to yield significant profits as a real estate investment in its present state. Even if a release process is carried out in the future, it may take several decades, and there is no certainty about the fate of the land or whether its designation will ultimately change.
Available land – “orange land” is a term used to describe land that has already undergone a release process. This means building permits can be granted without the need to change the land’s designation or approve plans. At first glance this may seem attractive. However, it is worth noting that such land is usually more expensive to begin with, which can make it less attractive in terms of the potential for a high return on investment.
Yellow land – when it comes to the land-release process, there is a category of land known as “yellow land”. In essence, this is land at an intermediate stage between agricultural land and available land. Typically, such land has already undergone a final change of designation under the outline plan (TABA), but building on it is not yet realistic. Nonetheless, the fact that the designation has changed increases the likelihood of the release being completed and the land ultimately becoming available for building.
When arranging a real estate transaction, it is important to consider both the risks and the opportunities involved. These may include a range of factors, such as potential legal disputes, market volatility and financial complications. It is essential to weigh these risks against the potential gains in order to make an informed decision about the deal.
It is important to understand that completing a real estate transaction on land in the process of release does not guarantee that the process will be completed, or determine how long it will take. To increase the likelihood of a quick and successful completion, it is advisable to consult a professional in the field and advance the process with a developer. It is worth noting that once agricultural land has been released, it cannot be returned to agricultural use, and the more advanced the land is in planning terms, the greater the possibility that it may also be used for building in the future.
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Investing in land, including planning-based land opportunities in Israel, involves significant risk. You should review the following with your own legal, tax, and financial advisors before making any decision. The risks include, without limitation:
This summary is not exhaustive. A full statement of risk factors is provided in the investor materials and should be read in full.
