Apartments as Gifts and Digital Tenders: Developers Struggle to Break Housing Market Stagnation

The ongoing stagnation in the housing market, alongside a stock of tens of thousands of new apartments left without buyers, is pushing developers to expand their marketing toolkit and pull out increasingly unusual moves in an attempt to bring buyers back. If in the past financing campaigns, payment deferrals, and flexible payment terms were considered the main tools for encouraging purchases, today some companies are moving to much more creative and aggressive steps.

One of the most prominent campaigns recently was the "Apartment as a Gift" by the company Anshei HaIr, which ended last Friday. As part of the campaign, launched in February, the company promised that one of the first 50 buyers to purchase an apartment in one of the company's projects in quarters 3 and 4 in Tel Aviv would receive a two-room apartment as a gift near Kikar HaMedina, with an estimated value of about 2.5 million shekels. Ultimately, the winner was 64-year-old Aliza Deri.

Examples of unusual campaigns:

• Anshei HaIr: An apartment as a gift at Kikar HaMedina worth 2.5 million shekels for those who bought an apartment in quarters 3-4.

• Prashkovsky: A tender where prices can be offered, which according to the company reflects a double-digit discount.

• Gindi Holdings: Full rent payment for three years in a project in Glil Yam, with an estimated value of 360,000 shekels.

Despite the uniqueness of these moves, the impact on the pace of sales was relatively limited. The Anshei HaIr campaign was extended due to the effects of the "Lion's Roar" war, yet only 13 apartments were sold throughout the period for a total of about 112 million shekels, at an average price of about 75,000 shekels per square meter. CEO Ron Chen emphasized that the goal was to attract those already looking for apartments in central Tel Aviv, and that the campaign achieved that goal.

Market Realities and Skepticism

Marketing campaigns have become a central tool in the developers' struggle for every buyer. In May, Tel Aviv led new apartment sales in Israel with 1,137 apartments purchased, though a large part of this jump was due to only two major projects. Nir Shmul, CEO of the Snir Group, states: "In current market conditions, if you don't shout loudly, no one listens. The gimmick is just the means; what determines the outcome is the price."

Prashkovsky's attempt to launch a 72-hour "digital tender" was also received with skepticism, as the company's stock lost about 5% of its value following the announcement, reflecting fears that the campaign signals difficulty in selling apartments.

Banks Scrutinize Deals

Even when developers present a decent sales pace through aggressive campaigns, banks today are examining transactions under a magnifying glass. The Hagag Group recently faced a situation where Bank Hapoalim and Bank Mizrahi-Tefahot did not recognize a significant portion of sales in the Masterpiece Bavli (Bavli 3) project for bank accompaniment purposes. The reasons included possible cancellation grounds by buyers or equity contributions of less than 15% of the transaction value.

Advocate Elnatan Hayu explains: "Aggressive financing campaigns may create an appearance of demand, but in practice, some buyers are unable to complete the transaction. If the equity is low, there is a risk that the bank will not approve the mortgage, the transaction will be canceled, and the apartment will return to the developer as an unsold asset."