Israeli Developers Boost Sales by Offering Fully Furnished Apartments Amid Market Slowdown
In response to high interest rates, declining project profitability, and sluggish demand, Israeli real estate developers are increasingly selling new apartments fully furnished and equipped. This approach, once mainly associated with luxury projects and foreign buyers, is now penetrating the local market as a strategy to differentiate projects and accelerate sales.
Gilad Goder, Marketing VP at Ben Shalom Developments, explains that fully furnished apartments primarily cater to foreign residents, saving them time and the hassle of managing interior design and suppliers. Since the outbreak of the war, this model has gained relevance for investors unable to visit Israel, enabling quick purchases with minimal involvement. Due to a general slowdown in real estate sales, developers have expanded this model to standard projects targeting local buyers, helping shorten decision-making and reduce buyer hesitation by presenting ready-to-move-in homes.
Selling completed apartments has become more challenging compared to off-plan sales, which now account for nearly 60% of new apartment transactions, according to the Treasury's April report. Industry experts attribute this to buyers' preference for customizing apartments during construction, favorable financing terms for off-plan purchases, and expectations of future price increases and lower mortgage rates. Additionally, the difficulty in selling existing homes in the secondary market delays upgrades, making immediate occupancy apartments less attractive.
Yaffa Sadan, Marketing VP at Yossi Avrahami, notes that the fully furnished sales model gained traction during the COVID-19 pandemic when many transactions occurred remotely. It also suits buyers seeking to minimize the effort involved in moving. Developers offer flexibility by furnishing only some units or allowing buyers to modify or reject certain furnishings with corresponding price adjustments.
The furnishing cost ranges from 150,000 to 500,000 shekels depending on apartment size and project type. Goder emphasizes that developers view this as a marketing expense rather than a profit source, as showcasing furnished apartments accelerates sales and can increase demand for other units. Real estate appraiser Shmulik Cohen estimates furnishing adds about 2.5% to 3% to the apartment price, sometimes up to 5% in luxury projects.
While furnished apartments are ideal for investors, seniors, or rental units due to convenience, they pose risks in the luxury market where personal taste varies widely. Developers often furnish only a model apartment to illustrate design possibilities without imposing a uniform style that might deter buyers. Ultimately, the success of this sales tactic depends on the target audience and their sensitivity to design choices.
