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"About a third of the companies involved in the real estate industry are at high risk" - Walla! Real Estate

2023-02-23T15:44:18.182Z


The high interest rate, the decrease in the number of apartments being sold, the level of risk in the industry and more: the annual Duns 100 forum of the real estate legal industry dealt with burning issues on the agenda


The annual Duns 100 forum of Dun & Bradstreet for the seniors of the legal branch in the field of real estate, was held last Tuesday (21/02) under the guidance of the journalist Dafna Shahar, in which the seniors discussed the burning issues on the professional agenda, including the impact of the Settlements Law, the Shaked alternative , the beginnings of residential construction in Israel and the ongoing shortage in the supply of apartments, urban renewal projects as the main beginnings of construction in Israel, the significant decrease in the number of apartments sold due to their higher prices, the decrease in the index of residential construction inputs, the high level of risk of the industry and more.



According to Sheila Zebro Weiss, manager of the Duns 100 department: "We are currently witnessing a continuous shortage in the supply of apartments reaching about 100,000 apartments. The continuous shortage of supply in the face of high demand that prevailed until recently pushed the prices of apartments up, despite the moderation in demand. According to estimates Dan & Bradstreet, about a third of the companies involved in the industry are at high risk and extensive steps must be taken so that the current slowdown in the sale of new apartments and their increase in price is stopped."

"Many entrepreneurs and contractors prefer to 'sit on the fence' and wait when construction of new projects begins" (Photo: ShutterStock)

Attorney Yohai Dor, a partner in the real estate department, Salomon Lifshitch, reinforces the words of Zebro-Weiss, and says that, like buyers, many entrepreneurs and contractors also prefer to 'sit on the fence'.

According to him, "The increase in interest rates by the Bank of Israel will dramatically increase the cost of financing and reduce the profitability of real estate developers.

The banks are reluctant to grant financing to contractors and to approve projects with low profitability rates."



"As a result, many entrepreneurs and contractors prefer to 'sit on the fence' and wait to start building new projects.

A consequence of slowing down the pace of construction starts is the continuation of perpetuating the lack of supply of housing units and harming attempts to curb the rise in housing prices.

I believe that the effect of slowing the rate of construction starts will give its signals in the near future"

"We were in a real estate bubble and today we are in a state of collapse - someone has to be the responsible adult"

Attorney Ilan Sharkon, founding partner of Sharkon, Ben Ami, Asher & Co., claims that he has a sense of de vivre: "Actually, history repeats itself, these crises were in 2002, they happened because of the financial market, because of the crisis The banker and we return to exactly the same crisis.

People sounded too optimistic to me, I'm very pessimistic.

The state printed a lot of money that flowed into the market, people didn't waste the money during the Corona period and immediately after that it erupted, the interest rates were low and therefore people invested.

Today interest rates are very high and markets have collapsed, including high-tech which is slowly starting to show signs of a very significant slowdown and the real estate market is currently experiencing a very deep crisis mainly because of the issue of interest rates and the state does not want to do anything, it is good for it that prices are falling, the entire investment market, people are not investing in real estate "N.



"All the hi-techists disappeared from the market and what is happening as of today, the housing innovators are also sitting on the fence, the market has frozen. Someone needs to understand this situation, we are in a state of deterioration, we were in a real estate bubble and today we are in a state of collapse - someone needs to be the responsible adult" .

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The annual Duns 100 forum of senior members of the legal branch in the field of real estate - year 2023 (photo: Tomer Neuberg)

To these claims, and a call for the state to take responsibility, attorney Zuriel Picar, director of the real estate department at the Herzog office, joins: "In view of the increase in interest rates and the financing difficulties faced by the real estate developers, I believe that the state can no longer stand by.

She must intervene and actively assist in removing the barriers that prevent the issuance of permits.

This is, among other things, through the establishment of a dedicated, swift and efficient body under the director of planning, whose purpose will be to supervise the planning institutions, and where the planning institution delays approval of plans or permits beyond the deadlines that will be set in advance, that body will be authorized to act under the delaying planning institution."



"In addition, in relation to the publication of tenders by RMI, a responsible government policy must be established, according to which a significant and predetermined part of the cost of the land will not be paid to RMI until the block is removed in a way that allows a permit to be issued in relation to the land subject to the tender. I believe that the pressure that RMI will exert, Both due to its objective strength and due to the aforementioned economic incentive, it will be much more effective than the entrepreneurs' efforts to mediate between the various authorities."

"It is not certain that the headlines about falling prices are news. If so, it is not necessarily good for the long term"

According to attorney Roi Eise, partner and head of the real estate and hotels department at Lipa Meir & Co., in the short term we are witnessing a slowdown and possibly even a decrease in housing prices: "In my opinion, this is the result of a combination of high interest rates and a psychological effect that has a substantial effect. There is a certain moderation expected of inflation later this year, so it can be assumed that people who stopped in the last few months and did not buy apartments, will do so in the future. In the medium term, we will see a return of high demand and this time with fewer companies that in the meantime have left the market for various reasons. Which may lead to over-concentration and damage to competition, when the financing bodies also contribute that the funding opportunities are not equal for all companies".



"Bottom line, it is not certain that the headlines about falling prices are news. If so, it is not necessarily good for the long term. Balance and long-term trends must be created by streamlining urban renewal procedures, incentives for municipalities to encourage residential projects, and a fundamental change in the tender policy of Rami. Accordingly, it is important to continue to encourage the privatization of planning procedures for agricultural land in small and medium-sized complexes, while providing tools and incentives to entrepreneurs. In this context, it is important to note the issue of changing the designation of agricultural land and restitution procedures with agricultural land tenants. The move must be while providing Real compensation for the lessees and in direct compliance with the lease period on the land and the contribution to its improvement."

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Source: walla

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