The joint initiative of commercial real estate companies to ease payments to the state

The solution of commercial real estate companies to the crisis affecting the office sector: Globes has learned that recently several leading companies in the field have organized themselves into a formal forum operating under the Association of Public Companies. The forum has appealed to various government ministries and relevant state institutions, requesting a rethink regarding the various payments that real estate companies are required to pay for land, as well as related taxes and levies. The forum is led by Tzahi David, VP of Business Development, Planning and Improvement at the Mivne Group, and formerly Deputy Commissioner of Budgets for Real Estate and Local Government at the Ministry of Finance.

The stated goal of the forum is to lead to additional investments in the industry and the economy, in amounts they claim reach billions of shekels, and to increase activity in the sector, which has suffered greatly since the rise in interest rates and the crisis in the high-tech sector, which seems to have been worsening recently.

Shifting the focus also to non-residential sectors

Until 2023, the office sector was at its peak, with construction starts crossing the one million square meter mark per year. In recent years, this momentum has slowed, to a situation where in the first quarter of 2026, construction began on 53,128 square meters of office space — the lowest pace in the last 17 years.

Now, the commercial real estate companies that are members of the forum are trying to change the existing reality. Over the years when the industry flourished, there was no need for adjustments to the economic reality, and most of the attention from government officials was naturally given to the residential sector. Now, when these companies are also dealing with significant challenges, they are asking for their own adjustments.

The reliefs can be defined in four separate moves:

1. Partial rights acquisition: when allocating land or in a zoning change transaction, allow purchasing only part of the rights possible in the relevant plan, in accordance with the building permit one wishes to promote (e.g., a minimum threshold of 40% of the volume of rights).

2. Interest and linkage mechanism: pay the assessment amount for the land without interest and linkage if the Israel Land Authority (ILA) does not complete the transaction within 3 months.

3. Metro tax: offset the payment to the ILA in places where a metro tax is imposed, so that the payment will be 91% of the land value at most.

4. Building permits: granting authority to ILA district managers to sign building permits when companies are ready to pay a bank guarantee against them.

What commercial real estate companies are asking from the state

• Partial rights acquisition: Allow purchasing only part of the possible rights in the plan.

• Interest and linkage mechanism: Pay the assessment amount without interest if the ILA does not complete the transaction within 3 months.

• Metro tax: Offset payments so that the total is 91% of the land value at most.

• Building permits: Granting authority to ILA district managers to sign permits when a bank guarantee is provided.

"The regulations were set during a rising market — almost 15 years ago," says David. "The state is very busy with housing, but if we can fine-tune the benefits for the current period of inflation and high interest rates, we will be able to build much more, and that is good for the economy and the ILA. There is no cost to the state here, and therefore in our view it is very appropriate to make these adjustments."

Now the ball passes into the hands of the government bodies — the Ministry of Finance, the ILA, the Ministry of Interior, the Ministry of Construction and Housing, and more — and they will be required to check if and how these moves can be implemented in practice.