Contractors Association Head Warns of 800 Firm Bankruptcies This Year
Roni Brik, president of the Contractors and Builders Association, stated that approximately 800 small contracting firms have gone bankrupt since the beginning of the year, marking the most challenging period the industry has faced in his 40 years of experience. He attributed the crisis to a sharp increase in construction costs since the start of the war, citing an example where a project's cost rose from NIS 30 million to NIS 48 million. Brik highlighted that infrastructure and execution contractors are particularly affected, facing rising expenses and cash flow difficulties, with some local authorities withholding payments or seizing projects, leading to bankruptcies.
Brik emphasized the significant influence of local authorities and mayors on construction volumes, asserting that mayors can effectively halt or advance projects. He noted that while some municipalities are willing to promote construction, the industry struggles with the current situation, pointing to 12,000 unsold apartments in Jerusalem as an example. However, he also mentioned a more positive outlook from Jerusalem's mayor and city engineer, who expressed a commitment to advancing new construction plans to attract and retain residents.
Addressing the broader economic context, Brik criticized suggestions from the Bank of Israel governor to raise taxes on the sector while simultaneously aiming to lower housing prices, calling it contradictory given that taxes already constitute 50-60% of a home's price. He also warned of potential new tax burdens being prepared by the Treasury, which he believes could further strain the industry.
Looking ahead, Brik urged the next government to establish a dedicated infrastructure and housing cabinet to tackle the crisis. He suggested that tax reductions could ultimately boost state revenue. Brik also advised potential buyers that the current period of uncertainty presents an opportunity to purchase apartments, though significant price drops are unlikely without government incentives.
