10 years later, and half the apartments in the luxury tower still haven't been sold

About a decade after the beginning of marketing, only 76 of the 168 apartments in Migdal Bereshit tower in Tel Aviv were sold, while Migdal Bereshit Daniel and Electra Building filed mutual lawsuits totaling hundreds of millions of shekels following disputes that escalated after a major fire in the project.

According to reports, the ongoing troubles in Migdal Bereshit tower in Tel Aviv are noticeably affecting the pace of apartment sales in it. So far, 76 apartments out of 168 that were built in it have been sold, after about a decade of marketing, and members of the developer family Kozhinov hold 15 additional apartments. Despite this, the family has no intention to lower prices beyond the flexibility that according to their assessment is required, given the difficult situation of the real estate market.

What was considered in the middle of the previous decade to be Tel Aviv's hottest tower in terms of marketing potential turned into a hot topic for all the wrong reasons, after a major fire broke out in it in 2023 as a result of an electrical short that caused massive damage and mutual accusations between the parties in the project. At the end of last week, Migdal Bereshit Daniel company, which manages the project on behalf of the Kozhinov family, and Electra Building company filed mutual lawsuits totaling hundreds of millions of shekels within an arbitration process. According to reports, it's about a process that is in its beginning and is confidential.

According to the report that Electra Building submitted to the capital market, the amount of its lawsuit reaches 270 million shekels, on account of payments that according to its claim are owed to it for work it performed in the project due to changes in the execution plans, as well as compensation for alternative return and loss of profits. In addition, the company raised claims to external consequences that delayed the project, and among them are the consequences of the fire that broke out in the building during construction. On the other hand, Migdal Bereshit Daniel filed a counterclaim in the amount of about 900 million shekels, which focuses on claims of delays on the part of Electra Building in completing work schedules, which according to its claim affect the pace of apartment sales in the project.

According to market estimates, even though the occupancy certificate for the building was issued in April last year, a significant portion of the apartments is still not fit, and therefore the pace of occupancy of the building is not high. The mutual lawsuits against Electra join a lawsuit that Migdal Bereshit Daniel is pursuing against the insurance company Migdal, totaling 480 million shekels, that was filed two months ago. Within it, the company claims that Migdal delayed in payment of insurance compensation for handling the building systems that were damaged in the fire, and that it caused Electra to leave the site without completing the work and thereby delayed the completion of the project by at least 15 months.

According to reports, several cancellations were also recorded on the part of buyers, and about 7 lawsuits are ongoing against the company at various stages on their part. In recent months, only two transactions were conducted in the tower, but at high prices: two 4-room apartments on the upper floors were sold for 15.7 million shekels and for 14.2 million shekels, at a price of about 110,000 shekels per square meter. The project also suffered financial damage from the slowness in marketing and from construction delays, and because of the fire, it was passed by the wave of accelerated sales that visited the market in 2021. According to Kozhinov, the company continues to market and to work hard despite the market condition, and because the family is wealthy, it compromises on the price but is not desperate to sell at any price.