Israeli Economy Weathers Global Storm

The country's real estate sector also has remained strong—and largely untouched by fallout from the subprime crisis that has hit many other markets. Rents for prime office space in the Tel Aviv area rose by nearly 40% in 2007, and while that's expected to slow this year, analysts still expect gains of 10%-15%. "Our occupancy rate is approaching 100% and we've got a long waiting list," says Arnon Toren, CEO of the Azrieli Center, the largest office complex in Tel Aviv. The situation is much the same at other major office blocks in Israel's financial capital. A leading Tel Aviv real estate company searched for nearly six months to find suitable premises to house the Israeli operations of two leading foreign investment banks.

Commercial real estate has been almost as strong and shows no signs of any letup. Few, if any, vacancies are being reported at any of the country's dozens of shopping malls, and rents are continuing to rise. The sole exception is residential housing, where prices have stabilized, particularly at the high end. The main reason is a sharp decline in the number of foreign buyers, who have previously driven up prices of luxury properties in Tel Aviv and Jerusalem.

The market for expensive real estate in Israel is still strong

Neither the one or the other. A REIT fund invests in real estate that yields an income; they are rented out, and that is the profit of the investor. A VC fund invests in technology, and it is high-risk. We use the money put in by our investors to build residential real estate projects, or even non-residential real estate projects, which are then sold. We do not invest in rent-yielding property, and we are not a high-risk investment like a VC fund. We have two funds, for which we raised $100 million. Since we can get bank credits for 80 percent of the cost of our projects, it means that we have more than $900m. at our disposal. We are now in the process of raising a third fund.

Fifty percent of our investors in the FAIRE 1 Fund were Israelis. In the second fund, only 25% were Israelis and the other 75% were from the USA, the UK, Canada, South Africa, Belgium, etc.

Largest Israeli real estate firms double assets

Israel's top 50 real estate firms increased their investment by 94% to an aggregate NIS 203 billion, reveals Dun & Bradstreet (D&B) Israel's Dun's 100 Real Estate company rankings.

The five largest real estate firms in Israel in 2007, by investment in assets and lands, are Gazit-Globe (TASE: GLOB), Delek Real Estate Ltd. (TASE: DLKR), Jerusalem Economic Corp. (TASE:ECJM), (JEC), Electra Real Estate Ltd. (TASE:ELCRE), and Africa-Israel Properties (TASE: AFPR). The survey reveals that the combined equity of the top 50 companies totaled NIS 61 billion, a 132% increase compared with 2006.

Optimizing Your Finances In Israel

Nefesh B’Nefesh is sponsoring a pre-aliyah finance seminar to be held on Sunday, May 18, 10:00 a.m.–12:00 p.m. at the Holiday Inn JFK, 144-02 135th Street, Jamaica, NY. The seminar, called “Optimizing your finances in Israel” will feature two experts, Philip L. Stein, CPA, and Debbie Rosen-Solow, attorney at law, who will discuss finances, tax issues, and real estate in Israel.

Topics include financial planning and budgeting, the new tax laws in Israel and how they affect you, and buying and renting your home in Israel. For more information or to register, go to www.nbn.org.il/seminars.

Developers target Tel Aviv area for more office space

During the past year there has been a flurry of activity in office real estate. Many developers are starting new projects or busily finishing others. In the Azrieli compound, the new square tower, the last of a trio, is going up. A 70-story office/residential tower is planned where the Elite factory used to be, while more high-rise buildings are being built, or being planned, along the Ayalon highway in the Petah Tikva Industrial Zone and in the Herzliya hi-tech industrial area.

But despite the flurry of activity experts believe that by the end of the year there will be a shortage of 400,000 meters of office space in the Tel Aviv metropolitan area.