Real estate in Israel/Reuven Castro
A special conference on the "Challenges of the real estate market after October 7", of the Elrov Institute for Real Estate Research, was held last night (Wednesday) at the Kohler Faculty of Management at Tel Aviv University, led and directed by Prof. Dani Ben-Shahar, head Elrov Institute, and Roit Huberfeld is the director of the institute.
The topics discussed at the conference regarding the challenges of the real estate market in relation to the effects of the war: the government's steps to accelerate the real estate industry, real estate taxation, injecting oxygen into the real estate market in three steps, the housing market and the construction industry in Israel and the trends The economy, the repairs that were required before the war and are required twice as much now, the housing plan and the future of the real estate industry, easements for construction in the periphery and conversion of offices to residences in the center, long-term rental housing, aspects of the real estate market and the effects of the war on the housing markets and infrastructure in the short and long term.
According to Shlomi Heisler , the Director General of the Ministry of Finance, who spoke in the first part of the conference: "We plan to implement a set of measures that can lead to a change in the real estate market, including a subsidy to the periphery and an allocation of NIS 1.1 billion as part of a target price of ten thousand (10,000) apartments at NIS 800,000 .
Also, the targeting of benefits on young and homeless couples while maintaining the purchase tax rate on apartments for investors.
Another step is financial relief to encourage long-term rental projects.
As part of the amendment, we will allow another route to be followed in the route of a transaction subject to VAT, he will be able to offset VAT at the very beginning and another series of steps.
All of this is subject to the fact that it will be possible to solve the workers' problem, which is a very serious problem."
"The payment terms offered by the contractors express an actual discount on the price of the apartment"
According to Shay Ahronovitz, director of the Tax Authority, "we see a recovery in residential apartment transactions in December 23, mainly in the field of contractor sales."
According to him, "the payment conditions offered by the 20/80 contractors actually express a discount in the price of the apartment that is not reflected in the report on the deal and hence in the housing price data, therefore the Tax Authority will examine how to give expression to this. We are promoting relief in VAT issues for developers who will build for long-term rental range, this is within the framework of an integrated route that will be added, when the rent will continue to be exempt from VAT and the entrepreneurs will be able to deduct VAT at the beginning, but the sale will be charged with VAT at the end, thus making it significantly easier for entrepreneurs to build long-term rentals. We are also interested in facilitating urban renewal "A 38 and the evacuation of construction in the periphery, the goal is to approve a reduction in the reduced purchase tax of 3% instead of 6%.
" of 5-6%.
This decision will create certainty in the market.
Among the other moves is the examination of the inheritance legislation after twenty years."
Furthermore, Aharonovitz noted that "within the framework of the new committee that was decided to be established, which examines the return of property tax, the Tax Authority will recommend to return and activate the tax using smart computerized means in the operation of the tax."
3 major developments in the real estate market following the events of October 7
According to Prof. Danny Ben-Shahar, head of the Alrov Institute for Real Estate Research at the Kohler Faculty of Management at Tel Aviv University, "There are 3 major developments in the real estate market following the events of October 7: an increase in uncertainty in the market;
A decrease in Israel's credit rating;
and a drastic decrease in the number of workers at the construction sites.
These add up to the deepening of the recession in the real estate market and later - to renewed pressure on apartment prices due to a lack of supply that will be created in the future."
According to Nechama Bugin, the chairman of the Real Estate Appraiser's Chamber of Israel, "injecting oxygen into the real estate market in three steps: urban renewal is the main engine of the residential real estate market, processes such as the mechanism for discussing the appraiser's 21 standard must continue to be optimized.
Housing for rent must become a practical alternative in Israel, real government encouragement is required.
Addressing the infrastructure sector, which is an obstacle to development, the central government should support the local government to enable the development of complexes that have already been planning approved."
According to Dr. Adi Brander, director of the research division at the Bank of Israel, "The activity in the construction industry before the war was on a high scale. The total active construction, the beginnings of construction and employment in the industry were at high levels, and the construction permits and the scope of approvals of the planning institutions indicated a promising "pipeline" of expansion in the coming years. With the outbreak of the war, activity in the industry was greatly reduced. Today, the main obstacle to activity is the lack of workers, due to the absence of Palestinian workers. There is a need to accept Decisions regarding the desired mix of workers and technology in the construction industry, since the arrival of a large number of foreign workers to replace the Palestinians will take a long time, the employment of Palestinian workers involves disruptions during periods of security tensions, and technological progress that will reduce the number of workers needed in the industry and encourage the employment of additional Israelis, involves investments and adjustment processes In addition, it is important to act to promote public investments in infrastructures in order to release the potential of lands whose promotion for construction is conditional on the development of those infrastructures."
According to CPA Iris Stark, former president of the Board of Certified Public Accountants and managing partner in Stark, Stark Accountants "The two strategic moves that will help bring the real estate industry out of the crisis are - encouraging settlement in the Negev and the Galilee by providing free land.
Last September, the state promoted a significant subsidy for settlement in these areas, a move that I proposed to carry out and certainly helped to improve the situation, but following the war, one should be encouraged to take another step and grant free land to the homeless and housing improvers in the rural settlements of the Negev and the Galilee.
In this way, the solution to the housing crisis will be integrated with the essential need of the settlement to protect the borders.
At the same time, entrepreneurs and contractors should be incentivized to build in these places with various benefits."
"The other strategic move relates to the demand areas in the center, and is to lead a policy of converting office buildings into residences. The lack of residential apartments in parallel with the excess supply and the low point that the office buildings in Israel and the world have fallen into, a trend that is clearly seen in the US and may also threaten the stability of the banks, can allow for an optimal solution.
This is by creating a huge supply of apartments in the heart of sought-after cities that can suit young people and families. An integrated model of mixing uses with a mix of 70% for residential and the rest for public and commercial buildings must be promoted. This move requires a government policy that promotes and removes barriers and bureaucracy, to support entrepreneurs who will make the change While providing tax benefits, expediting construction processes such as strengthening buildings and changing TBA.
Prof. Yael Steinhart, the deputy dean of the Kohler Faculty of Management at Tel Aviv University, welcomed the opening of the conference. Speakers at the conference included - Shlomi Heisler, Director General of the Ministry of Finance, Shai Ahronovitz, Director of the Tax Authority, Nechama Bugin, Chairman of the Real Estate Appraiser's Office Israel, Dr. Adi Brander, Director of the Research Division at the Bank of Israel, Dafna Harlev, CEO of the Aviv Group, Yehuda Morgenstern, CEO of the Ministry of Construction and Housing, CPA Iris Stark, former President of the Chamber of Accountants, Dr. Emily Silverman , head of the urban clinic at the Hebrew University of Jerusalem and Raul Sargo, president of the Association of Contractors Building the Ha'aretz.
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