Major Developers Report Minimal Contract Cancellations Amid Market Fears

Despite warnings from the Israeli Ministry of Finance about a wave of real estate contract cancellations, major developers are reporting minimal impact. Companies like Canada Israel, a seller of luxury apartments, have seen only two contracts canceled in the past six months. Tidhar reported five cancellations, and some of these apartments have already been resold. The Hagag brothers experienced several contract cancellations in the previous quarter, but clarified that some were purchase requests, not finalized contracts, and that only one actual contract was canceled, with the apartment subsequently sold.

Further investigation into non-publicly traded companies reveals a similar trend. Yossi Avrahami reports no cancellations among dozens of recently signed deals. Wi-Box, a publicly traded company, stated in a report that its exposure to cancellations is not expected to be material, with only one cancellation for an apartment worth approximately 3 million shekels (excluding VAT) in its marketing phases.

In contrast, Azorim reported 15 canceled sales contracts totaling nearly 57 million shekels, with seven of these in the Frankfurt Boulevard project primarily due to delays in obtaining building permits. The CEO, Adi Dana, noted that these cancellations represent a small fraction of over 1,000 apartments sold, and that buyers were entitled to cancel under the contract terms if permits were not issued by the agreed-upon date.

Other companies like Acro reported four cancellations, and Praskovksi reported two in the last six months. Analysts suggest that the recent interest rate cut may eventually bring buyers back to the market, although a surge in demand is not immediately expected. However, each rate reduction offers greater purchasing power for potential buyers, with some already saving hundreds or over a thousand shekels per month since November due to the rate cuts.