Daniel sent us this one — and I'll admit, it's the kind of question that makes you realize how easy it is to talk about developers without actually knowing who they are. He's asking us to look past the caricature. Who gets into real estate development in Israel? Are they all mega-affluent operators building luxury towers, or is there a long tail of smaller players? Do any of them do this for ideological reasons, not just profit? And in a system as tangled as Israel's — with government agencies, contractors, tenants, landowners all orbiting the same project — what does a developer actually do day to day?
This is the episode where we admit we've been unfair to an entire profession, and I'm genuinely excited about it.
Of course you are. You've been waiting for a chance to talk about zoning committees for months.
I contain multitudes. But look — the prompt is right. When we talk about housing, developers are usually the shadowy figures in the background. And there's a reason for that. But the actual landscape is nothing like the cartoon.
Where do we start? Who are these people?
Let's start with the number that surprised me most. The Israel Builders Association has about two thousand member companies. But the actual universe of active developers — people who initiate and complete projects — is maybe fifteen hundred firms total. And within that, the vast majority are not what you'd picture.
Meaning they're not building forty-story glass towers in Tel Aviv.
The median Israeli developer is a company that builds maybe one or two projects at a time, often fewer than fifty units total. Think of a family-run operation that's been doing this for two generations. The founder might have started as a contractor — someone who actually poured concrete — and eventually started buying small parcels and initiating their own projects.
The mega-developer with a portfolio of five thousand units across six cities — that's the exception.
That's maybe twenty firms in the entire country. Africa Israel, Azorim, Shikun and Binui, Y.Dimri, a handful of others. They dominate the skyline and the headlines, but they don't dominate the unit count in aggregate. Something like sixty percent of residential units built in Israel come from small and mid-sized developers. The long tail is real.
The long tail is also where things get interesting, because those are the operators who might actually have motivations beyond pure margin.
Let's talk about ideology, because the prompt asks specifically about it. There are developers in Israel who build because they believe in something — and I don't mean that in a vague "we're improving communities" mission-statement way. I mean actual, specific ideological commitments that shape what they build and where.
Give me an example.
The most visible category is religious Zionist developers who build in settlements or in specific neighborhoods within the Green Line because they believe in strengthening Jewish presence in those areas. They're not always profitable in the conventional sense — sometimes they take land designated by the government for development in areas where demand is uncertain, and they build knowing the margins will be thin.
The government effectively subsidizes that through land pricing.
Through land pricing, through infrastructure investment, through various tender mechanisms. But the point is, the developer is making a conscious choice to operate in a market that a purely profit-maximizing actor might avoid. That's ideology as a business strategy — or business as a vehicle for ideology.
Are there examples on the other side of the spectrum?
You've got developers — some from the Arab sector, some from the cooperative movement — who focus specifically on affordable housing and community development. The kibbutz movement historically produced its own development arms. Today there are non-profits and social enterprises that act as developers for below-market housing. They're still developers — they still coordinate contractors, secure financing, navigate the planning bureaucracy — but their returns are capped, and their mission is explicitly social.
I've heard of some Haredi developers who operate similarly — building for their own communities at price points that don't really make sense for an outside investor.
That's right. And this gets at something important about the Israeli market. Because land is so heavily controlled by the state — the Israel Land Authority manages ninety-three percent of the land — the developer's relationship with the government isn't optional. It's the entire game.
Which brings us to what a developer actually does.
Let me walk through a typical project. This is where most people's mental model breaks down, because they think a developer is just a person with money who hires an architect and a contractor and waits for the checks to roll in.
The "guy in a suit pointing at a blueprint" theory of development.
Which is about as accurate as saying a conductor just waves a stick. The developer is the entity that identifies a viable piece of land — or wins a government tender for one — and then assembles everything necessary to turn that land into a completed building. And in Israel, "everything" is a staggering list.
Walk me through it.
Phase one is land acquisition and zoning. In Israel, this means either buying private land — which is only about seven percent of the total — or, far more commonly, participating in a tender from the Israel Land Authority. The ILA publishes tenders for specific parcels with specific designations: residential, commercial, mixed-use. The developer bids on the land price and on the development plan. But winning the tender is just the starting gun.
Because the land comes with strings attached.
Layers of strings. The ILA tender will specify density requirements, building height limits, percentage of units designated for certain populations. There are environmental requirements. There are infrastructure contributions — the developer often has to fund roads, sewage connections, public spaces. And all of this has to be negotiated with the local municipality, which has its own planning committees and its own demands.
