When he passes the Azrieli Center in Tel Aviv, Israel Railways CEO Boaz Zafrir groans in deep frustration. In 2003, a footbridge was inaugurated giving the thousands of passengers at the railway station direct access to the Azrieli shopping mall located above it. The bridge led to a rise in turnover at the mall of at least 10%, but Israel Railways didn’t receive a penny in return for agreeing to its construction. David Azrieli gained a railway station adjacent to his project without it costing him anything. “Israel Railways has been too many people’s fool in this country,” says Zafrir, adding, “I find myself repeating this sentence over and over again.”
Israel Railways, which is finding it difficult to pay its employees’ wages and lives at the expense of the Ministry of Finance, controls huge tracts of real estate but has so far done nothing to make money out of it. Israel Railways’ rights in property are estimated to be worth billions of shekels (no-one knows exactly how much) but in the absence of effective business management other businesses have thrived at its expense. This will apparently come to an end soon with the establishment of a real estate subsidiary. The last obstacle to setting it up was removed this week when the National Labor Court rejected the Israel Railways workers committee’s request to delay implementation of the agreement in principle between it and the railways management, under which it was decided to set up real estate and cargo subsidiaries.The real estate company is already at the stage of appointing a board of directors, and will shortly advertise the position of CEO. “This will be the most interesting job in Israel Railways,” sourecs at the parent company say.
The idea of setting up a real estate subsidiary first arose in 2007, when Ofer Linchevsky managed the company. The agreement with the workers stipulates that the real estate subsidiary will remain wholly owned by Israel Railways, and will sell land rights to developers. Israel Railways will receive a fixed payment from each project in return for the land and the building rights, without itself injecting capital into the project…Read More>>