Israeli Real Estate Developers Expand Into Construction to Gain Control Amid Industry Challenges
In recent months, several major Israeli real estate developers have moved to acquire or establish construction subsidiaries, aiming to enhance competitiveness and control over their projects. This trend, accelerating since November 2025, includes deals such as Mehadrin's acquisition of a majority stake in Pi Engineering, Shoval Engineering's purchase of contractor Yitzhak Stern for 150 million shekels, and Rami Levy Real Estate's agreement to buy 80% of Rashit Building. Superin Holdings also announced the creation of its own construction arm, Superin Construction.
Lawyer Dor Avineri from Lipa & Co. explains that developers seek to improve tender competitiveness by offering both experienced development and quality construction under one roof. Controlling the construction process allows developers to manage project pacing, specifications, pricing, and ultimately improve service and quality for buyers. The rising costs and complexities in construction, exacerbated by labor shortages following the "Sword of Iron" conflict and supply chain disruptions, have made in-house construction capabilities increasingly valuable.
Executives like Superin's chairman Tsahi Superin and Shoval's CEO Yishai Rot emphasize the strategic importance of owning construction arms to ensure quality, customer experience, and operational flexibility. Rami Levy Real Estate's CEO Moti Hazan highlights the economic and managerial benefits, noting that owning a construction company provides synergy and greater control over a growing project pipeline.
PwC Israel's Guy Freminger adds that beyond cost control, developers view construction arms as strategic assets that reduce reliance on external contractors, lower project risks, and enhance credibility, especially in urban renewal projects where buyers demand certainty. However, experts caution that entering construction is complex and not suitable for all developers, requiring significant operational expertise and management.
Despite challenges, industry insiders predict continued expansion of developers into construction, driven by market demands and the need for integrated project control. Avineri notes that tenders increasingly favor developers with construction capabilities, making this integration a critical competitive advantage in Israel's evolving real estate market.
