(photo credit: ORCITY.CO.IL)
The downfall of Inbal Or’s Or City Real Estate has been a spectacle in the Israeli media, and Tel Aviv District Court Judge Eitan Israel Orenstin’s decision Tuesday to liquidate the company will certainly have negative repercussions.
Those negative repercussions, however, will fall mostly on the several hundred people who expected to have homes in the company’s projects in coming years.
For most people, buying a home is the biggest investment they will ever make, and some of the Or City purchasers will have made that investment without getting an apartment in return.
The reason is that they did not buy apartments, per se, but what one analyst called “the idea of the right to an apartment once it was built” through a special type of joint ownership scheme. For those whose projects were already far enough ahead that the land was purchased, they may yet see an apartment down the line, though it may take much time and money before they do. Others will simply have to hope that some money is left for them after the liquidators sell off the company’s assets.
Despite the media attention paid to Or City, it was a relatively small company in Israel’s market, and its bankruptcy isn’t expected to have an overall effect on, say, the housing supply or the overall price of homes.
It may, however, invite more regulation to ensure that regular people are not duped into parting with their money in unstable housing schemes.