Israel Background & Economics Location Alternatives
Development Areas Property Ownership
Identifying and Registering Property Title Land: Use/Zoning/Building Rights
Leasing Property Purchasing Property
Taxes Tax Status – Categories
Taxes on Transactions Other Real Estate Taxes
Financing Loans Brokrage & Legal fees
Further Professional advice - Appraisal, etc
REAL ESTATE INVESTMENTS IN ISRAEL
InvestOne Real Estate is serving the private Investor's community, capitalizing various real estate opportunities, in order to maximize your investment capabilities and return on investment. Our portfolio encompasses properties, industrial buildings, commercial space (offices & stores). We are matching our properties & services to fit each client's specific needs. Through strategic partnerships with leading developers and agencies we are able to invest in profitable real estate opportunities from the ground up.
Background & Economics
As befits a geographically small country undergoing rapid economic development, Israel boasts a very active real estate market. Construction and development in the market is dominated by the private sector, while the land market is dominated by the government. The real estate market in Israel has undergone and is continuing to undergo a significant process of maturation, moving from a market characterized by limited choice and options and low quality construction, to one which now boasts a wider range of alternatives in terms of location, size, building quality, and amenities.
The foreign investor seeking to purchase or lease a property in Israel for investment or for corporate use should familiarize himself with the operation of the market in Israel, in terms of pricing dynamics, location alternatives, the types of property available, and the legal and financial framework within which the Israeli market operates.
Prices in the Israeli real estate market are delineated in dollar terms, a convention which the market has adopted due to the fluctuations of the shekel, thus providing a steady frame of reference when comparing offers, and negotiating. Once contracts are signed transactions are converted to the shekel amount and linked to the Israeli inflation index. Prices are quoted per rentable square meter, called "gross space". The rentable meter is measured from the outside wall, and includes the relative portion of the building's common area and service core (lobby, elevators, stairwell, machinery rooms, etc.). The difference between gross and net space ranges from 10 - 15% in light industrial properties, to 25 - 35% in fully serviced office towers.
A practical starting point for understanding the Israeli market is from the perspective of the various location and site alternatives which the market presents to the investor and user. Commercial real estate in Israel is typically found in one of two types of locations, either center city "central business district" locations, or in outlying industrial areas which function much as suburban office parks. The two sources of property serve different purposes and markets.
Center city locations, such as those in Tel Aviv, Jerusalem, and Haifa, cater to financial and service businesses, professional services, media and government offices. In addition, most retailing has historically been concentrated within the city and town centers, although the past decade has witnessed an increasingly dominant trend of construction of shopping centers and strip malls on the outskirts of the urban areas, adjacent to major highway and road development.
Industrial areas, located on the outskirts of Israel's cities and towns, house a mix of uses, primarily high technology, manufacturing, and warehousing tenants. These industrial areas have also been the site of much of the recent growth in retail development. In recent years, these areas have begun to take many of the characteristics of suburban office parks, albeit with a higher concentration of development as is typical in Israel. Computer, electronics, and other high technology firms, whether engaged in development or in actual manufacturing, generally seek locations in the industrial and suburban areas, with a preference for industrial areas where other similar companies are concentrated, or separate industrial or suburban office park developments.
This overall trend of office, industrial, and commercial development outside the urban centers coincides with the rising level of automobile ownership and subsequent increased mobility of the country's population and the trend of private home construction and suburbanization.
As part of the government's ongoing efforts to encourage industrial development, particularly in small towns outside of the center of the country, the Ministry of Trade and Industry administers development grants and tax incentives for creation of industry in these areas. In addition, companies seeking land in these areas may apply and receive site allocations at subsidized prices for construction of factories.
Land is measured by the "Dunam" or 1,000 square meters. The size of zoned land is quoted in net Dunam. When purchasing unzoned land it will usually be quoted in gross Dunam. The buyer must verify how much land will remain after expropriation for public use, such as roads, public facilities, etc.
The use of a property or its potential for a particular use is determined by the city building plan, which defines the permitted uses of a specific site or area, and the size and bulk of a building which may be erected on the site, as well as additional requirements such as landscaping, parking or sewage hookups. These building plans are typically initiated by the local government and must also receive approval at regional and national levels. Various city as well as national and regional plans can be in effect simultaneously, each governing a different aspect of the overall form of an area, with one for roads, another for building rights and permitted uses, a third for parks and public facilities, and so forth.
Land owners can also initiate new building plans or changes in existing plans, to enable new development on their properties or changes in use. A potential purchaser of real estate must check the relevant plans governing the property he is considering in order to verify that it meets the relevant criteria, and to evaluate the potential or danger of changes in the future. Such changes can raise or lower the value and potential of a property. The city plans are generally available in the local municipality or building department, and consist of a map and set of regulations. Plans in preparation and under consideration are normally begun at the local level, and then publicized for public comment by the regional planning board. After all public comments are received and dealt with; the plan is finally approved by the Ministry of Interior. The process is lengthy, and can take several years.