Before a single brick is laid, the developer is already coordinating with three or four different government bodies.
And that's before we get to financing. Israeli developers typically don't use much of their own capital. They secure bank financing, but Israeli banks are conservative about real estate lending — they'll typically require significant pre-sales before they release construction loans.
Pre-sales meaning they have to sell units before they've built them.
So the developer is now also a marketer. They have to create sales materials, set up a sales office, often build a model unit, and convince buyers to commit to an apartment that won't exist for two or three years. And the buyers' money goes into escrow — it's protected by the Sales Law, which means the developer can only access it in stages as construction milestones are met.
Which protects buyers from losing everything if the developer goes under.
The system isn't perfect, but Israel's buyer protection laws are among the strongest in the world for off-plan purchases. But for the developer, it means they're managing a cash flow puzzle where they can't touch most of the money until they've already spent on construction.
The developer is a land speculator, zoning negotiator, government liaison, marketer, sales team, and cash flow manager — all before we even get to the actual building.
Then there's the building. The developer typically hires a general contractor — they're not pouring the concrete themselves. But they're responsible for selecting the contractor, negotiating the contract, monitoring progress, managing change orders, resolving disputes. If the contractor goes over budget or behind schedule, it's the developer who faces the buyers. If there are construction defects, it's the developer who gets sued.
This is starting to sound less like "guy in a suit pointing at a blueprint" and more like "person juggling chainsaws while riding a unicycle on a tightrope.
That's actually a pretty good description. And the unicycle is on fire.
Of course it is.
Here's a concrete number that puts it in perspective. A mid-sized residential project — say, a hundred and twenty units in a Tel Aviv suburb — will typically take five to seven years from initial land tender to final delivery of keys. The developer is actively managing that project for the entire duration. They're not flipping it in eighteen months.
Five to seven years of exposure to interest rate changes, regulatory shifts, construction cost inflation, political turnover at the municipal level.
All of it. And the margins aren't what people assume. The typical net margin for a residential developer in Israel is somewhere between eight and fifteen percent. The big profits come from land appreciation — buying land that becomes more valuable because of zoning changes or infrastructure investments that the developer didn't create but benefited from.
Which is why land banking is such a big part of the large developers' strategy.
The mega-firms will buy land and sit on it for a decade, waiting for the zoning to shift in their favor. That's not building — that's financial speculation with a hard asset. It's a completely different business from the mid-sized developer who needs to turn over projects to stay solvent.
This is also where the luxury tower dynamic comes in, right? Because if you're a developer who's paid a premium for land in central Tel Aviv, the math only works if you build high-end units.
That's the part of the story that gets missed. The developer isn't necessarily choosing luxury because they're greedy — they're choosing luxury because the land cost, the construction costs, the financing costs, and the regulatory burden all push toward a product that can command high per-square-meter prices. If you paid a hundred million shekels for the land, you literally cannot build affordable housing on it and break even.
Which means the policy question is about land pricing and zoning, not about developer morality.
It's both. Developers do lobby for zoning that favors high-end construction. They're not passive victims of the system. But the system creates the incentives, and the developers respond to them. If you want different outcomes, you have to change the incentives — through inclusionary zoning, through public land allocation at below-market rates for affordable projects, through density bonuses tied to below-market units.
Let's go back to the smaller developers for a minute. The prompt asks about the long tail — are there developers who operate at a small scale? Someone building six units, twelve units?
There's a whole category of micro-developers. These are often people who started as contractors or even as individual investors. They'll buy a single lot, maybe an old building to demolish and replace, and build a small building with four to eight units. In Jerusalem, you see this constantly in neighborhoods like Baka or Katamon — a developer buys an old building, tears it down, and puts up something with six or eight apartments.
That's a full-time job for someone?
It can be. Or it can be a side endeavor for someone who's primarily a contractor and takes on one development project every few years. The margins are thin, the risk is concentrated, and one bad project can wipe someone out. These aren't wealthy people in the traditional sense — they're small business owners operating in a high-stakes environment.
What about the day-to-day? The prompt asks what it actually takes to pull this job off. What does a developer's Tuesday look like?
