What do we look like to the outside observer? This new book presents frightened foreign investors with a few tips about the Israeli real-estate market.

"The Israelis like their houses. More than 72% of the Israelis own their apartments, being one of the highest rates in the world. In order to compare, the ownership rate over apartments in the U.S. is up to 68%, in Britain 69% and in France 54%. Every year, Israeli contractors invest about 36 billion N.I.S into construction, approximately two thirds go into the domesticating market. The construction industry in Israel constitutes of about 12% of the national raw product, and occupies hundreds of thousands; the number of mediators in Israel is between 5000 and 8000, the number of architects comes up to 8000 and the number of certified contractors is about 9000". This is the prologue of a book specified for foreigners who are interested in purchasing real-estate in Israel.

The book has recently been published by the "Bne Brit" publishing house, as a result of the "Heftziba" incident, it is also available to download free from the internet site: www.BuyingYourHomeInIsrael.com "I also receive calls from potential real-estate buyers that express their concern about a possible bankruptcy in the branch and about guaranteeing their money" says the narrator, jurist Dr. Haim Katz.

Katz himself understands the concern: indeed he has been working in Israel many years already, but when he arrived here from Britain 25 years ago, he experienced the reality of an outsider living in a foreign culture and language. "The greatest difficulty for them is that they are far away from here. Most of their knowledge about the "Heftziba" incident comes from the media, and what they see is that the director-general ran away and got arrested, and people invaded and entrenched themselves in apartments that were in construction – this worries them" explains Katz.

The 65 page book is in the sense of a light comprehensible introduction to the Israeli real-estate market. It starts off with fundamental data about the Israeli real-estate market. It then progresses to the chapter where it advises about the different living areas in Israel: "Is your family a young family that needs kindergarten and schools? Is your family big? Are you an elderly couple trying to purchase an apartment for your children? Do you prefer an urban environment with shops, culture etc. or do you prefer the rural areas?"

Katz also examines the Israeli mediators and states that "a good mediator is worth every penny". He adds "In my opinion there are no alternatives to real-estate contractors that are willing to show you as many apartments as you like. Some contactors are experts in their neighborhoods and therefore can focus the search and minimize you money and time expenditures. They can also assist you by negotiating with the sellers".

Katz indicates that the protocol signed between buyers and sellers precedes writing a contract that later on would be executed by their lawyers. Sometimes this document will be forced on you by unprofessional mediators that are eager to seal the deal. Don't listen to what others tell you, never sign a protocol. It's obligating, although the brief wording that characterizes these documents can cause big problems. There's a good reason why agreements to sell in Israel are 5 to 10 pages in length.

One of the main problems that individualize the Israeli real-estate market, in comparison to western countries, is the fact that many apartments aren't listed in the land registry office. "Almost half of the apartments, about 900 thousand, aren't listed in the land registry office, and such a manifestation is unknown to someone arriving from the U.S. says Dr. Katz. His guide also includes a chapter dedicated to this issue, in it he explains that "a big part of the apartments that aren't listed in the land registry office, about 550 thousand, were established on administrative grounds and the rights to them could be checked in the administration. This isn't a complete registration by law, and purchasing an apartment that isn't listed in the land registry office can result in jeopardization. Under no circumstances should you purchase such an apartment without receiving certified advice.

"People that don't live in Israel are frequently surprised that the term "American dollar" bears several meanings. Usually, a second hand asset is priced using the American dollar. Nonetheless, most contracts require payment in N.I.S by the dollars' exchange rate. When you transfer dollars from your countries, they arrive as a foreign coin in Israel. When you sell the dollars to banks in order to buy N.I.S, the dollars' exchange rate is calculated according to a lower rate than the exchange rate. The difference between them can measure up to about 1%, depending on the bank.

The book also includes many more items regarding the Israeli real-estate market and can even teach the Israelis a few things. The problem when reading the directing principals of our market in English is that we build a picture of a very strange and complicated market, not to say – insecure" as Katz protests.

"The purpose of the book was to encourage foreigners to buy real-estate in Israel because buying real-estate here is much safer than many other places in the world" adds Katz. When I'm asked by foreigners about the "Heftziba" incident I tell them that in this case people are liable to lose their money because they didn't obey the law, something that later turned out as a big mistake on behalf of the buyers. Guarantees of laws that protect selling and other defense provided by the Israeli law are quite good. There are many places in the world that when a contractor files for bankruptcy, the buyers lose all their investment. Here they at least secure the capital payment they paid, and that's considered a lot".

Katz is convinced that the Israeli bureaucracy, that intimidates many, is actually improving: "you can't compare today to what it was like when I arrived here 15 years ago. There is still room to improve, and the bureaucracy here is a bit more complicated, but in the end everything works out".

And maybe foreigners will one day say that Boaz Yona was the one who encouraged them to purchase an apartment in Israel.

First published in Hebrew in the real-estate supplement in the Haaretz newspaper.

Last Updated: 01-10-2007