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Israel Real Estate Report Q1 2012
Business Monitor International, Dec 2011, Pages: 52
Business Monitor International's Israel Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Israel's Real Estate industry.
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.
- The outlook for the industrial sector is also positive, due to low vacancy levels and higher demand, as the manufacturing sector continues to grow.
- The retail sector in Israel has undergone significant consolidation in terms of ownership of malls in 2011 with the merger of two leading property companies, British-Israel and the Azreili Group. It is likely this will result in improved returns for the major players and higher rental rates. A strong consumer spending environment will also support this.
- The economic outlook remains positive, with a 2012 real GDP growth forecast of 3.4%. Unemployment declined to 6% in Q111 and is forecast to remain at 6.5% until 2015. However, elevated risks of instability in Israel's neighbours, including Jordan, Lebanon, Syria, the West Bank and Gaza, have raised political risks in Israel. The Israel-Palestinian conflict remains unresolved, and the risk of militant attacks in Israel cannot be ruled out.
Interest rate policy is also a key area to watch. 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 to 3.25% on May 23 2011. However, on August 29 the Bank of Israel decided to leave its benchmark interest rate unchanged at 3.25%. The central bank also recently changed its tone in regard to its monetary policy stance, suggesting that further rate hikes may not be on the way soon.
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