Israel Real Estate Report Q3 2011
Includes 3 FREE quarterly updates
BMI is optimistic about the prospects for Israel's commercial real estate sector over the next five years. In general, demand is growing, leading to high occupancy rates and increasing rents, while new construction is still relatively quiet.
Israel has the third highest residential property price growth rate in the world, according to Global Property Guide. Residential property prices in Israel increased in Q111 by 7.8% year-on-year (y-o-y) in real terms. The government has enacted a number of measures to cool activity in the residential market, including tax initiatives to make it more expensive for investors to buy residential property, as well as other measures to accelerate the sale of apartments and to encourage new construction. Consumer price index (CPI)-linked mortgage interest rates have been rising for seven consecutive months. The Bank of Israel increased the benchmark interest rate by 25 basis points (bps) to 3.25% on May 23 2011.
The acceleration in Israel's economic recovery thus far in 2011 has prompted us to revise up our 2011 and 2012 real GDP growth forecasts to 4.8% and 4.5% respectively, from 3.8% and 3.3% previously.
Unemployment declined to a seasonally adjusted 6.0% in Q111 (its lowest level since Q308), manufacturing production is at its highest level since 2004, and growth in exports and private consumption has been robust. We expect private consumption to grow 5.3% y-o-y in 2011, up from 5.0% in 2010. Steadily declining unemployment, along with lower levels of under-employment, indicates that a larger number of Israeli consumers have more disposable income to spend.
The increase in public unrest across the Middle East and North Africa (MENA) in 2011 has the potential to derail Israel's growth momentum. Indeed, unresolved political situations that are leading to volatility in countries neighbouring Israel – Lebanon, Syria, Jordan and Egypt – could lead to instability along Israel's borders. Disputes with the Palestinian territories regarding both their right to sovereignty and the reconciliation deal between Hamas and Fatah could also worsen tensions in the region. Escalations in any of these situations would likely depress private consumption and fixed investment, thereby posing downside risks to our real GDP growth forecasts.
BMI is optimistic about the prospects for Israel's commercial real estate sector over the next five years. In general, demand is growing, leading to high occupancy rates and increasing rents, while new construction is still relatively quiet.
Israel has the third highest residential property price growth rate in the world, according to Global Property Guide. Residential property prices in Israel increased in Q111 by 7.8% year-on-year (y-o-y) in real terms. The government has enacted a number of measures to cool activity in the residential market, including tax initiatives to make it more expensive for investors to buy residential property, as well as other measures to accelerate the sale of apartments and to encourage new construction. Consumer price index (CPI)-linked mortgage interest rates have been rising for seven consecutive months. The Bank of Israel increased the benchmark interest rate by 25 basis points (bps) to 3.25% on May 23 2011.
The acceleration in Israel's economic recovery thus far in 2011 has prompted us to revise up our 2011 and 2012 real GDP growth forecasts to 4.8% and 4.5% respectively, from 3.8% and 3.3% previously.
Unemployment declined to a seasonally adjusted 6.0% in Q111 (its lowest level since Q308), manufacturing production is at its highest level since 2004, and growth in exports and private consumption has been robust. We expect private consumption to grow 5.3% y-o-y in 2011, up from 5.0% in 2010. Steadily declining unemployment, along with lower levels of under-employment, indicates that a larger number of Israeli consumers have more disposable income to spend.
The increase in public unrest across the Middle East and North Africa (MENA) in 2011 has the potential to derail Israel's growth momentum. Indeed, unresolved political situations that are leading to volatility in countries neighbouring Israel – Lebanon, Syria, Jordan and Egypt – could lead to instability along Israel's borders. Disputes with the Palestinian territories regarding both their right to sovereignty and the reconciliation deal between Hamas and Fatah could also worsen tensions in the region. Escalations in any of these situations would likely depress private consumption and fixed investment, thereby posing downside risks to our real GDP growth forecasts.
Contents
Executive SummarySWOT Analysis
Israel Real Estate SWOT
Israel Economic SWOT
Israel Business Environment SWOT
Real Estate Market Overview
Real Estate Market Analysis
Table: Israel’s Real Estate Market – Historic Rents, 2009 And 2010 (m2/month, USD)
Table: Israel’s Real Estate Market – Net Yields, 2010 And 2011 (%)
Table: Israel’s Real Estate Market – Terms Of Rental Contract/Lease, Mid-2010
Table: Israel’s Real Estate Market – Available (m2) And Vacant Space (%), Mid-2010
Industry Forecast Scenario
Real Estate Outlook
Table: Israel’s Real Estate Market – Rentals, 2010-2012 (m²/month, US$)
Table: Israel’s Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Israel’s Construction and Infrastructure Industry Outlook
Table: Israel Construction And Infrastructure Industry Data, 2007-2015
Table: Israel Construction And Infrastructure Industry Data, 2012-2020
Macroeconomic Outlook
Table: Israel - Economic Activity; 2006-2015
Business Environment
Real Estate/Construction Business Environment Rating
Table: Middle East And Africa Real Estate/Construction Business Environment Ratings
Israel’s RECBER
Israel’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Middle East and Africa – Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations
Competitive Landscape
Company Profiles
AFI Group
Gazit-Globe
Housing And Construction Group
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
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