I talked to someone who runs a mid-sized development firm — about forty units a year — and his description stuck with me. He said his job is sixty percent problem-solving, twenty percent relationship management, and twenty percent actual strategic thinking. On any given day, he might be dealing with a contractor who discovered unexpected rock during excavation and needs a change order that'll add two hundred thousand shekels to the cost. Then a call with the bank about releasing the next tranche of construction financing. Then a meeting with the municipal engineer about a parking requirement that changed since the original permit was issued.
Somewhere in there he's supposed to be thinking about the next project.
Which is the part that actually determines whether the company survives. The project he's building now was conceived four years ago. The project he needs to start in two years — he should be working on that now. Finding the land, beginning the zoning conversations, building relationships with the relevant planning committees. The pipeline is everything.
It's a job that requires being simultaneously detail-oriented enough to argue about a change order and strategic enough to be placing bets on neighborhoods that won't see construction for half a decade.
Interpersonal enough to manage relationships with a dozen different stakeholders who have conflicting interests and no particular reason to trust each other. The developer is the only party in the entire process whose job is to hold the whole picture. The architect cares about design. The contractor cares about execution. The bank cares about risk. The municipality cares about compliance and tax revenue. The buyers care about their specific unit. Only the developer has to make all of those concerns coexist.
That's actually a useful definition. The developer is the party whose job is to internalize all the externalities.
And the job attracts a certain personality type — high tolerance for ambiguity, comfort with risk, strong social skills, and a kind of practical intelligence that isn't necessarily academic. Most of the developers I've encountered are not MBAs. They're people who learned the business from the ground up.
Which brings us back to the caricature. The prompt asks whether the "mega-affluent, multi-property developer" is a myth. I think the answer is that it's a real category, but it's a small one, and it's not representative.
It's the visible tip of an iceberg that's mostly underwater. The public sees the luxury towers and the billionaire developers quoted in the business press. They don't see the guy in Holon who's been building twelve units a year for twenty years and has never been in a newspaper.
The incentives for the visible players are different from the incentives for the invisible ones. The mega-developer can afford to lobby, to land-bank, to wait out market cycles. The small developer needs projects that cash-flow quickly. They're playing completely different games with the same job title.
There's another dimension here worth exploring. The prompt mentions developers who get into the business for ideological reasons. But there's also a category of developers who are ideological in a different sense — they're committed to a particular architectural vision or a particular way of building.
The "I want to build beautiful things" developer.
Yes, and that sounds naive, but it's real. There are developers in Israel — a small number, but they exist — who specifically pursue projects that allow for higher design quality, better materials, more thoughtful public spaces. They're not doing it for charity — they charge a premium for it — but they're also not maximizing profit per square meter. They're trading some margin for a product they believe in.
Which is basically the developer equivalent of a chef who could make more money running a fast-food franchise but chooses to run a small restaurant instead.
That's the analogy. And just like in the restaurant business, most of them don't get rich. They make a living, they build things they're proud of, and they contribute something to the built environment that a pure profit-maximizer wouldn't.
Let's talk about the government tender process more specifically. You mentioned the Israel Land Authority. How does a developer actually propose a project?
The ILA publishes a tender document — a "machraz" — that specifies the parcel, the zoning, the permitted uses, and various conditions. Developers submit bids that include a price for the land and a development proposal. The development proposal isn't just "we'll build apartments." It includes preliminary architectural plans, a timeline, proof of financing capability, and often a detailed breakdown of how the project will meet the tender's specific requirements.
The ILA evaluates these how?
It depends on the tender. Some are purely price-based — highest bid wins. But increasingly, especially for larger or more sensitive parcels, there's a quality component. The ILA will score proposals based on design quality, environmental performance, inclusion of public amenities. Price is still the dominant factor, but it's not the only one.
Which creates an opening for developers who want to compete on something other than just who can pay the most for the land.
And there's been a slow but real shift over the past decade. The government has recognized that pure price-based allocation tends to produce the worst outcomes — both in build quality and in affordability. So they've started experimenting with mechanisms like "price per square meter to the buyer" tenders, where developers compete on who can offer the lowest final price to end buyers.
That's clever. It inverts the incentive.
It does, and it's had some success in bringing down prices in specific projects. The challenge is that it only works when the land is cheap enough that developers can afford to compete on final price. In high-demand areas, the land cost is so high that even the most efficient developer can't offer affordable units.
Which circles back to the fundamental problem. The developer is operating within a system shaped by land policy, zoning, and infrastructure investment. You can't fix developer behavior without fixing the system they're responding to.
