Contractors Association President: 800 Small Firms Bankrupted 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 construction industry has ever faced. Brik, speaking at the Globes Israel Real Estate Conference, attributed the crisis to rising construction costs, which have surged by tens of percent since the start of the war, and cash flow difficulties, particularly for infrastructure and execution contractors.

He highlighted that some local authorities are exacerbating the problem by withholding payments or confiscating performance bonds from contractors during wartime. Brik emphasized the significant power local municipalities hold, with mayors capable of halting or advancing construction projects based on their discretion. He noted that while some authorities are willing to promote building, others are actively obstructing it.

Brik criticized suggestions from the Bank of Israel governor to lower housing prices by increasing taxes on the sector, arguing that such a move is counterproductive given that taxes and regulation already constitute 50-60% of a home's price. He also expressed concern over potential new tax plans being developed by the Treasury that could further burden the industry.

Looking ahead, Brik urged the next government to establish a dedicated infrastructure and housing cabinet to address the crisis. He believes that reducing taxes, potentially to 2.5%, could ultimately boost state revenue and foster a thriving industry. Brik also advised potential buyers that the current period presents a unique opportunity to purchase apartments, as the market is currently on hold pending the outcome of upcoming elections.