Av-Gad Faces Sales Slump Amid Buyer Hesitation, Seeks New Strategies
Israeli real estate developer Av-Gad is experiencing a significant slowdown in apartment sales, with potential buyers hesitant to commit and waiting for further price reductions. Company executives described the current market as one where "buyers are sitting on the fence," anticipating more discounts, according to a conference call summarizing the second quarter.
Yuval Arad, Av-Gad's deputy CEO, noted the widespread difficulty in converting potential buyer registrations into signed contracts across the industry. To counter this, Av-Gad has introduced a trade-in program to assist existing homeowners in selling their current properties, which Arad stated is "significantly driving sales." The company is also increasing its aggressive promotional offers through consumer clubs to stimulate demand and align sales pace with construction starts.
Av-Gad, which focuses on urban renewal projects and is expanding its construction activities, reported a 27% increase in second-quarter revenues to NIS 52 million, with a profit of NIS 29 million compared to a loss in the same period last year. However, the company faces a negative NIS 98 million cash flow from operations in the first half of 2026, though it asserts this does not indicate a liquidity problem and it expects to meet its obligations.
To bolster its capital, Av-Gad partnered in August with investment firm Barak Leshem Finance to establish a joint venture, Av-Gad Ba'Ir, focusing on medium-sized urban renewal projects. Barak Leshem Finance committed NIS 49 million to the venture, which will receive rights to 11 existing Av-Gad projects.
The company's attempt to expand into income-generating real estate, particularly the "Ir Kinneret" project in Tiberias, has faced setbacks. A planned IPO for a subsidiary to fund this project did not materialize. Furthermore, a dispute with landowners led to the cancellation of agreements in February 2026, followed by a NIS 20.5 million lawsuit filed by the landowners in June, which Av-Gad disputes.
