The Israeli real estate boom

 Itzik Teshuva (photo credit: EITAN TAL)
Itzik Teshuva
(photo credit: EITAN TAL)

The real estate sector in Israel is as strong and steady as ever, despite the ongoing coronavirus pandemic, Itzik Tshuva, founder and owner of the Itzik Tshuva Group, recently told The Jerusalem Post.

 Tshuva recently sat down with The Post to discuss trends in Israeli private and commercial building, the effects of the coronavirus pandemic on the market, and the measures that need to be taken to reduce the rising costs of real estate in Israel.

“During the coronavirus pandemic, in the building sector, we continued to work - both in the office, and in construction work went on as usual,” he said.

What the pandemic did impact however, he said, were government offices and financial institutions that all moved to a remote work model.

“Municipalities began working with minimal staff and so this really concerned entrepreneurs seeking to advance projects,” he said.

“Though ultimately, people continued to work and even though there was less manpower we found that the responses were actually faster and more to the point,” he added. “Suddenly a municipality was closed on certain days, but on days when people came into work there was a sense of urgency in getting approvals for building plans and the same with the banks and so on.”

Nevertheless, Tshuva said that in the first few months of the pandemic there was a great deal of uncertainty.

“There was a lot of uncertainty specifically over developing office buildings, but very quickly this proved to be otherwise,” he said. “People did want to go back to the office and companies did want to continue to expand and so demand for office buildings went up immensely a few months after the pandemic.”

During the coronavirus pandemic, he said that with regards to office buildings, his company sold three major commercial real estate projects.

The first was Metropolin, a 28,000-meter commercial real estate complex in Netanya. “We sold it all in one year - 100% in 2021,” he said.

The office buildings, located in Netanya and Rishon LeZion, he said were marketed entirely during the pandemic.

During this past year, his company also marketed three new residential buildings in Netanya. “We quickly sold almost all of the apartments in these buildings and though we are only in year one of construction there are only a handful of apartments left,” he said.

Tshuva said that he has several ongoing residential real estate projects in Netanya, Tel Aviv, and in Jerusalem. As well as many plots of land in Netanya for future real estate projects that his company acquired during the pandemic.

“We see that every building we send out for marketing, we are selling at a much faster rate than in previous years,” he said.

He attributes this increase in sales to the coronavirus pandemic and the “new mentality” it has brought out in people.

“Today people are making decisions much faster in terms of buying,” he said. “During the pandemic people would go into the supermarket and buy things very quickly and get out for fear of contracting the virus. They also started to shop online, where buying things is easy, with the click of a button. So this all also translated into real estate. People are buying houses or office buildings without much hesitation.”

Still, despite the increase in demand, Tshuva said he believes that in the near future there will be a slowdown in the increase in real estate prices.

“Prices will stop climbing in the very near future,” he said. “Though after this slowdown I think they will start to climb again.”

The most significant issue regarding putting a stop to the increasing real estate prices, he said, is the need to shorten the time for approvals of building plans.

According to Tshuva, it takes a minimum of three years to receive approvals once an entrepreneur submits plans for a new project.  Overall, he said it can take up to six years from the time he purchases a plot of land until he can start construction.

In comparison he said, in the United States it takes roughly two years for developers to receive approvals and start construction.

As such, he said the current administration is working on legislation to shorten this timeline, led by Interior Minister Ayelet Shaked.

“Time is a very important factor,” he said. “If real estate entrepreneurs are able to build in half the time that it takes today, they will be able to invest their money over a shorter period and as such this will reduce costs, which will in turn reduce the prices of apartments.”

Looking to the future, Tshuva said he is very hopeful that the government will be able to ease the bureaucracy as it is in the interest of everyone involved.

“In real estate we are optimistic, we worked throughout the pandemic and even now, with the Omicron variant, and whatever other variant will come we will continue to work and build new projects,” he said.     

This article is taken from The Jerusalem Post Annual Executive Magazine 2021-2022. To read the entire magazine, click here.

This article was written in cooperation with Itzik Tshuva Group