Haggag Group CEO Sees Housing Market Bottoming Out, Prices Poised to Rise

Tzachi Haggag, CEO of the Haggag Group, believes the Israeli real estate market has hit its lowest point and anticipates a significant price increase in the coming year. He attributes the company's continued success, even during a market slowdown, to strategic adaptations, including focusing on foreign buyers and offering more affordable properties abroad.

Haggag highlighted the company's expansion into Romania and Azerbaijan, targeting international buyers who are less sensitive to price negotiations and often purchase luxury units at higher price points. He noted that a substantial portion of their sales, particularly in Tel Aviv and Jerusalem, come from overseas investors from countries like France, the US, Mexico, South Africa, and Australia.

The company's strategy involves acquiring land with development potential, securing permits, and adding value to projects, which allows them to maintain profit margins of over 20% even when offering deals. Haggag cited the 'Migdalei Ha'arba' project as an example, where the buildable area increased significantly through permit changes.

Regarding the luxury market, Haggag stated it's a niche segment dominated by a few key players, with Haggag Group being one of them. He also addressed the trend of 20/80 payment plans (20% down, 80% upon completion), explaining that while they offer such options, their core business model relies on linear contracts with higher initial down payments, reducing the risk of cancellations.

Haggag also revealed plans for a significant expansion into data centers in Romania, involving an investment of up to 67.5 million euros. This move leverages the company's existing real estate expertise and strong local connections in Romania, where they are reportedly the largest real estate players. The company has secured exclusive rights for land acquisition for server farms and is pursuing four additional deals in the region.