Almogim Sells Apartments at a Loss to Megurit Amid Israel Housing Market Slowdown
The slowdown in residential real estate sales and rising construction and financing costs are straining Israeli housing developers, with some gaps being filled by rental REIT funds. This dynamic is evident in a recent deal between Almogim and the rental REIT fund Megurit. Almogim, which began marketing a 311-unit project in Rehovot in 2023, had sold only 124 units (40% of the project) by early 2026, including 22 units sold since the start of the year. To address the slow sales, Almogim agreed to sell 54 units to Megurit for 117 million shekels, averaging 2.2 million shekels per apartment. This price is lower than the average prices of 2.4 million and 2.5 million shekels seen in 2025 and 2024 sales, respectively, reflecting a discount due to the bulk purchase.
Almogim expects this transaction to result in a 6 to 7 million shekel loss in its annual financial reports but justifies it as a move to align the project's construction pace with its lagging sales. The project’s construction, which started in 2023, is expected to complete by 2028. The company’s gross profit margin on the project has declined from 13% in 2023 to 10%, due to increased construction costs rising from an estimated 647 million shekels in 2023 to 688 million shekels by mid-2026.
Beyond Rehovot, Almogim has three other projects totaling 364 units expected to finish by next year, with sales rates ranging from 41% to 76%. The company has also offered buyer incentives, including contractor loans on 70% of transactions in early 2026, which led to 7.4 million shekels in interest expenses and a 2.3 million shekel revenue reduction, compared to 26% of deals and 4.2 million shekels in interest costs in 2025.
Financially, Almogim’s revenues jumped 49% to 232 million shekels in the first half of 2026 compared to the previous year, but rising construction costs cut gross profit by 13% to 30 million shekels. Financing expenses more than doubled to 32 million shekels, turning a 4.2 million shekel profit into a 13 million shekel loss.
Megurit has similarly supported other developers by purchasing large apartment blocks to offset slow sales, such as buying 47 units for 191 million shekels in a Tel Aviv project last year and acquiring 52 units from Aura’s project in Hadera in May 2026, where sales have also lagged.
