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consulting
The Israeli Residential Market Daniela Paz Erez Paz Group Founder & CEO
This presentation may not be used for any purpose without direct, written
permission from Paz Group, Ltd.
May 9, 2016 G721001
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Paz Group 2
■ Paz Group is Israel’s leading real estate consultancy (According to Dun’s 100).
■ With nearly 20 years in the industry, Paz’s expertise spans all real estate sectors, including property
appraisals, construction loan monitoring, urban planning, economic research & business consulting.
■ The company has supported thousands of projects in the private and public sectors, including the
monitoring of tens of thousands of housing units and advised on the most complex and critical national
development projects in Israel.
■ Among Paz’s customers: government ministries, local municipalities, banks, real estate entrepreneurs,
developers and contractors.
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Agenda
1. Residential Market Overview
2. Government Policies and Programs within the Housing Sector
3. Construction Potential in Israel
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RESIDENTIAL MARKET
OVERVIEW
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Characteristics of the Residential Units
Multi-family units 61%
Single Family units
39%
Existing 2.457 m residential units
Anticipated types of residential units over the next
decade
Single Family units
29%
3-6 Stories 15%
4-7 Stories 28%
10 Stories and up
28%
2.582m Households Potential of 1m Units
Source: Central Bureau of Statistics and data analyses conducted by Paz Group Ltd.
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Israel’s Housing Shortage: Causes and Triggers
Source: Israel’s Central Bureau of Statistics, 1995 & 2008: Population Census, 2014: Labour Force & Construction Completion Surveys
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Housing Construction and Population Growth
Source: Central Bureau of Statistics, Housing Starts and Completions
Housing Units Housing Starts Project Completions
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Housing Prices
Source: Central Bureau of Statistics, Housing Sales Records and data analyses conducted by Paz Group Ltd.
NIS (thousands)
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Production Process
Land ownership Private
7%
State 93%
The Apartment Production Process
Government goal: 60,000 unit housing starts each year
Zoning Evacuation Infrastructure Construction Permit
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GOVERNMENT POLICIES
AND PROGRAMS WITHIN
THE HOUSING SECTOR
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Residential Units Approved by the Planning Authorities
Source: Interior Ministry, Annual Report 2014
*2016 Development Targets
Residential Units
*
100,000 99,514
Haifa 11,209
North 10,459
Jerusalem 11,651
South 20,524
Center 20,251
Tel Aviv 25,420
North Center Jerusalem
2015 Nationwide 100,000 Units
63,467
75,368
62,553
32,462
24,506 23,409 24,630 23,749
South
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Free Up Land of IDF Bases
IDF Bases 60,000 Units
Defense Industries 40,000 Units
North Center Jerusalem
Development of 100,000 Units
Sde Dov 17,000
Shalishut”" 1,200 “HaKirya” 1,000
Tel HaShomer 20,000
Tzrifin 17,000
Sirkin 12,000
IDF bases and defense industries in central Israel
Israel Military Industries 30,000
Source: Government Resolution 2392.
South
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Transportation Infrastructure for Residential Projects Roads and Public Transport Budget (According to the State Budget) (Million NIS)
North Center Jerusalem
Ashkelon Beer Sheba Railway
Jerusalem Light Rail Extension
Tel Aviv Light Rail
531 + HaSharon Railway
The Metronit (BRT) Extension
Highway 6 Extension
Transportation Projects which support
Residential Development
Source: Ministry of Finance, State Budget 2015
South
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Framework Agreements
Developers Infrastructure
License & Permits
Residents Educational and
Public Facilities
Municipality Development
Costs & Timeline
Government
Increased Housing Stock
Accelerated Development
High Demand Areas
Planning Certainty
Cooperation
Transparency
Haifa 34,000
Jerusalem 8,000
South 57,000
Center 108,000
Nationwide 210,000 Units
North Center Jerusalem
Source: Israel Land Authority and Paz Group Ltd.
South
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Urban Regeneration
Haifa 155,000
North 55,000
Jerusalem 105,000
South 85,000
Center 410,000
Nationwide 810,000 Units
Potential of 10,000 New Housing Units
Per Year
Potential for Urban Renewal
North Center Jerusalem
PINUY BINUY RAZE AND REBUILD Demolition of old buildings and new construction of increased density
TAMA 38 Expansion and reinforcement of old buildings
Source: Data analyses conducted by Paz Group Ltd.
South
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The “Resident Price” Plan
● Can be sold only to non-home owners – by lottery
● Price reduction of at least $50,000 as compared to market prices.
● Construction according to uniform standards.
Haifa 7,000
North 4,000
Jerusalem 5,000
South 5,500
Center 7,500
Nationwide 30,000 Units of 100,000
Government goal
Tenders published thus far
North Center Jerusalem
In 2015-2017 all land tenders will be subject to the “Buyer’s Price”
The “Buyer’s Price” Plan
Source: Israel Land Authority analyses conducted by Paz Group Ltd.
South
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Rental Market
■ Publishing state tenders ■ Purchase of entire buildings ■ New zoning is directed to rental housing ■ Tax benefits and building rights for rental projects ■ Additional 20,000 Student dormitory beds
International Comparison - Percentage of Rentals
Note: The above statistics do not include Kibbutz housing or units rented from family members and close friends.
Source: Central Bureau of Statistics, National Social Survey, 2013; Survey data processed by Paz Group
0.0
20.0
40.0
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Policy Measures to Encourage the Long Term Rental Market
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CONSTRUCTION
POTENTIAL IN ISRAEL
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Residential Units Under Construction
Residential Units
Source: Central Bureau of Statistics, Construction in Israel
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Residential Market Needs
40,000 Units
27 Months
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Summary & Call For Action
Opportunity for foreign
construction companies
Demand for
residential
units
Need for
housing
prices
reduction
Government
support
and actions
Diverse
residential
market
Increased
construction
capability
Shortened
construction
period
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Thank you
Paz Group - Real Estate Consulting
2 Ha-Menofim St. P.O Box 12305
Hertzliya Pituach 46728 Israel
Tel +972 9 9700800 Fax +972 9 9700801
info@pazgroup.co.il www.pazgroup.co.il
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