Itai Shance

Israeli Real Estate- How to Buy Low and Sell High

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Last month, the Israeli Ministry of Finance published shocking data regarding the Israeli real estate market: 2023 was the worst year in the real estate market since the Second Intifada, that’s 20 years ago. Now this may not be a surprise for many, 2023 started with major protests regarding the judicial reform, and came to an end with one of the bloodiest wars that Israel has fought in decades. All this uncertainty put pressure on the market, which has currently come to an almost halt. But all bad news brings with it opportunity in unexpected places, and the Israeli property market of 2024 is no different.

Understandably, at times of uncertainty, people don’t want to buy. They are unsure where the market will go, unsure of where in the country it is safe to invest in, and perhaps most importantly, unsure of their future incomes. All these factors make potential first-time buyers fearful of jumping on the property ladder. But for every hesitant buyer, there are sellers under pressure who are willing to offer very attractive deals, specifically, Israeli property developers.

Developers are desperate for buyers, their entire business model is based on income from new buyers, to support existing and future building projects. They have salaries to pay and materials to buy and they need new buyers to keep the ball rolling. They understand the market well, and therefore, they are offering apartments for sale with super attractive conditions. 

Currently, Israeli developers are selling apartments on plan where you only have to pay as little as 15%-20% upfront, and the rest, upon completion. This is unheard of, presenting real opportunity. It means that buyers can come up with 20% of the amount now, and only borrow/come up with the rest in a year or 2 or 3 when the apartment is ready. 

Normally when buying on plan, buyers will have to pay certain percentages of the full amount throughout construction. These amounts will be increased according to the Israeli Construction Index (which is determined by the cost of building materials, cost of labour etc.). So buyers would have to pay sometimes as much as 3% more than the original price of the apartment due to the index going up.

Now, many real estate developers are allowing buyers to ignore the Construction Index, guaranteeing that they will pay a fixed price upon completion, and not a penny more. This is a huge incentive for buyers and provides them with the certainty they need to buy with confidence. But the real opportunity here is in the growth potential. By not paying an indexed price, and by not paying interest on borrowed money until the apartment is ready, buyers have the opportunity to buy a brand new apartment whose value will have already increased by the time they can live in it. 

In simple terms, buyers who can put down 20% today, and then pay the rest in 2025 when the war will most probably be over, and the market will have recovered, will be in a much better position than those who plan to buy in 2025. Their property will have already increased in value and they will be able to live in it, rent it, or even sell it for a profit, whereas those who waited will buy when prices are higher and payment conditions aren’t as generous.

Yes, the market is down at the moment, but it won’t stay like this forever. Israel’s natural population growth and limited land resources are a constant and will eventually drive the market upwards. Attractive offers like these from developers provide real opportunities for people wanting to step onto the property ladder and also for those who want to climb a little higher. 

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About the Author
Itai Shance is an Israeli real-estate lawyer based in Herzliya. His office deals primarily with buying and selling properties in Israel, family wealth management, and land disputes. Since opening his office he has helped countless new immigrants purchase their first home in Israel.
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