Migdal Insurance Boosts Investment in Long-Term Rental Housing with 860 Million Shekel Deal
Migdal Insurance is significantly expanding its presence in Israel's long-term rental housing market, positioning itself as the leading institutional player in the sector. Following last week's acquisition of a 20% stake in Ashtrom Residential for 451 million shekels, Migdal is preparing to invest approximately 860 million shekels to purchase 50% of three rental housing projects developed by real estate company Preshkovsky. These projects will include a total of 865 apartments.
The three projects are located in Nofei Ben Shemen in Lod (352 apartments), Be'er Ya'akov (298 apartments), and Ganei Azar in Kfar Azar (195 of 215 apartments). Migdal's investment reflects valuations of about 600 million shekels for Nofei Ben Shemen, 660 million shekels for Be'er Ya'akov, and 460 million shekels for Ganei Azar. Construction has not yet started on the Ganei Azar project, so the payment covers land value and Migdal's share of construction financing. Preshkovsky's total investment in land acquisition and development for these projects exceeds 600 million shekels.
These projects operate under the government-regulated "Dira LeHashkar" (Apartment for Rent) model, which ensures long-term rental agreements under supervision. Migdal is not participating in Preshkovsky's separate rental housing project at Sde Dov. Migdal Insurance currently holds the largest real estate portfolio among Israeli institutional investors and has been actively expanding its rental housing investments over the past two years. The company's investment division, led by Erez Madali, views the recent market slowdown and rising interest rates as opportunities to acquire quality assets in high-demand areas.
Before this deal, Migdal held partnerships in projects with 1,285 apartments, investing around 600 million shekels, and also invested 40 million shekels in the Rent It fund, which focuses on rental housing. The growing institutional interest in rental housing is driven by demographic shifts, with younger populations buying fewer homes and increasing demand for rental units. This surge follows years of stagnation triggered by Bank of Israel interest rate hikes, which caused significant valuation losses in many real estate companies. Migdal sees the current decline in land prices, asset devaluations, and a record high inventory of unsold apartments (over 80,000 units) as a strategic opportunity to expand its rental housing activities now.
