Elbit Real Estate CEO Warns of Developer Bankruptcies Amid Market Stagnation

Eran Mazor, CEO of Elbit Real Estate Group, points to a profound shift in Israel's housing market, driven by economic pressures and changing behaviors among the younger generation.

"There is a massive dissonance in the real estate market today. On one hand, we see immense demand for rentals, with prices rising continuously over the past three years. On the other hand, there is a clear decline in home purchases, even in the second-hand market, where it is currently easier to rent out a property than to sell it."

According to Mazor, while the core product remains the same, renting has become a far more practical alternative to buying. High property prices, elevated interest rates, and steep equity requirements have pushed homeownership out of reach for many potential buyers.

Financial Strain and Bankruptcy Risks

Mazor warns that if the current stagnation persists, the industry could face a wave of bankruptcies among developers and contractors.

"The year 2025 was exceptionally weak, and 2026 continues this negative trend, with challenges mounting for developers. In this environment, the inability to sell apartments at a satisfactory pace creates immense financial pressure. While banks support developers, prolonged delays in sales increase project debt and overall risk, which could lead to bankruptcies among smaller firms lacking strong financial backing."

Furthermore, Mazor notes a direct link between this trend and broader inflation. Since rent is the largest component of the Consumer Price Index (CPI), the surging rental market drives inflation, preventing the Bank of Israel from further cutting interest rates.

Bringing Investors Back to the Market

The core of the problem, according to Mazor, is the absence of real estate investors. To counter this, he proposes lowering the purchase tax from its current rate of 8%, conditional on the investor committing to rent out the property for at least five years post-occupancy without quick resale. This move would boost the supply of long-term rentals, curb rent hikes, stabilize the CPI, and allow interest rates to fall.

Elbit Real Estate's Peripheral Strategy

To mitigate market exposure, Elbit Real Estate has focused on peripheral areas where housing remains affordable, rather than prime locations in central Israel.

The group, acquired in 2023 as a shell company by businessman Eliyahu Knepfler, expanded rapidly through the acquisition of Tanya Israel in 2025. It currently manages a portfolio of approximately 4,500 housing units (1,500 in new construction and 3,000 in urban renewal projects), with projected future revenues exceeding 5 billion NIS.

Key projects include:

Park Tzameret in Afula: A premium 300-unit boutique development overlooking the Jezreel Valley, with prices ranging between 1.8 and 2 million NIS.
White Key in Eilat: Located at the old airport site, offering fully furnished apartments with private pools, targeting yields of 7% to 8% through short-term rentals.
Other Locations: Active developments in Abu Ghosh, Lod (Ben Shemen), Efrat, Jerusalem, Beit Shemesh, Ashkelon, and Bat Yam.

By balancing urban renewal projects, which require minimal upfront financing, with rapid-delivery new construction, the company maintains financial stability and growth potential during market downturns.