Israel Real Estate Market Sees Deal Drop, Mortgage Uptick, and Stock Slump
Translated & summarized from Ice by baba
Israel's real estate market saw a drop in transactions this week, with contractors and second-hand sellers facing difficulties. However, mortgage volumes increased significantly due to refinancing. Investors in real estate stocks have experienced substantial losses, with some shares declining over 20% since the start of the year. Major deals include Leumi Partners' $100 million investment in a US real estate firm and Clal's acquisition of a stake in Ashtrom Residential for over 400 million shekels.
The story in 6 lines · by baba
- Israel's real estate market experienced a decline in transactions this week.
- Mortgage volumes in Israel have significantly increased due to refinancing.
- Investors in Israeli real estate stocks have suffered substantial losses, with some down over 20%.
- Leumi Partners is investing $100 million in the US real estate company Harbor Group.
- Clal will acquire a 20% stake in Ashtrom Residential for over 400 million shekels.
- One region in Israel is seeing rising property prices despite a market slowdown.
Israel's real estate market experienced a notable decline in the number of transactions this past week, with both contractors and second-hand sellers struggling to move properties. Despite this slowdown, the total volume of mortgages taken out saw a significant increase, driven by refinancing. The ultra-Orthodox party United Torah Judaism is reportedly seeking to regain control of the Housing Ministry portfolio as part of coalition negotiations.
Investors who shifted funds from real estate to the stock market in early 2024 have suffered substantial losses, with some real estate stocks dropping over 20%. This contrasts with a more favorable investment in physical property, which has generally outperformed real estate stocks. For instance, Ashtrom Residential for Rent saw its stock fall 19.7% year-to-date, though its parent company is involved in a significant deal where Clal will acquire a 20% stake for over 400 million shekels.
In a major investment, Leumi Partners is injecting $100 million into the American real estate company Harbor Group, valuing it at approximately $1.275 billion, potentially leading to a 10% stake. Meanwhile, mortgage data for October revealed a 14% rise in the volume of new mortgages, bringing the year-to-date total to 97.5 billion shekels, nearing 2021's peak levels. Contractors are actively using financing incentives, with nearly half of new apartment sales in September involving such benefits, and 67% of second-hand apartments sold in August included bomb shelters.
Examining contractor deals, one developer is offering a 10-year interest benefit, which a real estate appraiser suggests is worth significantly less than the claimed 700,000 shekel saving. Separately, entrepreneur David Azulai has reportedly offered 60 million shekels to acquire parts or all of an urban renewal company. The Tax Authority estimates that a property tax on landowners may soon be implemented, with its director noting it was nearly enacted before recent events.
Analysis of market data indicates that while most areas are experiencing a slowdown, one specific region in Israel is seeing a rise in property prices due to decreasing supply and increasing demand. Conversely, data also suggests that Tel Aviv is among the cities where it is less advisable to buy property due to market dynamics. In a separate stock market event, trading was suspended for a series of bonds from the American real estate company Cohon after it failed to publish its financial reports on time.
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