You can't fix the system without understanding what developers actually do and why they make the choices they make. That's what I appreciate about this prompt — it's not asking us to defend developers or attack them. It's asking us to understand them.
Understanding is the thing you do before you can fix anything.
And I think one of the most misunderstood aspects of the developer's role is the risk they absorb. When a developer signs a contract to buy land and begins the planning process, they're making a bet that the market will exist in five years at a price that covers their costs. If they're wrong, they lose everything. And unlike most businesses, they can't pivot quickly. A software company can change its product in months. A developer who's halfway through a hundred-unit project can't decide to build a shopping center instead.
The capital is literally set in concrete.
The personal liability is often enormous. Most small and mid-sized developers personally guarantee their construction loans. If the project fails, they don't just lose their company — they lose their house, their savings, everything. The bankruptcy risk is real and it's not abstract.
That's a dimension that doesn't make it into the "greedy developer" narrative.
It doesn't, and I understand why. The public sees the finished building, sees the prices, and sees the developer driving a nice car. They don't see the years of risk and the projects that failed. Survivorship bias in real estate development is extreme — we only see the developers who didn't go under.
Let's talk about the parties involved in a major project. The prompt mentions "a huge amount of parties" and asks to what extent the developer is responsible for wrapping around all these resources. Can you map that out?
For a typical residential project in Israel, the developer is coordinating with at minimum: the Israel Land Authority, the local municipality's planning committee, the local municipality's engineering department, the fire department, the Home Front Command — which has input on shelter requirements — the electric company, the water company, the gas authority, the Ministry of Environmental Protection if there are environmental impacts, the Ministry of Housing if there are subsidized units involved, the bank providing construction financing, the bank providing buyer mortgages, the insurance companies providing various guarantees, the architect, the structural engineer, the soil engineer, the traffic consultant, the general contractor, the subcontractors, the sales team, the lawyers handling purchase contracts, and the buyers themselves.
That's twenty-three parties.
I'm probably forgetting a few. The developer is the hub that connects all of these spokes. If any one of those relationships breaks down, the project can stall. And in Israeli real estate, time really is money — construction loans accrue interest, buyers get impatient, contractors move on to other jobs.
The developer's core competency isn't really real estate. It's coordination.
It's coordination under conditions of extreme uncertainty with high financial stakes. That's the job.
The personality type that thrives in that environment is... A little obsessive? A little paranoid?
I'd say resilient. High tolerance for things going wrong. The ability to absorb bad news and keep moving. The developers I've met who've survived multiple cycles share a kind of equanimity about setbacks. They expect things to go wrong — they budget for it in time and money and emotional energy — and they don't spiral when it happens.
That's almost a temperament more than a skill set.
I think it's both. You can learn the skills — how to read a zoning plan, how to structure a deal, how to negotiate with contractors. But if you don't have the temperament, the first major setback will break you.
What about the question of whether there are realtors who become developers for ideological reasons? The prompt specifically asks about that crossover.
It's less common than you might think. Realtors and developers are adjacent but the skill sets are different. A realtor's job is transaction — matching buyers and sellers, closing deals. A developer's job is creation — turning land into buildings. There's some overlap, and certainly some realtors have become developers, but it's not a natural progression the way contractor-to-developer is.
Because the contractor already understands construction, which is the part that most frequently goes wrong.
The contractor-turned-developer knows what things cost, knows how long they take, knows which corners can be cut and which can't. The realtor-turned-developer knows the market but is learning construction from scratch — and that learning curve is expensive.
I want to come back to something you mentioned earlier about the Haredi developers building for their own communities. That seems like a particularly interesting case of ideological development.
It is, and it's significant in scale. Haredi communities have specific housing needs — larger apartments for bigger families, proximity to synagogues and yeshivas, specific design requirements like sukka balconies. Mainstream developers often don't understand these needs or don't want to deal with them. So Haredi developers have emerged to serve their own market.
They operate differently from secular developers?
In some ways. They're often more embedded in the community, so reputation matters enormously — a developer who delivers poor quality or goes bankrupt will find it hard to do business in that community again. They also tend to be more conservative with leverage, partly for cultural reasons and partly because their buyer base is less likely to tolerate delays or defects. The social cost of failure is higher.
That's a built-in quality control mechanism.
