Israeli Real Estate Investors Owning Nine or More Properties Surge 20% Amid Market Challenges
New data from the Israeli Tax Authority, obtained by Globes, reveals a significant increase in the number of real estate investors holding multiple properties since the start of 2024. While the overall market faces high interest rates, low yields, and rising risks of price declines, the segment of investors owning nine or more apartments has grown by 20%, reaching 1,067 households last month compared to 891 at the beginning of the year. This rise outpaces the 8% growth in single-property owners and the 13% increase among those holding more than one property.
According to the Tax Authority, there are approximately 1.77 million households owning a single apartment and an additional 424,000 investors holding at least two properties, collectively owning over one million apartments. Although exact numbers are unclear due to partial ownership and varying usage, about 30% of all apartments in Israel, around 900,000 units, are rented out, according to the Central Bureau of Statistics. The Tax Authority’s focus on the number of owners and their holdings highlights a trend of "heavy collectors" who actively manage large portfolios, contrasting with smaller investors who treat property as passive income.
This growing group of large-scale investors suggests a shift from passive rental income to long-term managed business ventures. Despite warnings from the Treasury’s Chief Economist about declining rental stock due to investors selling more than they buy, the Tax Authority data indicates that inheritance and land combination deals with developers contribute significantly to new property acquisitions. These factors complicate the assessment of the rental market’s supply.
Socially, the data underscores widening economic disparities in Israel. While only 8% more households have acquired their first home in the past two and a half years, the number of wealthy investors with nine or more properties has surged by 20%. This affluent group is capitalizing on current market conditions, including decreased demand and favorable purchasing opportunities, as reflected in increased mortgage loans for high-value properties exceeding five million shekels.
The Tax Authority also notes that owning more than ten rental apartments is taxed as a business, though courts still determine whether such holdings constitute passive income or active business operations. This evolving landscape points to a sophisticated investor class reshaping Israel’s real estate market amid challenging economic conditions.