Tzachi Hagag on Real Estate Strategies, Sde Dov, and Overseas Expansion
Tzachi Hagag navigates the real estate slowdown by targeting foreign luxury buyers and expanding into affordable international markets like Romania and Azerbaijan.
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The real estate market is experiencing a slowdown, but looking at the recent deals made by Tzachi Hagag, it is clear he is executing two core strategies: adapting to the period by expanding into Romania and selling apartments in Azerbaijan to meet the demand for affordable housing, and focusing on foreign residents because the average Israeli cannot afford luxury apartments.
Financial reports from the Hagag brothers show that the company excels at selling luxury apartments, including in Sde Dov. Meanwhile, reports from Israel Europe demonstrate an ability to sell affordable housing abroad to Israelis. Tzachi Hagag emphasizes that the company constantly proves its sales capability by holding prime locations, challenging the market, and offering promotions that do not harm profitability.
Expanding Abroad: Data Centers and International Markets
Hagag Europe recently signed a deal worth up to €67.5 million to acquire land in southern Romania for the construction of server farms. "This is a very interesting field. In my eyes, and given what we are doing in Romania, we are the biggest real estate players there, with connections and regulatory capabilities," Hagag notes. The company has secured a two-year exclusivity agreement with landowners and is advancing four additional land deals.
Additionally, the group has entered the Azerbaijani market in Baku. "Why Baku? There are good relations with Israel, and we identified a potential for value appreciation—$150,000 per apartment. For the Israeli investor, we sell a stunning product that will appreciate in value and yield high returns," Hagag explains, noting that the project is situated on a 20-kilometer coastline comparable to Manhattan.
Luxury Real Estate and Sde Dov Market
Addressing the luxury market, Hagag points out that foreign buyers from France, the United States, Mexico, South Africa, and Australia make up a significant portion of sales in Tel Aviv and Jerusalem. "We foresaw this two years ago and established an international department that identifies clients around the world. There are deals of 20 million shekels and more. On Rothschild Boulevard, a project will soon launch at over 150,000 shekels per square meter."
Regarding the high-profile Sde Dov district, Hagag remains optimistic despite market fluctuations. "We have sold over 50% of the tower even before construction, which is super flattering. Those who want luxury come to us." While average prices in Sde Dov previously reached higher peaks, Hagag's project currently sells at around 80,000 shekels per square meter, with expectations of a significant rebound as the market corrects.
"We prove every time that we know how to sell, and that we have the right merchandise. The merchandise we hold is in prime locations, and we know how to challenge the market and bring in people with the right promotions that do not hurt profitability."
