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The worst year in the last decade: out of about 300 complexes marketed by the Israel Land Authority in 2023, it was only able to put out to tender about half.
This is according to an analysis of the Madelan site for Rami tenders.
According to Madelan data, only about 50% of the complexes that were marketed in 2023 were successful and a winner was found for them, the rest of the complexes remained on the shelves of Rami and will probably be marketed again in 2024.
For comparison, in 2022 Rami marketed a similar number of plots, but the success rates were high: 86%.
In apartment marketing, Rami marketed about 48 thousand apartments in the past year, of which 58% were successfully marketed, which is 28 thousand apartments.
In 2022, a similar number of apartments were marketed and only the marketing of about 10% of them (4,757 apartments) failed.
Dividing it into halves, it can be seen that the first half of 2022 was particularly successful, with 94% success in the marketing of apartments, while the second half of the year already saw a certain decrease in light of the increase in interest rates in the economy, the legal reform and the protest wave.
The difference between the first and second half of 2022 reflects the beginning of the interest rate hikes in April 2022, when it continued to rise up to a rate of 4.75% after a row of 5 interest rate hikes, and when the starting point is an almost zero interest rate of only 0.1%.
For this reason, we also did not see an immediate change, and from one increase to the next, the situation of the apartment buyers continued to deteriorate, and at the same time, the financing on the land became more expensive and the banks became more selective in terms of providing financing.
Let's recall that 2023 began with a particularly bad starting point, when the stagnation in the housing market was joined by the war starting on October 7, and the situation only got worse.
Where was the hardest hit in marketing?
In the division into districts, 2023 ended with a decline in all districts, with the most severe damage being in marketing in Judea and Samaria.
In 2022, 1,600 were sold there and the success rate was 96%, in 2023 only about 230 apartments were sold and about 90% of the marketings failed.
In the southern and northern districts, the success rates in apartment auctions in 2022 were 85% and 91%, respectively, compared to success rates of only 49% and 54% in 2023, respectively.
The districts that ended the year with a milder impact were the Center and Haifa, with success rates of 76% and 71% respectively, and Tel Aviv and Jerusalem also managed to reach rates of 69% and 67% respectively in marketing.
The figures that have been published now are not surprising, as mentioned, since from the moment the interest rate began to burden the financing costs of the entrepreneurs, they strove to reduce the existing obligations, reduce as much as possible the taking of new loans, and increase liquidity.
Some of the companies directed much of the activity to urban renewal where the financing burden is low since the costs do not include the land component;
and accelerated construction on lots in their inventory.
The decrease in the scope of marketing has an effect in the medium and long term, since each lot that is marketed requires the promotion of a plan and the subsequent receipt of permits, so the time that passes from the moment of winning to the start of construction is not immediate and can take years.
In the proposal of the decision-makers that was presented recently, the Ministry of Finance proposed a subsidy for the development expenses in the periphery, in settlements that are up to 10 km away from the northern border or the Gaza Strip, for places where the attempt to market plots for residential construction has failed in the last year to the last year and a half in the range of 50%-35%.
Tal Kopel, CEO of Madeleine/Orit Panini
Tal Kopel, CEO of Madelan, said regarding the data: "Like the entire real estate market, Rami did not have a successful year in land marketing either.
Although there was a slight recovery between the first half and the second, and the success rate increased from 54% to 60%, it is still not the success levels of 2022. The situation can be attributed to interest rate increases: many entrepreneurs chose not to enter into long-term projects when the level of interest they will pay during them is not is known and is on the rise.
From this point of view, the lowering of the interest rate brought about by the war, and the expectation that the interest rate will not rise again in the near future, are an important and positive calming siren for the market, but the war itself is not good for it, especially in the areas of tension in the south and north."
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