Wednesday, March 30, 2011

The Diplomatic Subdivision and Housing Finance

As part of our process for interviewing subcontractors (a plumbing sub in this case), we visited the Diplomatic Subdivision today. It's a residential subdivision just on the outskirts of Ramallah designated for members of the Palestinian Authority or people associated with the Palestinian Government, and the level of luxury evident in these houses made it easy to forget that the people this government is representing are living under military occupation.

Here are some photos from the trip:

(street view of the villas)

(looking downhill, with apartments at the end of the street)

(the views from the balcony of one of the villas - looking towards Ramallah)

(another balcony view - another new Master-Planned Community in the foreground)

(master bathroom inside the villa)

(master bathroom fixtures)

Development is everywhere you look. From what I've been able to gather, condominium regime laws were introduced in 1993 and really facilitated the exchange of apartment ownership, then the mortgage system began entering the West Bank (apparently brought in by Jordanian banks investing in the Occupied Territories around the year 2000), and the elements for a housing boom were in place. 

The start of the second uprising (Intifada) delayed the start of the housing boom, but as soon as the political situation started stabilizing the supply of apartments / condos began to increase and demand is projected to be at 7,000 - 8,000 units a year at a minimum (other figures I've read are as high as 40,000 per year for the next decade).

A banker colleague of mine said he read in a study that there is close to one billion US dollars "under the mattress" in the West Bank. That's roughly one seventh of the cash available to all the banks in the West Bank, and it's starting to come out from under the mattresses. The people of Palestine generally have strong saving habits, and 35 years of pent up demand are finally finding some available supply to start satisfying them.

Mortgage financing is now available through Western finance vehicles, as well as through Islamic finance institutions, and the usual terms these days are 15% down payment and 20-year mortgage. There are even institutions like the Palestine Mortgage Housing Corp. that offer 10% down payment and 25- year financing. 

As for land prices, the desirable areas have plots that are 1 dunum (roughly 1/4 acre) selling for $1M ... just the land, no improvements on it. That's on the high side, but the average is around $300k-$400k per dunum in Ramallah.

Here's another view of west Ramallah taken from the Diplomatic Subdivision. Note the expansion down into the valleys:

(view towards Al Tireh neighborhood. Note the street cuts and all the fill material dumped downhill)

(neighboring property development - again note the fill material dumping mentioned in earlier posts)

As for our little project, we finally got the water main extended into the proposed road, and the temporary water meter installed. We also got our electric meter tested and approved today, so we can officially extend power to the construction site.

(our proposed road filled back in after waterline construction)

(our new temporary water meter)

Tomorrow the blacksmith comes out to work on the mobile office, adding windows, doors and locks. Now all we have to do is find a contractor and we can get started! 

Sunday, March 27, 2011

Rain Days and Temporary Utilities

We just had a couple of light (and much welcomed) rain days in Ramallah, which may be the last rain days we see for several months. Apparently the average rain fall is around 40 cm annually (~ 15.7 inches) and very little of it comes between April and October. As such, not much progress was made on the ground.

We spent our time interviewing and negotiating with several local contractors and builders to find the most suitable candidate for the upcoming work.  On the design side, we completed the as-built survey of the site and the cut / fill calculations, which showed that we have a total cut and haul-off volume of 1,951 cubic meters, and I got word that the final geotechnical report has been completed with foundation design recommendations.

Today was a beautiful spring day with sunny skies and temperatures around 18 degrees Celsius. Here's what the site looks like:

(view from the proposed road looking south - site looks relatively dry)

The last couple of items we need before we can begin are temporary site utilities. We paid dues for water and electricity, and are waiting on pipes to arrive at the water company (apparently the last shipment they got did not meet specifications, so the water company currently has no pipes for extending main lines), and for the temporary electric meter test to be conducted (scheduled for Wednesday) before we can receive power.

A site visit today gave me hope about the status of the water pipes arriving. I'm hoping the pictures below mean that the water company is expecting to lay pipe tomorrow, and not that we're going to have an open trench for many days to come:

 (trench for new water main, roughly in the middle of the proposed street)

(location of future temporary water meter, to be installed on the wall at our request)

As soon as the trench in the street is closed back up, we've contracted with a blacksmith to pay a visit to the site and help turn the shipping container into an office with actual doors and windows. Stay tuned.




Sunday, March 20, 2011

New Office Arrives

We bought a shipping container and had it delivered to the site yesterday. It's 2.5 meters x 6 meters, and we'll partition a small section for a guard shack and the rest for site office with the help of a blacksmith and some insulation and sheet rock. Below are the photos of the delivery:

 (driver had to back all the way into the future road above the site)


  (not much room to maneuver)

(driver climbing onto container to hook up the chain)

 (turning it for proper orientation)

 (unloading complete)

(this is where I'll spend a lot of my time over the next 18 months)

We paid 7,000 NIS for the container, including delivery, and will probably spend another 3,000 NIS on the blacksmith and 5,000-7,000 NIS on the interior finishing, putting the whole thing at around $4,700, or $260/month on office + guard shack rent if we use it for 18 months. Not to mention that we'll use it again on the next project, or sell it for somewhere around 12,000-15,000 NIS if demand remains anything close to what it is today.

Hitting Rock Bottom

The excavation contractor reached bedrock a few of days ago, and their work slowed down considerably. In addition, we decided to increase the excavation limits to allow for the pouring of a retaining wall foundation at the northern (street) boundary. As such, their completion was pushed back to Thursday afternoon, so it took them a week total.

