The Israeli Residential Market Netanel Lapidot Senior Department Manager Strategy & Policy Planning This presentation may not be used for any purpose without direct, written permission from The Ministry of Construction and Housing June 6, 2016 Agenda 2 1. Residential Market Overview 2. Government Policies and Programs within the Housing Sector 3. Construction potential in Israel RESIDENTIAL MARKET OVERVIEW Characteristics of the Residential Units 4 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% High density 28% units 61% 3-6 Stories 4-7 Stories 15% 28% 2.582m Households Potential of 1m units Israel’s Housing Shortage: Causes and Triggers 5 Source: Israel’s Central Bureau of Statistics, 1995 & 2008: Population Census, 2014: Labour Force & Construction Completion Surveys Housing Construction and Population Growth 6 Housing Units Source: Central Bureau of Statistics, Project Groundbreakings and Completions Production Process 7 Land ownership Private 7% State 93% Government goal: 60,000 unit groundbreakings each year The Apartment Production Process Zoning Evacuation Infrastructure Permit Construction GOVERNMENT POLICIES AND PROGRAMS WITHIN THE HOUSING SECTOR Residential Units Approved by the Planning Authorities 9 2015 Nationwide Residential Units 100,000 Units 100,000 99,514 North 10,459 Haifa 11,209 75,368 62,553 63,467 Center 20,251 Tel Aviv 25,420 Jerusalem 11,651 32,462 23,749 24,630 23,409 24,506 South 20,524 * North Center Jerusalem Source: Interior Ministry, Annual Report 2014 *2016 Development Targets Vacating IDF Bases 10 Development of 100,000 Units 30,000 Israel Military Industries 17,000 Sde Dov IDF Bases 12,000 Sirkin 60,000 Units 1,000 “HaKirya” 1,200 "Shalishut” Defense Industries 20,000 Tel HaShomer 40,000 Units 17,000 Tzrifin North IDF bases and defense industries in Center central Israel Jerusalem Transportation Infrastructure for Residential Projects 11 Transportation projects Roads and Public Transport Budget (According to the State Budget) (Million NIS) which support 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 Framework Agreements 12 Nationwide 210,000 Units Municipality Developers Development Infrastructure Costs & Timeline License & Permits Haifa 34,000 Planning Certainty Center 108,000 Cooperation Transparency Jerusalem 8,000 Residents Government Educational and Increased Housing Stock Public Facilities Accelerated Development South 57,000 High Demand Areas North Center Jerusalem Urban Regeneration 13 Nationwide PINUY BINUY TAMA 38 Potential 810,000 Units Demolition of old buildings Expansion and for urban potential of 10,000 new housing units and intensive new reinforcement of old renewal per year construction buildings North 55,000 Haifa 155,000 Center 410,000 Jerusalem 105,000 South 85,000 North Center Jerusalem The “Resident“Residential Price” Price” Plan Plan 14 Tenders Nationwide In 2015-2017 all land tenders will be published 30,000 Units subject to the “Resident Price” thus far Of 100,000 Government goal ● Can be sold only to non-home owners – by North 4,000 lottery Haifa 7,000 ● Price reduction of at least NIS 50,000 as Center 7,500 compared to market prices. ● Construction according to uniform Jerusalem 5,000 specifications. South 5,500 North Center Jerusalem Rental Market Rental ■ ■ ■ ■ ■ Additional T New zoning is directed Purchase Publishing ax Policy measures to measuresPolicy benefits and benefits 20.0 40.0 60.0 0.0 of entire state state tenders International International שוויץSwitzerland 20,000 20,000 גרמניהGermany צרפתFrance building building rights for rental projects Student Student דנמרקbuildings Denmark .ארה"U.S.Aב הולנדto rental to rental housing Netherlands Encourage Concern long term rental market rental term Concern long Encourage dormitories Luxembourg Comparison לוקסמבורג 28.8% EUהאיחוד … Source: Central Bureau of Statistics, National Social Survey, Survey, Social Bureau National Central Statistics, of Source: rented friends. or and members units Kibbutz close The do housing family fromabove Note: include notstatistics Israelישראל Cyprusקפריסין פינלנדFinland beds Italyאיטליה פורטוגלPortugal - יווןGreece Percentage סלובניהSlovenia איסלנדIceland ספרדSpain צ'כיהCzech Republic Latviaלטביה Estoniaאסטוניה 2013 of פוליןSurvey Survey data processed ;by Paz Group Poland ; Malta Rentalsמלטה נורווגיהNorway בולגריהBulgaria סלובקיהSlovakia הונגריהHungary ליטאLithuania רומניהRumania 15 CONSTRUCTION POTENTIAL IN ISRAEL Residential Units Under Construction 17 Residential Units Source: Central Bureau of Statistics, Construction in Israel Residential Market Needs 18 40,000 Units 27 Months Summary & Call For Action 19 Demand for residential units Shortened Need for construction housing period prices reduction Opportunity for Foreign construction Increased companies Government construction Support capability and actions Diverse residential market Thank you.