Israeli Real Estate Firms Boost Bond Issuance Amid Market Slowdown

Israeli real estate and construction companies are increasingly turning to the capital markets to raise debt through bond issuances, driven by high interest rates and a persistent slowdown in the property market. This trend allows companies to diversify funding sources, secure longer-term debt, and reduce reliance on the banking system.

In 2025, the number of real estate companies issuing bonds surged to 30, a significant jump from the seven to eight companies annually between 2022 and 2024. This momentum continued into 2026, with 17 companies issuing bonds so far. The total volume of debt raised also increased, reaching approximately NIS 34.5 billion in nominal value from January to July 2026, a 3% rise compared to the same period in 2025 and a 37% increase over two years. The real estate sector now accounts for about 27% of all bond issuances.

New entrants to the bond market are primarily from the construction and entrepreneurship sectors, making up 44% of new issuers. Additionally, companies focused on income-generating properties abroad, including those registered in British Virgin Islands (BVI) for tax advantages, represent 31% of new issuers and contributed 51.5% of the total issuance volume. Israeli income-generating property firms constitute the remainder.

Experts attribute the rise in bond issuances to the challenging market conditions. High interest rates have significantly increased financing costs, while a slowdown in apartment sales, coupled with favorable payment terms for buyers, has heightened developers' funding needs. Simultaneously, institutional investors and investment funds are actively seeking attractive debt yields, creating a supportive environment for these issuances.

However, significant disparities exist among new issuers regarding debt quality and financing costs. Some companies, like Amim Yizmot, issued bonds at 7.2% interest, while others, such as Avigam Holdings, secured financing at a much lower rate of 3.5%. These differences highlight the challenges faced by smaller, less-known real estate firms in raising capital, with some failing to complete their offerings altogether. Investors are advised to scrutinize individual issuers, focusing on management quality, leverage ratios, equity, and cash flow generation capabilities. For development companies, collateral and project progress are crucial, while for overseas property firms, corporate governance and asset quality are key considerations.