Delays in Apartment Deliveries Hit Long-Term Rental Companies' Revenues
Delays in the delivery of apartments are increasingly affecting long-term rental companies in Israel, which are already struggling with low yields amid rising financing and interest costs. Several leading real estate investment trusts (REITs) reported significant postponements in apartment handovers during the first half of 2026, impacting when these projects begin generating rental income and thus affecting their financial results and future revenue forecasts.
Migorit, Israel's largest REIT, currently owns 2,209 apartments and is developing an additional 279 units. The company disclosed receiving about 13.9 million shekels in compensation for delays from five projects in the first half of 2026 and has filed five lawsuits against developers over late deliveries. Despite these compensations, Migorit reported a net income shortfall of approximately 6 million shekels due to the delays, with potential future revenue losses expected as well. Notable delayed projects include "Etz HaChaim" in Jerusalem (80 apartments delayed by up to a year), "Welcome" in Bat Yam (26 apartments delayed nearly two years), and "Community Lodge 62-64" in Tel Aviv-Yafo (21 apartments delivered months late).
Azorim Living, another REIT, experienced delays in 98 apartments in the Park HaYam neighborhood of Bat Yam, with delivery postponed by over a year. In March 2026, the company purchased 11 additional units at a price reflecting a 7.7 million shekel compensation for the delay. Azorim Living reported 3.7 million shekels in delay compensation in the first half of 2026, compared to 4 million shekels for all of 2025.
Abu Family Residences also faced delays, mainly in 2024 and 2025, involving 60 apartments including those in the Imri Towers in Ashdod and other projects. The company received 1.15 million shekels in compensation in 2025 and 205,000 shekels in 2023. These delays have become common due to the war and severe labor shortages in the construction sector.
The Israeli Supreme Court ruled that delay compensation claims must be handled individually in courts, rejecting calls to treat delays as force majeure. According to Amendment 9 to the Israeli Apartment Sales Law, buyers are entitled to monthly compensation starting from the second month of delay, ranging from full rent for similar apartments to 150% of rent after ten months. Industry stakeholders have urged government intervention to address the widespread delivery delays.
Summary: Israeli long-term rental companies face significant financial impacts from widespread delays in apartment deliveries, with major REITs reporting millions in compensation but also substantial income losses. These delays, exacerbated by war and labor shortages, have led to legal disputes and calls for government action to mitigate the ongoing challenges in the housing market.
