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Strong shekel hits Israeli real estate costs in Europe

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In November 2017, Israeli income property company Alony Hetz announced that its next target market would be the UK. “brexit Five years later, 25% of Alony Hetz’s property portfolio is in the UK.In 2007, almost 9 NIS/lb. Trading at just NIS 4.6/lb in 2007, the sterling has not seen another 17% decline since 2017.

Aronie Hetz is not alone.total investment The amount of Israelis in European real estate is 1 billion euros. every year. AFI Properties puts almost all of its resources in Europe, with 74% of its assets in Eastern Europe. Shikun & Binui Construction owns about 10,000 apartments in Europe and G City (formerly Gazit-Globe) owns 62% of its assets in Europe.

Israeli real estate companies have always loved Europe. The Israeli is her 14th largest investor in European real estate, according to a survey by real estate consultancy JLL. The love for Europe is evident. It’s close, transparent, and in most cases easy to do business with, diversifying your domestic portfolio. The more intrepid are targeting Eastern Europe, while the more conservative are sticking to the “safer” investments in Western European countries.

But even before the Russian-Ukrainian war and major economic crisis, the biggest danger was that most of these real estate companies continued to pile up heavy debt here in Israel. It is evaluated quarterly and yields a monthly rent in foreign currency. This makes investment dependent above all on exchange rates rather than supply and demand in each overseas real estate market.

euro vs shekel

Euro banknotes and coins on display in a store in Brussels, Belgium, November 14, 2017 (Credit: REUTERS/ERIC VIDAL)

Hence the fall of the pound, euro and other currencies european A depreciation of the currency against the shekel, and an economic slowdown that is driving down property values, rents and occupancy rates abroad, will take a toll on the profits of Israeli real estate businessmen.

In euros and pounds, Israeli house prices jumped 37%

Europe’s waning fortunes may also reinvigorate hopes that tomorrow morning hundreds of thousands of new immigrants from Europe will flock to Israel to finally discover the magnificence of a Jewish nation. , this also means that these immigrants will compete with the Israelis for the already scarce supply of apartments, driving prices even further, especially if these Europeans bring suitcases of money from abroad. will push it up.

But to put things into perspective, European Jews are far less wealthy than we think, and even more so when it comes to buying on the Israeli property market. Israeli apartment-buyers may be frustrated by the 17.8% rise in apartment prices last year. , Israeli apartment prices have jumped 37% in the last 12 months.

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