And it's worth noting that some of the most successful large-scale developments in the Haredi sector — places like Kiryat Sefer or Modiin Illit — were built by developers who started small and grew with the community. They weren't outside investors seeing an opportunity. They were community members solving a community problem.
Which is basically the definition of ideological development — you're building because your people need places to live, not because you spotted a market inefficiency.
And that motivation exists across other sectors too. There are developers in the Arab sector who focus on building in Arab towns and cities because they want to address the severe housing shortage there — a shortage that mainstream Jewish developers largely ignore. There are developers who focus on the periphery — the Negev, the Galilee — because they believe in strengthening those regions.
Are those developers profitable?
Some are, some aren't. The ones who survive tend to find a model that works — often by being extremely efficient, or by developing deep expertise in a specific market that lets them avoid costly mistakes. But they're not getting rich. They're making a living and building something they believe in.
That's a useful corrective to the image of the developer as purely extractive. It's not that extractive developers don't exist — they absolutely do. But they're not the whole picture.
They're not even the majority of the picture. The majority is small and mid-sized operators who are trying to build decent housing, make a reasonable return, and not go bankrupt in the process.
The prompt asks about myths. I think the biggest myth is that developers are interchangeable — that they're all playing the same game with the same motivations. The reality is that "developer" is an umbrella term covering everything from the guy building four units on his grandmother's old lot to the publicly traded company building four thousand units across the country.
The policy mistake we make is treating them all the same. Regulations designed to constrain the mega-developers often crush the small ones. A compliance requirement that's a rounding error for Africa Israel can be existential for a five-person firm in Be'er Sheva.
Which is how you end up with a market increasingly dominated by large players — not because they're better at building, but because they're better at navigating the regulatory burden.
That's the consolidation dynamic in a nutshell. And it's counterproductive, because the small and mid-sized developers are often the ones building in the places and at the price points that actually address the housing crisis.
What does a developer's Tuesday actually look like, to answer the prompt's question directly?
It looks like a series of problems that need solving before they become crises. A call from the contractor at seven in the morning because the concrete pour scheduled for today got delayed because the truck can't access the site due to road work the municipality didn't warn anyone about. An email from the bank asking for updated cash flow projections because interest rates moved. A meeting with the architect about a design change the municipality is demanding. A call from a buyer who's panicking because they heard a rumor that the project is delayed. An evening spent reviewing the tender documents for a new parcel that just came on the market.
Somewhere in there, lunch.
If they're lucky.
It sounds exhausting.
And the people who do it successfully for decades are a specific breed. They're not necessarily the people you'd want to have a beer with. But they're also not the cartoon villains of the housing crisis narrative. They're operators in a system that's bigger than they are, responding to incentives they didn't create, absorbing risks that most of us would find paralyzing.
Some of them, at least, are trying to do something more than just maximize returns.
Some of them are. The ideological developers, the community-focused developers, the design-obsessed developers — they exist. They're a minority, but they're a meaningful minority, and they show that the system can produce different outcomes when the right people are in the right positions with the right incentives.
I think that's the thread to pull on for the future. If we want more developers who care about community and affordability and design quality, we need to structure the system to reward those things. Right now, the system mostly rewards land speculation and regulatory arbitrage.
That's a policy choice, not a law of nature. Other countries have developer ecosystems that look different — more small players, more diversity of motivations, better outcomes in terms of affordability and build quality. Israel can learn from that.
The answer to the prompt is: no, the mega-affluent caricature isn't the whole story. There's a long tail. There are ideological operators. The job is coordination under uncertainty. And the system shapes the players more than the players shape the system.
That's a good summary. And I'd add: if you're angry about housing, be angry at the policy framework, not just the people operating within it. The developers are doing what the system incentivizes them to do. Change the incentives, and you'll change the behavior.
Now: Hilbert's daily fun fact.
Hilbert: In the late sixteen hundreds, European explorers in what's now Nunavut observed Arctic foxes following polar bears across sea ice to scavenge seal carcasses — an arrangement so reliable that the foxes would wait at breathing holes alongside the bears, essentially using them as hunting partners. The bears tolerated it because the foxes provided early warning of approaching threats.
The foxes were subcontractors.
With a very specific deliverable.
This has been My Weird Prompts. Thanks to our producer Hilbert Flumingtop. If you enjoyed this, we'd love a review wherever you get your podcasts. Find us at myweirdprompts.I'm Corn.
I'm Herman Poppleberry. We'll be back next time.
