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. G721001 May 9, 2016 consulting
2 2 Paz Group ■ 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. consulting
3 3 Agenda 1. Residential Market Overview 2. Government Policies and Programs within the Housing Sector 3. Construction Potential in Israel consulting
RESIDENTIAL MARKET OVERVIEW consulting
5 5 Characteristics of the Residential Units Existing 2.457 m Anticipated types of residential units residential units over the next decade Single Single Family units 10 Stories Family units 39% and up 29% Multi-family 28% units 61% 3-6 Stories 4-7 Stories 15% 28% 2.582m Households Potential of 1m Units Source: Central Bureau of Statistics and data analyses conducted by Paz Group Ltd. consulting
6 6 Israel’s Housing Shortage: Causes and Triggers Source: Israel’s Central Bureau of Statistics, 1995 & 2008: Population Census, 2014: consulting Labour Force & Construction Completion Surveys
7 7 Housing Construction and Population Growth Housing Starts Project Completions Housing Units Source: Central Bureau of Statistics, Housing Starts and Completions consulting
8 8 Housing Prices NIS (thousands) Source: Central Bureau of Statistics, Housing Sales Records and data analyses conducted consulting by Paz Group Ltd.
9 9 Production Process Land ownership Private 7% State 93% Government goal: 60,000 unit housing starts each year The Apartment Production Process Construction Zoning Evacuation Infrastructure Permit consulting
GOVERNMENT POLICIES AND PROGRAMS WITHIN THE HOUSING SECTOR consulting
11 11 Residential Units Approved by the Planning Authorities 2015 Nationwide 100,000 Units Residential Units 100,000 99,514 North 10,459 Haifa 11,209 75,368 Center 20,251 63,467 62,553 Tel Aviv 25,420 Jerusalem 11,651 32,462 23,749 24,630 23,409 24,506 South 20,524 North Center * Jerusalem South Source: Interior Ministry, Annual Report 2014 consulting *2016 Development Targets
12 12 Free Up Land of IDF Bases Development of 100,000 Units 30,000 Israel Military Industries 17,000 Sde Dov IDF Bases 60,000 Units 12,000 Sirkin 1,200 " Shalishut ” 1,000 “ HaKirya ” Defense Industries 20,000 Tel HaShomer 40,000 Units North 17,000 Tzrifin Center Jerusalem IDF bases and defense industries in South central Israel Source: Government Resolution 2392. consulting
13 13 Transportation Infrastructure for Residential Projects Transportation Projects Roads and Public Transport Budget (According to the State Budget) which support (Million NIS) Residential Development The Metronit (BRT) Extension Highway 6 Extension 531 + HaSharon Railway Tel Aviv Light Rail Jerusalem Light Rail Extension Ashkelon Beer Sheba Railway North Center Jerusalem South Source: Ministry of Finance, State Budget 2015 consulting
14 14 Framework Agreements Nationwide 210,000 Units Developers Municipality Infrastructure Development License & Permits Costs & Timeline Haifa 34,000 Planning Certainty Center 108,000 Cooperation Transparency Jerusalem 8,000 Residents Government Increased Housing Stock Educational and South 57,000 Accelerated Development Public Facilities High Demand Areas North Center Jerusalem South Source: Israel Land Authority and Paz Group Ltd. consulting
15 15 Urban Regeneration Nationwide 810,000 Units Potential PINUY BINUY TAMA 38 Potential of 10,000 for Urban RAZE AND REBUILD Expansion and New Housing Units Renewal Demolition of old buildings reinforcement of old Per Year and new construction of buildings increased density North 55,000 Haifa 155,000 Center 410,000 Jerusalem 105,000 South 85,000 North Center Jerusalem South Source: Data analyses conducted by Paz Group Ltd. consulting
16 16 The “Buyer’s Price” Plan The “Resident Price” Plan Nationwide Tenders In 2015-2017 all land tenders will be 30,000 Units published of 100,000 subject to the “Buyer’s Price” thus far Government goal ● Can be sold only to non-home owners – by North 4,000 lottery Haifa 7,000 ● Price reduction of at least $50,000 as Center 7,500 compared to market prices. ● Construction according to uniform Jerusalem 5,000 standards. South 5,500 North Center Jerusalem South Source: Israel Land Authority analyses conducted by Paz Group Ltd. consulting
Rental Market ■ ■ ■ ■ ■ Additional 20,000 Student dormitory beds Tax benefits and building rights for rental projects New zoning is directed to rental housing Purchase of entire buildings Publishing state tenders 20.0 40.0 60.0 Policy Measures to Encourage the Long Term Rental Market 0.0 ץיווש Switzerland International Comparison - Percentage of Rentals הינמרג Germany תפרצ France קרמנד consulting Denmark הרא"ב U.S.A. דנלוה Netherlands גרובמסקול Luxembourg דוחיאה… 28.8% EU Note: The above statistics do not include Kibbutz housing or units rented from family members and close friends. לארשי Israel Source: Central Bureau of Statistics, National Social Survey, 2013; Survey data processed by Paz Group ןיסירפק Cyprus דנלניפ Finland הילטיא Italy לגוטרופ Portugal ןווי Greece הינבולס Slovenia דנלסיא Iceland דרפס Spain צ'היכ Czech Republic היבטל Latvia הינוטסא Estonia ןילופ Poland הטלמ Malta היגוורונ Norway הירגלוב Bulgaria היקבולס Slovakia הירגנוה Hungary אטיל Lithuania הינמור Rumania 17 17
CONSTRUCTION POTENTIAL IN ISRAEL consulting
19 19 Residential Units Under Construction Residential Units Source: Central Bureau of Statistics, Construction in Israel consulting
20 20 Residential Market Needs 40,000 Units 27 Months consulting
21 21 Summary & Call For Action Demand for residential units Shortened Need for construction housing period prices reduction Opportunity for foreign construction companies Increased Government construction support capability and actions Diverse residential market consulting
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 consulting
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