Amram CEO: Demand Steady for Mid-Range Homes, Luxury Market Stagnant
Noam Greif, CEO of Israeli real estate developer Amram Avraham, stated that the company is maintaining its sales pace due to its focus on the "middle market," specifically apartments priced between 2 to 3 million shekels, primarily in peripheral areas. This segment, he explained, is less affected by market fluctuations, including interest rate hikes and security concerns, due to consistent demographic demand.
Greif contrasted this with the luxury real estate market, which he described as facing "real difficulty, even stagnation," due to greater availability of alternatives. He noted that Amram Avraham's strategy of engaging in government-subsidized housing programs like "Mechir L'Mishtaken" and "Mechir Matara," alongside urban renewal projects, insulates it from broader market downturns.
Despite the resilience of its core market, Greif acknowledged that buyers still contend with security uncertainties, an upcoming election, and higher interest rates compared to pre-2022 levels. He anticipates that the certainty following the election, regardless of the outcome, will provide relief and encourage some buyers back into the market.
Financially, Amram Avraham reported a 9% increase in revenue for the first half of the year, reaching 774 million shekels, with 605 apartments sold totaling approximately 1.15 billion shekels. However, gross profit margins slightly decreased from 22% to 19% due to a shift in project mix, rising labor and subcontractor costs, and buyer financing incentives. The company's net profit saw a significant jump to 153 million shekels in the second quarter, largely attributed to a one-time revaluation of an investment.
Looking ahead, Amram Avraham has a substantial pipeline of nearly 30,000 housing units, with over 1 billion shekels expected to be released from project escrow accounts as developments are completed. The company is also expanding into income-generating properties, including logistics centers, data centers, and hotels.
