Experts expect a large influx of investment into the so-called "third-tier" cities of Israel. In particular, the cities of Arad, Carmi and Nahariya are expecting active development.
This was stated by Michael Carmon, an investment banker representing the division Cukierman & Co. Investment House Ltd. (a leading Israeli investment group) in an interview with Hotel Management on the eve of the Israel Investment Summit, which will be held in Tel Aviv on November 19-20, 2018. The expert will take part in the section “Investments: Where are the deals taking place and who is investing?”
Characterizing the state of the Israeli hotel market and investments in this sector, the expert noted that Tel Aviv is becoming an increasingly important city - both for business and for tourism.
“Major players in real estate are entering the market, multinationals such as Facebook and Amazon are expanding their presence in Israel, and hotel operators have built many hotels in Tel Aviv. Other cities in Israel have also experienced a construction boom in the last 10 years, including Netanya, Ashdod, Haifa and Tiberias. We see great potential in third-tier cities, and expect large investments in Arad, Carmi and Nahariya. Cukierman’s goal is to attract foreign investors to Israel and offer investment opportunities to our Israeli clients,” the expert emphasized.
He also specified that, in general, the return on investment in real estate in Israel is quite high. The residential market yields from 3 to 3.5 percent, commercial real estate from 6 to 7 percent, and the profit from hotels can be even higher, since they are in a “separate league,” especially if we are talking about a well-established hotel operator.
"The Israeli real estate market has proven itself to be resilient to geopolitical and financial crises, outperforming well-developed economies around the world. Ultimately, this is the most important factor for investors," noted a representative of Cukierman.
According to him, the hotel market currently significantly outperforms other real estate sectors in terms of return on investment and is one of the most profitable, especially in Europe.
“In recent years, Israel has had a higher GDP growth than other countries. Real estate is one of the Israeli investment sectors that has benefited from this growth and has shown strong and consistent results. This is also confirmed by the results of Israel’s recent credit ratings – according to Moody’s and S&P. The tourism industry is also very profitable for hoteliers. Firstly, hundreds of thousands of Jews come to Israel every year to visit their loved ones, do business or just visit the places where their ancestors came from. Secondly, the pleasant climate and access to beautiful beaches are already an attraction. Thirdly, the Israeli tourism market is not subject to seasonality due to sunny summers and mild winters, so hotels are occupied most of the year. As a result, hotel room prices remain relatively high, even compared to top tourist destinations. As a result, hoteliers and operators are in a good position. Although the market structure is quite small and not very saturated. Some local players are actively exploring new niches to focus on, such as business hotels,” Michael Carmon emphasized.
He also stated that in the near future, large international hotel brands such as Ritz-Carlton, which is currently successfully operating in Israel in the luxury segment, will come to Israel.
“Meanwhile, leading Israeli hotel chains such as Fattal are expanding in Europe and around the world, making the Israeli hotel industry a more significant player in the hotel business worldwide,” added the expert.
Source: trn-news.ru