Avissaror Reveals Narrow Margins and Risks in Lod Residential Project Ahead of IPO
Avissaror, a real estate developer preparing for its stock market debut in Tel Aviv, disclosed in its prospectus that its flagship residential project in Lod's International Quarter is facing very slim profit margins. The company expects to generate 540 million shekels in revenue from selling 227 apartments ready for occupancy in about 18 months, against direct costs of 504 million shekels, resulting in a gross profit margin of less than 7%, or roughly 160,000 shekels per apartment.
The prospectus also revealed that if apartment prices in Lod fall by 10%, the project would incur a gross loss of 11.5 million shekels, with net losses likely to be much higher once financing, marketing, and taxes are factored in. As of the end of 2025, 190 apartments (84% of the total) remain unsold, despite the project’s launch nearly two years earlier. This situation contrasts with another Avissaror project in Ashdod, where the company anticipates a 43% gross profit margin, though no sales have yet occurred there.
The Lod project was part of a major government-backed urban development plan initiated about a decade ago, with Prime Minister Netanyahu attending the launch ceremony. The neighborhood is planned to include over 11,000 apartments, about half of Lod’s current housing stock. However, the area is now saturated with competing projects, and infrastructure development, particularly key road connections managed by the state, has lagged, dampening demand and prices.
Land prices have also declined sharply. Avissaror paid 1.05 million shekels per apartment in land costs in May 2022, while recent government land tenders in the same area have seen prices drop by 26% to 773,000 shekels per apartment. Sales have slowed dramatically, with only 13 apartments sold in the past year and a half compared to 25 sold before construction began.
This case exemplifies the risks in real estate development when land is purchased during market peaks but sales and prices fall during construction. Avissaror’s Lod project still projects a modest profit on paper, but even a small price drop could push it into loss. The company’s IPO disclosure highlights the fragile economics of large-scale housing projects amid changing market conditions.