Although violence in the North has certainly affected economic activity in the region, experts believe the impact on the Israeli economy as a whole will likely be minimal and that the real estate market will emerge relatively unscathed if the conflict does not go on for a prolonged period. "If the war comes to a satisfactory conclusion in a relatively short time, I believe it will have a positive impact on the market. Victorious wars, even mini-wars, usually have a very positive effect on the economy," Ilan Baharal, CEO of ZUK, a real estate company that deals with development and construction work, told The Jerusalem Post. The short-term picture is different, however. "At the moment, demand for real estate is frozen as the market adopts a wait-and-see attitude [regarding the war] and both buyers and sellers are sitting on the fence," he said. This was a common theme voiced by real estate operators surveyed. Many even believe that the war ultimately could have a positive impact on real estate with an upsurge in demand when it's all over, although expectations of a demand surge may only prove to be psychological in nature. In any case, the dominant sentiment is that unless the conflict is a prolonged one, the market will thrive. "In 2004, there was a big overhang of office and commercial real estate in the central areas, including the coastal strip extending from Netanya, Tel Aviv and including the Rishon, Rehovot area. In Jerusalem and Haifa there was an overhang of over 30 percent," said Jackie Mukmel, the CEO of MAN Properties, which specializes in marketing non-residential real estate. This, he said, was equal to approximately one million square meters of empty unused space. But he noted that in the past 18 months real estate has undergone what he called a steady, gradual and sustainable recovery. Now, he noted, the overhang in both office and commercial real estate has fallen to 15% due to the growth in demand because of the increase in economic activity and the fact that in the past five years or so there has been practically no new construction, especially in office buildings. "Real estate is in good shape because of the upsurge in the economy. The present war will only negatively affect real estate if it lasts much longer than expected and consequently damages the economy," Mukmel said. The impact of the conflict on the residential market also was expected to be minimal. "The residential real estate market, at this time, is undergoing a process of recovery,"said Shlomi Hasson, CEO of Parrisat Hassoni development and construction company. "The annual rate of housing starts in the first half of 2006 is approximately 30,000, which more or less equals demand. The overhang in residential real estate is very small, if at all, and in such places as Tel Aviv and Jerusalem I very much doubt if there are many unsold residential units." However, Erez Shaked, vice president of sales at Y H Dimri Development and Construction Company, which has building projects from Eilat to Netanya, paints a different picture of the war's impact. "The war is affecting real estate and there is a drop in sales," he said. "If the war ends by the end of July or mid-August things will return to what they were at the beginning of July, which means relatively strong demand for real estate whether residential, commercial or office in the central areas of the country and depressed demand in the peripheral areas. If the war lasts longer, there may be unexpected developments, which may influence not only real estate, but also the economy in general." Shaked added that he does not believe overseas demand will be affected by the conflict since most of the demand is based on Jews from France buying a house or apartment in case things get too hot for them in their home country, or from Jews in English speaking countries who either want a second home in Israel, want to move to Israel or want to retire in the country. "This demand will stop only if the war causes dramatic changes - something I do not believe will happen," he said.