Tel Aviv: End of long-term rental housing? (Photo: Reuven Castro)
Magorit: They are considering closing the business
Are we facing the end of the long-term rental housing option?
At the hearing held this week in the Knesset's Interior Committee, Attorney Erez Rosenbuch, chairman of Magorit, dramatically announced: "We are about to close the business."
"The trend is that in the next week, month or two months we can say Kaddish on the rental housing market," said Attorney Rosenbuch. "It's over.
There is no longer an incentive to buy long-term rental housing.
Today, when the interest rate is 7-8 percent, those who buy an apartment for investment cannot justify renting at a 3 percent return.
There is no financial model behind this, unless you believe in a sharp rise in housing prices in the coming years.
We see a dramatic jump in the rent in our apartments, more than what the CBS advertises and today we have no viability in buying apartments for rent, so apartments like ours are for sale wholesale. The banks are not ready to finance such projects."
"We are nearing the end of the long-term rental housing market. The model that today offers between 7,000-10,000 apartments per year - I wish they would stick to it, if the Ministry of Finance does not agree to this, it is a warning call to all the entrepreneurs we have initiated. We, our investors, are institutional bodies and I have already received inquiries from them in weeks The last ones to break up the fund, sell the apartments and get out of the field. I'm the biggest player in the market, I don't want to think about what happens to the smaller players."
Continuing his words, Attorney Rosenbuch stated that about three years ago they approached the Ministry of Finance with a proposal to fix the market and were promised that a decision would be made on providing a state guarantee, but in practice nothing was done. No funding and no government assistance.
Treasury: Market forces are stronger
Against this background, the chairman of the committee, MK Yaakov Asher, called on the government to find a solution to the situation and put its hand in its pocket, "I was surprised when I saw the scope of those present at the hearing. I was surprised that only one REIT fund arrived, but it turns out that there are no more. You will not escape from the fact that the state has to put Hand in pocket. The state profits from the sale of the apartments."
In response to these calls, Assaf Wexler from the budget division of the Ministry of Finance responded and said that the government prefers that market forces do their thing.
"The state is not afraid to put its hand in its pocket, but it is afraid to create a distortion in the market. In the end, every move that is made will affect the market as a whole. The interest rate is a factor, and it is the most significant player on the market, but in the end there is a private market and if the state intervenes in the costs, it will cause more damage than a benefit. The REIT funds are almost untaxed, the tax rate is zero so the state does not profit at all from these projects. The marketing mechanisms in apartment projects for rent are such that for each apartment marketed the state loses thousands of shekels
His words were reinforced by Arbel Altoshler, Director of Taxation and Real Estate in the Accountant General's Division, who said: "The state intervenes in the institutional rental market through, among other things, taxation measures, waiving of income, real estate marketing and planning and construction, and this is promoted in the Settlements Law as well. Is this enough? There is always thinking and not It is unlikely that further steps will be taken in the future. I will not say that there is no problem and we support the institutional rental market. We examined the issue of a state guarantee at length and found it to be less relevant. This is an intervention in the financing market and the state guarantee is a limited tool and has certain uses."
'Apartment for rent': we need the private market
Oral Yafarah, the CFO of the Apartment for Rent company agreed with the words of Attorney Rosenbuch and said, "'Apartment for rent' is a significant factor in land marketing, but we also need the private market, where the most significant player is the REIT funds. From an economic point of view, I agree with Erez In every word. What can be done is to take care of the financing tools, and on the other hand, these funds need to be given some flexibility so that they can sell these assets every few years and bring money home to the investors. If there is not a quick solution to the interest issue, we are in a problem."
Real estate
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Long term rental
real estate