Real Estate Rebound Will Be Swift, Says Profd Israel CEO
The hype surrounding real estate investments has significantly diminished, with a noticeable drop in interest, according to Peleg Davidovitz, controlling shareholder and CEO of the public company Profd Israel. Speaking at the Globes and Bank Leumi Israel Real Estate Conference, Davidovitz reported a 50% decrease in registrations for his real estate courses, reflecting a broader decline in market sentiment.
Davidovitz explained that this trend mirrors broader market behavior, including the stock market, where initial success can attract investors who are later deterred by unfavorable valuations. He believes that those who entered the real estate market driven by speculative success will be the first to leave, leading to a correction. "The return to investing in real estate will be sharper and faster than people think," he stated.
He elaborated that a key factor for renewed investment is the relationship between monthly mortgage payments and rental income. Since 2022, rising interest rates and peak property prices have inverted this equation, making monthly payments prohibitive for many investors. Davidovitz anticipates an "optimum equation" where rental income covers mortgage payments, a scenario not currently prevalent.
Beyond economic factors, Davidovitz cited geopolitical events, the ongoing war, and upcoming elections as contributing to market uncertainty. He emphasized that real estate trends are driven by a "sequence of events" rather than single incidents, and these cumulative factors will eventually draw people back to the market.
Profd Israel focuses heavily on urban renewal, which Davidovitz sees as a key driver of future growth. He highlighted significant economic opportunities not only in new construction but also in pre-renovation second-hand properties, where the potential for future expansion offers substantial value. He advised potential buyers to conduct thorough due diligence on urban renewal projects, including checking developer selection, required majority attainment, and planning status.
