Real Estate Market Shakeup: REITs Buy Up Unsold Apartments at Steep Discounts
Translated & summarized from Maariv by baba
Israel's real estate market is seeing rental REITs acquire large blocks of unsold apartments from developers at discounts of up to 20%, totaling hundreds of millions of shekels. This trend is driven by a sales slowdown, high interest rates, and geopolitical uncertainty, creating a win-win for developers and REITs. While not immediately lowering rents, the model offers renters long-term price stability through fixed lease agreements.
The story in 6 lines · by baba
- Rental REITs are acquiring approximately 86,000 unsold apartments in Israel at significant discounts.
- Recent deals include Rent It REIT buying 52 apartments for 108.5 million shekels and Abu Family Living acquiring 50 for 156 million shekels.
- Developers are offering discounts due to market slowdown, high interest rates, and geopolitical uncertainty.
- The acquisitions create income-generating rental properties for REITs and free up capital for developers.
- Renters may benefit from long-term rental stability rather than immediate price reductions.
- REITs are also considering purchasing entire buildings for greater management control.
Israel's real estate market is experiencing a significant shift as a surplus of unsold apartments creates opportunities for rental REITs (Real Estate Investment Trusts). With approximately 86,000 new apartments remaining on the market as of late August, developers are facing cash flow pressures and seeking solutions for their accumulated inventory. This situation has empowered rental REITs, which specialize in long-term rentals, to acquire large blocks of apartments from developers at substantial discounts, often ranging from 15% to 20% below market prices. These acquisitions, totaling hundreds of millions of shekels, are transforming unsold units into income-generating rental properties.
Several major deals illustrate this trend. In May 2026, Rent It REIT purchased 52 apartments from Aura in the "Aura City" project in Hadera for about 108.5 million shekels. Also in May, Abu Family Living acquired 50 apartments in Jerusalem from Bingo Real Estate for approximately 156 million shekels, with delivery expected by June 2029. In August 2026, Azorim Living REIT bought 26 apartments in Jerusalem from its parent company, Azorim, for 76.5 million shekels, slated for rental by late 2026. Rent It REIT made another acquisition in September 2026, buying 30 apartments in Jerusalem for 63.2 million shekels, and most recently, Abu Family Living purchased 50 apartments from Azorim in Netanya for about 120 million shekels.
Experts attribute this market dynamic to high housing prices, elevated interest rates, and geopolitical uncertainty, which have led to a significant slowdown in sales. "The contractors are willing to sell at attractive prices," noted Tossia Cohen, a real estate expert, explaining that the unsold inventory is forcing developers to offer discounts to free up capital and reduce risks. This creates a win-win situation, allowing developers to complete projects and repay loans while REITs secure profitable investments.
For renters, the impact is less about immediate price reductions and more about long-term stability. While rental prices are still based on market rates, long-term rental agreements offered by REITs provide predictable rent increases, often tied to the consumer price index, for up to ten years. This offers a level of certainty often absent in private rentals. REITs are also exploring the acquisition of entire buildings, which can offer greater control over management and maintenance, further optimizing operational efficiency.
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