Real Estate Firm Beit V'Gag Expands Beyond Tel Aviv Amid Market Challenges

Beit V'Gag, a real estate company specializing in urban renewal projects, is strategically expanding its operations beyond the central Gush Dan region, particularly Tel Aviv, to areas like Netanya and Haifa. This move comes as the company faces significant challenges in selling apartments in Tel Aviv, especially in prime locations like Kikar Hamedina, where competition is fierce and differentiation between projects is minimal. Rom Shahar, a director at Beit V'Gag, noted that while funding isn't the primary issue for buyers in these areas, general market sentiment, government actions, and political and security uncertainties are causing potential buyers to hesitate.

Ronen Akavia, CEO of Beit V'Gag, highlighted that the biggest sales challenge is in central Tel Aviv due to intense competition and a lack of distinctiveness among projects. The company, historically known for smaller Tama 38 projects in Ramat Gan and Tel Aviv, began developing projects in new locations like Netanya and Haifa before the current market downturn. Beit V'Gag was founded as a private fund in 2011, later becoming a public company listed on the Tel Aviv Stock Exchange in March 2022 after raising NIS 80 million. The Shahar family, owners of the "Meir" car import group and Maccabi Haifa football club, became controlling shareholders in 2023 with a NIS 150 million investment.

The company is currently promoting approximately 12,000 housing units across the country, with a projected gross profit of NIS 1.8 billion from signed projects. Akavia anticipates significant growth in the coming year, with the commencement of large-scale projects of 700 units or more. Shahar emphasized the company's expansion, stating that its future construction in Haifa alone will surpass its cumulative output in all previous locations combined. Beit V'Gag's major projects outside Tel Aviv include "Topia" in Bat Galim, Haifa, with 715 units, and "Ofek Hayam" in Netanya, with 745 units.

Despite market shifts, including rising construction and financing costs and decreased sales pace, Beit V'Gag maintains a conservative pricing strategy. Akavia noted that while profit margins are impacted, the company's ability to absorb a 10% discount in payment terms, a common market concession, is crucial for project viability. He expressed optimism for market recovery by 2027, contingent on continued interest rate reductions, political stability, and security calm.