Real Estate CEO: No Debt Servicing is Our Advantage
Translated & summarized from Bizportal by baba
Alex Mariash, CEO of Hachsharat Yishuv Urban Renewal, stated that the Israeli real estate market is not in a uniform crisis, with significant regional differences. His company manages over 30,000 housing units and avoids aggressive discounts, preferring institutional partners over debt. Mariash predicts stable or rising prices in peripheral areas but continued pressure in Tel Aviv, with significant profits expected in 2028-2029 as projects advance.
The story in 5 lines · by baba
- Hachsharat Yishuv CEO Alex Mariash sees no uniform crisis in Israel's real estate market.
- The company manages over 30,000 housing units, with 9,000+ having approved plans.
- Mariash predicts stable or rising prices in peripheral areas, but pressure in Tel Aviv.
- Significant profits are expected in 2028-2029 as projects reach advanced stages.
- The company avoids debt, preferring institutional partners for financial flexibility.
Alex Mariash, CEO of Hachsharat Yishuv Urban Renewal, believes the Israeli real estate market, despite current challenges like rising interest rates and construction costs, is not in a uniform crisis. He emphasizes significant differences between cities and projects, noting that a broad view misses nuances. Mariash's company manages over 30,000 housing units in its pipeline, with more than 9,000 having approved building plans and the required majority of homeowner consent.
Mariash highlighted that the crucial factor is not the sheer number of units but their actual feasibility for construction, sale, and profit. He pointed out that some companies are offering discounts of 10-15% to sell apartments, a strategy his company avoids. Hachsharat Yishuv has opted to bring in institutional partners rather than taking on debt to finance its operations. He also explained that while projects are progressing, significant profits will only appear in financial reports in a few years.
Regarding market trends, Mariash predicts no price drops in the coming year in areas like the North and South, where prices are around NIS 20,000-22,000 per square meter. He anticipates continued strong demand and even price increases in these areas, citing over 100 apartments sold in Kiryat Yam before a major marketing campaign. In contrast, he expects continued price pressure in Tel Aviv but not significant drops or increases within the next year, attributing this to a substantial supply of projects and the economic infeasibility of starting new ones due to high construction costs.
The company aims to have approximately 1,000 housing units under construction by the end of 2026 and to double that to 2,000 units by 2027. Key projects expected to drive this growth include a flagship development in Haifa with over 720 units and a project in Nes Ziona. Mariash also noted that while sales are progressing, accounting recognition of profits is tied to construction progress, meaning substantial profits will be realized in 2028 and 2029 as projects like those in Ramla and Kiryat Yam reach more advanced stages.
Mariash stressed that Hachsharat Yishuv's financial strategy of avoiding debt for ongoing operations, relying instead on equity from institutional partners like Menora and Migdal, provides flexibility. This approach allows the company to proceed with projects even when profitability is eroded by rising costs and interest rates, unlike other real estate firms burdened by debt servicing. He stated that the company is not currently abandoning any projects but may seek planning adjustments to improve economic viability.