Hamburger Evron & Co.

  • 27.5.2015, “Give Benefits when buying second-hand apartments too”, Ynet

Attorney Dor Shacham – senior partner and member of the executive board at Hamburger Evron & Co., recently participated in the 2015 Real Estate Forum hosted by Dun & Bradstreet. Attended by top executives from the leading real estate companies in the economy, the Forum held in-depth discussions on the state of the real estate market in Israel.

Adv. Shacham, as quoted in the Ynet article below, was of the opinion that an increase in the supply of homes in the periphery is not the solution to helping more young people onto the property ladder, not least because the periphery town mayors prefer to attract investment in commercial space. The way around the heavy price tag of Israeli apartments, he believes, is by more construction in the center so that the periphery will benefit from the run-on effect.

27.5.2015, “Give Benefits when buying second-hand apartments too”, Ynet

At the Real Estate Forum of the Dun & Bradstreet Group, Segi Eitan, CEO of Properties & Building Corporation (PBC), suggested the promotion of government loans and grants – not only for new apartments: “The second-hand market is the engine.” Oren Hod, CEO of Africa Israel, was critical of the government: “People understand that political sound bites have
no influence – and rush out to buy apartments”

Have apartment buyers lost faith in the government? if you ask the contractors, the answer is yes.
At the Annual Real Estate Forum of the Dun & Bradstreet Group, held today (Wednesday) in the Group’s offices in Givatayim as part of “DUN’S 100” Forum for the Real Estate industry, the heads of leading real estate companies in the economy argued that the lack of stability in the sector arises from the repeated announcements of new plans. “People understand that the sound bites of the politicians have no influence – and rush out to buy apartments. They’ve stopped believing in what is said in Jerusalem,” said Oren Hod, CEO of Africa Israel.

Segi Eitan, CEO of PBC, added that “the lack of stability in the sector stems from the fact that every now and then there is a new plan, some new spin.” She proposed promoting the provision of loans, grants and benefits for young couples to buy a second-hand apartment and not only to buy new apartments, like the zero VAT program that was shelved and the target price plan. “The second-hand market is the engine,” she emphasized.

Yigal Damari, CEO of YH Damari, blamed the government for the high price of housing: “We must internalize it – the State of Israel does not want to reduce prices. The moment it reduces them, its tax collection will be hit.” he claimed.

Gil Geva, CEO and owner of Tidhar, related to the problem of construction workers. “There aren’t enough workers in the country – there are no engineers here. This is foolishness. Every year 500 engineers who came to Israel from the Russian Aliya retire, and there is no one to replace them. We need a responsible process, not to repeat the same mistakes time and time again.”

Tzah Berki, VP Data and Research and Chief Economist at Dun & Bradstreet, explained to the audience that housing prices around the world are rising. “The reason for this is the low interest rates,” said Berki. “We are seeing an increase in most countries and some have outpaced the rise in house prices in Israel. In Ireland, for example, housing prices are three times higher than ours are here.”

“The supply must be increased in the Negev and the North”

Tamir Dagan, CEO of Shikun & Binui Real Estate, spoke of the initiative of new Finance Minister, Moshe Kahlon, to raise the purchase tax on investment apartments. “I don’t know what the ‘Kahlon Plan’ is, but to his credit it can be said that he did not get up and say, ‘I’ll reduce prices by 30% within a year.’ Last year there was euphoria when there was a slowdown in demand, but the moment the zero VAT plan fell, we saw a rapid rise last December. This ‘bang’ is only effective for a month or two. The investors, ‘the bad guys’ that everyone attacks, fulfill the function of the State. After all, in this country there are no apartments for rent.”

Ohad Danos, Chairman of the Real Estate Appraisers Association, also addressed the issue of the real estate investors. “I’m very disappointed in Kahlon,” he said. “Despite the fact that government changes here every two years, the Finance Ministers repeat the same mistakes over and over again, and pursue the easy solutions – to suppress the demand. Now they also want to wipe out the investor market and quash it.”

Yeki Reisner, CEO and owner of Reisdor, added in this context: “Everyone is talking about Kahlon and no one is talking about Housing Minister, Yoav Galant. The only chance of something perhaps happening in the housing market would be if Kahlon were to remain as Finance Minister for four consecutive years. At the moment I don’t see a solution, given that he will be replaced within two years.”

Shaul Lotan, CEO and owner of Meshulam Levinstein, addressed the issue of the supply of apartments in Israel. “Increasing the supply can be done by releasing land more quickly, and drastically cutting the authorities’ bureaucracy,” he argued. “When I need to have a building permit issued every two years, I get held up on projects for many years. As long as we are controlled by legal advisers, nothing will every happen here.”

Adv. Dor Shacham, senior partner and head of the Real Estate Department at law firm Hamburger Evron & Co., referred to increasing the supply in the periphery towns, arguing that “an increase in supply in the periphery won’t help. Mayors in the periphery towns are not interested in increasing the supply, but prefer commercial space instead. An increase in supply should be in the centers of demand, because this is the only thing that will lead to construction in the periphery.”

Reem Aminoach, a founding partner in CPA firm Steinmetz, Aminoach & Co., also related to the periphery towns. “As long as there is no proper transportation in the periphery, prices will not fall,” he said. “To lower the prices, there’s a need to handle land in the center. The IDF and the Defense Ministry hold a lot of land. They want to free land up – and we must work towards this happening. If we take steps to resolve the funding problem and move the bases to the periphery, land will become available in the central area, and so too permanent force personnel will move there.”

To this Damari added that “There is a need to increase the supply in the Negev and in the north. Today the whole of Israel is in demand. Five years ago they promised to evacuate military bases from the center and so far nothing has happened. To evacuate the bases in the center, bases are meant to be built in the Negev and the north, but I haven’t heard of tenders in recent years.”

Daniella Paz Erez, CEO of real estate consultancy Paz Economics & Engineering, explained that the question of planning is already behind us: “We’re seeing a transfer of the director of planning and of Israel Land Administration. The issue here is that this is in fact an attempt to regulate what has happened since Trachtenberg – while there are successes in accelerating planning, they simply aren’t apparent yet. The real estate industry is not a speedboat but an aircraft carrier: it takes time for processes to crystallize.

“I don’t see how the country will create construction without a plan to absorb such a large volume of work when it’s investing 30 billion shekels in transferring army bases to the Negev and billions on trains. They deal with what’s right under their nose. Even if they suddenly have a eureka moment and tomorrow fly in teams from Turkey so there will be production capacity, we will then have a problem with the banks because there is a limit of 20% of credit. Some good advice for Kahlon – do some strategic planning of the need and everything required to fulfill the need, the planning issue is solved – it is simply not visible, the issue of barriers too; the wagon has departed.”

Avi Jacobovitz, CEO of Gav-Yam, addressed the office market in Israel. “The market for offices is really hot right now and is totally on a roll. We are seeing an expression of confidence in Israel by international high-tech companies, such as Apple, which opened a center in Herzliya, and the Microsoft campus in Haifa. It’s a market that is experiencing high demand and is constantly expanding. The high-tech park in Beer Sheva, for example, is truly a statement of the country.”Jacobovitz emphasized that “We are at full occupancies in this arena, but there’s a need for improvement in infrastructure, roads and railways.”