Israeli REITs Snap Up Unsold Developer Inventory at Steep Discounts
Israel's housing market stagnation and mounting developer inventory have fueled a surge in bulk REIT acquisitions, with over 700 apartments bought at steep discounts in 2026.
The stagnation in Israel's housing market and the accumulation of unsold apartments in the hands of developers—reaching approximately 86,000 units at the end of August—have created fertile ground for bulk transactions. Real estate investment trusts (REITs) specializing in long-term rentals have been snapping up dozens of apartments at significant discounts.
The latest deal was reported this week by Azorim Living REIT, managed by Eran Anavim, involving the acquisition of 80 apartments from the Zvi Zarfati construction company in the city of Azor for roughly 198 million shekels (2.5 million shekels per apartment). The fair market value of the apartments was estimated at about 231 million shekels, reflecting a discount of approximately 15% and highlighting the seller's urgency.
A Globes analysis reveals that since the beginning of 2026, at least 15 such transactions have been signed, totaling 712 apartments with an aggregate value of approximately 1.6 billion shekels. The average price per apartment in these deals stood at about 2.6 million shekels.
Surge in REIT Acquisitions
The most active REIT since the beginning of the year is Abu Magurim, led by developer Tzachi Abu, which acquired 248 apartments for 420 million shekels. It was followed by Megorit, which purchased nearly 200 new apartments for close to 600 million shekels. Azorim Living and Rent It followed with 156 and 82 apartments respectively.
Prominent deals include Megorit's acquisition of 54 apartments from Almogim in Rehovot for 117 million shekels, and Rent It's purchase of 52 apartments from Aura in Hadera for 109 million shekels.
Stagnation in the Free Market
Sharon Tossia-Cohen, founder and CEO of Rent It, notes that the market stagnation stems from interest rate expectations, price drop anticipations, and geopolitical tensions. "People are sitting on the fence," he says. However, this dynamic creates a win-win situation where developers can offload completed inventory and free up equity from bank financing, while REITs secure apartments at favorable discounts.
Megorit founder and Chairman Erez Rosenbuch emphasizes a shift toward "last-sale" acquisitions—buying ready-to-move-in apartments rather than pre-construction units. This minimizes financing costs and generates immediate rental income for the funds, which currently enjoy near 100% occupancy rates across their portfolios.