Below are site photos from the past couple of days:

(hammering through bedrock)

 (a lot of fill material to haul off)

 (cleaning up the site)

 (final grades)

And here's one showing the official method (from my new collection called "Not Sanctioned by OSHA") for repairing a leaking oil pipe on your excavator:

(also seen under "why women live longer than men")

The surveyors came out today and did their elevation check in order to give us final quantities of haul material, which will be the basis for final payment of the excavation contractor. We also had the geotechnical engineer make their visit to take the soil samples, and below are some photos of the highly technical specimen collection methods:

 (drill getting ready to go down 11 meters)

 (dirt collected on corrugated metal sheet, dumped into ziplock bag)

(one of 3 bore holes, depths of 8, 8 and 11 meters. preliminary indications are all rock)

(the geotech showing me the strength of a soil/rock sample. everything's very hand's on)

Next we move on to securing temporary water and electricity for the site, buying a mobile site office / shipping container, and negotiating for prices with materials suppliers (rock, concrete and steel) and sub-contractors (electricians, plumbers ... etc.).

Getting a lock on the price of the materials will be critical to establishing our cost basis, and since the materials prices are climbing and the dollar is falling against the Shekel, it's impossible to determine the final price for each unit. We think they will sell for somewhere in the $180k-$190k range for approximately 190 square meters (roughly 2,050 square feet).

More on all of this to come in the weeks and months ahead.

Monday, March 14, 2011

Excavation

The excavation contractor is making good time with the great weather we've had recently. They are done with the bulk of the excavation for the building foundation, and should be ready to do fine-grading by tomorrow afternoon. The surveyor is scheduled to come out on Wednesday morning to stake the corners of the septic tank for excavation and check elevations, then the geotechnical engineer will take some samples to provide final foundation design recommendations.

Following are some photos from my site visit today:




(large rocks I asked to be saved for landscaping in the foreground)

(looking north, towards the fill from the future street)

I'd estimate those guys have hauled off about 1,500-2,000 cubic meters of fill already, and they probably have another 1,000 to go before they're all done. The cost for that work will probably run around 57,000 NIS (New Israeli Shekels), or about $15,800. The initial estimate was for 10-12 days of work, but I think they'll be done in closer to 8 days, since they haven't encountered much rock.

Today, we had to ask the geotechnical engineer to make a quick trip to the site to evaluate the stability of the fill material from the street that is encroaching on our property. The final elevation for the 1st basement level gardens falls on top of 1-3 meters of fill, and the decision was made to remove all that excess fill and go down to natural grade. This will increase the excavation quantities from the initial estimate, and probably result in taller retaining walls along the street, but will hopefully be less expensive than having to deal with excavating for wall foundations after the big backhoe is offsite, and create for a more stable design environment for the retaining wall.

I was again reminded of the differences in the way people do business here, since (a) I called the geotech firm owner, he was in Barcelona but answered his phone and gave me the name and number of another engineer in his office, who made the time (and took a taxi) to come to the site on a 1-hour notice, (b) he and I walked around and under the backhoe while it was working, asked the guy to dig in a certain spot in front of us to confirm his assessment of the natural ground elevation, and (c) I called the surveyor and made arrangement to have them come out to the site on a day's notice and they are both willing and able to do so.

I feel like I've been fortunate in my dealings with contractors and designers so far, and everyone has been accommodating and responsive. I keep getting the feeling that it's still a small town and people will do what they can to help you. We had a similar experience on a personal level when we first arrived and had the need to call a doctor a 7pm on our second or third night in town. Not only did he answer his cell phone, he stopped by our house 20 minutes later for a house call and we paid him directly. I think if I can stay ahead of the curve a little bit, I can keep this project moving forward pretty smoothly ... I just wish I knew more about what to expect and how a typical project of this type progresses, but I guess that's why they call it gaining experience. 





Sunday, March 13, 2011

Groundbreaking

We broke ground on our new residential condominium project yesterday, after obtaining the excavation permits from the municipality and a handshake agreement with the excavation contractor to agree on a price for hauling fill material offsite (per cubic meter).  Here are a couple of architectural renderings prepared by Amara Architects:

(front view, looking south)

(rear view, looking north)

Building anything on the steep (15%-35% slope) Ramallah grades is challenging, and the solution for new roads has most commonly been to (a) have roads well in excess of 15% slopes, and (b) dump a bunch of fill onto downhill properties, sadly ignoring existing trees and paying no attention to stabilizing soils for water quality purposes (though there is an attempt to provide structural stability, albeit in a rudimentary fashion). You can see a little bit of what I'm talking about in the lower left-hand side of the first two photos below, where some contractor (hopefully directed by the municipality) dumped material there for the future road and encroached by 6 or 7 meters onto our property, as well as in the fifth photo below showing the future road into our project area. I'll post some more extreme examples at a later date.

As anticipated, I'm trying to quickly un-learn the US customary system of measurement I'd grown accustomed to in my past 11 years of land development work in the US and adjust to the metric system in all aspects of life, not just my work. Daily forecasts and your oven temperature are given in degrees Celsius,  gasoline for your car in Liters, and your car odometer reading in kilometers per hour. Even the laundry detergent instructions tell you how many milliliters of the liquid soap to use! This, in addition to figuring out the translation of all technical terms I need to use on a daily basis for work, has kept me on my toes from day one.

Below are the 5 panoramic photos we submitted to the municipality attached to our excavation permit (to keep the neighboring properties condition on file, avoid conflicts during or after construction), looking south-east from the future road / entrance to our project, and turning south-west:

(survey crew and excavation contractor in the corner)

(future views from the balconies of east units)

(future views from the balconies of west units)


(future road leading to site)

These are a few, more scenic, photos of the site wildflowers and my son picking poppies as he accompanies me to the groundbreaking site meeting. Although the contractor offered him a chance to climb on the big excavator before it was running, he (surprisingly) refused this time around. With no hard hats in sight, and the possibility of a 3-year old climbing on a piece of heavy machinery, you could say people do things a little differently in this part of the world.