Contractor Urges Next Government to Readmit Palestinian Workers Amidst Real Estate Crisis

The Israeli real estate sector has been in a significant downturn for the past three years, exacerbated by ongoing conflicts, judicial reform debates, high interest rates, and a slight dip in housing prices, with a brief respite in 2024. Ran Yanai, CEO and owner of the construction company C.P., stated that the primary challenge for the next government in the real estate sector is to create conditions for the construction industry to return to regular execution pace. He identified three main obstacles: a shortage of manpower, difficulty in obtaining credit, and high financing costs, alongside a slowdown in housing demand.

Yanai emphasized that to revive the industry, the government must address manpower, credit, and demand issues through focused policy. This includes removing supply-side barriers and encouraging demand from homebuyers. A key proposal is the return of Palestinian workers, subject to legal regulation and oversight mechanisms. This issue is a point of contention among contractors, with some, like Yossi Avrahami, a prominent Israeli contractor, adamantly opposing their return, citing past negative experiences and advocating for reliance on new workers, including Israelis.

Yanai argues that the most significant current barrier is the lack of skilled labor, which hinders companies' ability to meet deadlines. He advocates for a regulated framework for the return of Palestinian workers, contingent on security decisions, necessary approvals, and strict supervision. This, he believes, would increase the available workforce, improve construction site productivity, and reduce project delays. He also suggested expanding vocational training and increasing the supply of alternative workers for a long-term solution.

Another major hurdle Yanai highlighted is financing. With high credit costs and complex project cash flows, construction firms face heavy financing expenses. He proposed the government establish a dedicated credit fund for the construction sector, offering loans on reasonable terms to help companies manage working capital, fund ongoing work, and maintain operational continuity. Such a fund could also assist companies facing liquidity pressures and mitigate the risk of financial delays cascading into construction delays.

Concurrently, Yanai suggested addressing demand by providing targeted grants to young couples and first-time homebuyers based on clear criteria and household economic capacity. These incentives could lower entry barriers, facilitate transactions, and support renewed industry activity, provided the aid is designed to increase housing accessibility without fully inflating prices.

Yanai concluded that resolving the construction crisis requires a combined approach: increasing available manpower, improving credit access, and bringing homebuyers back to the market. These three actions must proceed in parallel as part of a coordinated government plan to provide certainty and enable forward planning for companies. The ultimate goal, he stated, is not just to return to previous activity levels but to ensure stable execution capacity, reduce project delays, and improve public access to housing.