higher costs compared to construction above ground, engineering challenges, and even psychological difficulties arising from moving part of the human activity underground. The guiding principle in our work is to stick to the existing urban planning policy in Israel, while maintaining the economic viability of the projects. The goal is to show that underground development is not just a utopian vision, but a realistic possibility, albeit subject to certain conditions. For this purpose, we used two case studies of urban renewal projects, one in the heart of a high demand area (Petah Tikva) and the other located farther from Israel’s core metropolitan area (Nesher). In both cases, we based our analysis on the existing economic reports of these projects, accurately reproducing the structure of their costs and revenues. We then proposed planning alternatives that combine the existing projects’ features, along with various possibilities of development in their underground. These alternatives differed from each other regarding the main assigned use of the underground: commerce and employment, leisure and sports, or medical services. They also differ in the intensity of the underground development both regarding the built area, and the depth. For each one of these options, we adjusted the economic model and calculated the costs and revenues arising from the analysis. To be consistent with the accepted practice, our analysis used the official standard of the Board of Real Estate Appraisers, which requires a minimum profitability rate for developers. In all the alternatives we tested, the additional development of the underground lowered the rate of profitability below the 17% required by the standard. However, we show that in most cases it is possible to provide incentives to the entrepreneur, that together with reasonable assumptions regarding an increased willingness to pay for apartments in the project, may raise the profitability of the project to the required level. Some of these incentives are additional building rights or lower fees and taxes. Even when the incentives have a budget cost (e.g., tax iv D. Broitman, Y. Farja, A. Alhanaty, N. Kheir
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