Israeli Developers Demand Concessions as Market Shifts
Translated & summarized from Globes by baba
Tomer Reifman, CEO of Ya'az Entrepreneurship, stated that homeowners must renegotiate urban renewal agreements in Tel Aviv as developers face market challenges. Homeowners are making financial concessions, averaging NIS 500,000 per apartment, to proceed with projects. These adjustments are necessary due to rising construction costs and stagnant prices, impacting developer profitability. Ya'az is expanding its operations while navigating these market dynamics.
The story in 6 lines · by baba
- Homeowners must renegotiate urban renewal agreements to proceed with projects, according to Ya'az CEO Tomer Reifman.
- Concessions from homeowners in Tel Aviv average NIS 500,000 per apartment, sometimes reaching NIS 1 million.
- Developers like Ya'az are accepting lower profit margins, around 15%, to keep projects viable.
- Luxury penthouses play a significant role, contributing up to 30% of a project's sales value.
- Ya'az reported a net loss of NIS 12.3 million in the first half of 2026 despite improved sales.
- The company plans to expand beyond Tel Aviv but will maintain its core focus on the city.
Developers in Tel Aviv are increasingly requiring homeowners to accept reduced benefits in urban renewal projects due to a stagnant housing market and rising construction costs, according to Tomer Reifman, CEO of Ya'az Entrepreneurship. Reifman stated that any homeowner unwilling to renegotiate existing agreements will find their projects stalled. He cited examples where homeowners contributed approximately NIS 250,000 each or agreed to forgo rent during construction, valued at around NIS 300,000 per apartment, to move forward.
Reifman explained that in central Tel Aviv, these concessions can average NIS 500,000 per apartment, sometimes reaching NIS 1 million. Ya'az, which focuses on urban renewal in Tel Aviv and manages nearly 80 projects, has had to revisit dozens of agreements signed three to five years ago. Homeowners are asked to accept reduced apartment sizes, lower specifications, or forgo rent, with concessions tailored to their needs. Reifman noted that even with these adjustments, homeowners still see significant value increases compared to their old properties, which often lack essential features like bomb shelters.
The company itself is operating on lower profit margins, around 15%, than initially planned. Reifman mentioned that revised agreements sometimes include clauses for compensating homeowners if the market recovers significantly during construction. He also highlighted the crucial role of luxury penthouses, which can account for up to 30% of a project's sales value despite being a smaller percentage of the total units.
Despite improved sales in recent quarters due to these market adjustments, Ya'az reported a net loss of approximately NIS 12.3 million on revenues of NIS 23.1 million in the first half of 2026. The company's stock has seen a decline, which Reifman attributes partly to low trading volume. Ya'az plans to expand its operations to other cities like Holon, Ra'anana, and Ramat HaSharon, but Tel Aviv will remain its core focus.
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