Apartments not delivered on time: The new concern for long-term rental companies
Financial reports from REIT funds for the first half of 2026 reveal significant delays in the delivery of hundreds of apartments. This results in delayed occupancy and lost rental income, with several cases now heading to court.
Delays in apartment delivery are affecting not only individual buyers but also companies in the long-term rental sector, which are already struggling with low yields in an era where rental income barely covers financing and interest costs.
A review of reports from leading REIT funds for the first half of 2026 shows that many are facing numerous delays in the delivery of acquired apartments. These delays have serious consequences, as they postpone the moment when projects become income-generating assets.
Since REIT funds primarily purchase apartments in existing or under-construction projects, they are entirely dependent on contractors' progress. If delivery is delayed, occupancy is postponed, directly impacting the funds' financial results and future profit forecasts.
Millions in compensation
Magurite, the largest REIT fund, has been hit hardest. As of June, it held 2,209 apartments for long-term rental, with another 279 units in the pipeline.
In its first-half 2026 report, the company stated it received approximately 13.9 million shekels in compensation for delays across five projects and has filed five lawsuits against developers. Despite receiving significant compensation (4.55 million shekels in 2025, 6.8 million in 2024, and 2.432 million in 2023), the damage remains substantial.
"As a result of the delays, there was an income shortfall of about 6 million shekels after receiving compensation in the first half of the year," the report stated. The company also warned of potential future income losses due to these delays.
Reports for 2025 show nearly ten projects experiencing delays, totaling 281 apartments. These include the Etz HaChaim project in Jerusalem (up to one year delay), the Welcome project in Bat Yam (nearly two years), Kehilat Lodge 62-64 in Tel Aviv-Yafo, and the HaSolelim project.
The impact of the war
Azorim LIVING also faced delays for 98 apartments in the Park HaYam neighborhood in Bat Yam (developed by Neve Binyan). Delivery was originally scheduled for Q2 2025 but was postponed by over a year. In March 2026, the company purchased 11 additional units in the project, with the price reflecting 7.7 million shekels in compensation for the delay.
Abu Family Magurim reported delays for 60 apartments, including the Imri towers in Ashdod and the HaChartzit and Alroy towers projects. The company cited the war as the cause, receiving 1.15 million shekels in compensation in 2025.
Delays have become common in the residential sector due to the war and severe labor shortages. The Supreme Court has ruled that such delays cannot be blanketly classified as "force majeure," requiring each case to be settled in court on its own merits.
Compensation is determined by Amendment 9 to the Sale (Apartments) Law: from the second month of delay, the buyer is entitled to full rent for a similar apartment; from the fifth to the tenth month, 125% of the rent; and from the 11th month onwards, 150% of the rent.
