The Real Deal New York

Israeli investment in NYC real estate plummeted in 2016: report

Investors spent $131M last year, down from $2.07B in 2015
March 31, 2017 09:10AM

Israeli investment in New York City real estate all but ground to a halt last year, according to a new report.

Amid concerns that the market was overheated, investment plummeted to just $130.5 million in 2016 — down from nearly $2.07 billion in 2015. Last year’s investment level was the lowest since 2009, according to the report by Ariel Property Advisors.

Citywide, overall investment dropped to $48 billion in 2016 from $67 billion in 2015.

According to APA’s report, Israeli investors were involved in 18 deals last year, down from 39 in 2015.

“Israeli investors, as well as developers here, really took a step back” amid concerns of an overheated market, APA president Shimon Shkury, told Commercial Observer. He said there were fewer “major trades” and a slight drop in multifamily deals.

The report found far fewer investments in development projects. In 2016, investors only put $112.5 million into 11 deals, down from $1.31 billion in 24 deals in 2015. By comparison, they invested $18 million in seven multifamily deals last year, compared to $353.7 million in 10 deals in 2015.

Since 2007, Israeli investors have pumped $5.74 billion into 225 commercial property transactions in New York, the report said.

Increasingly, American real estate firms are heading to Israel to secure financing. Firms raised $878.5 million in debt in Israel in 2016, mostly by raising bonds on the Tel Aviv Stock Exchange. That number was down from the $1.07 billion raised in 2015.

Despite last year’s slowdown, Shkury said he expects investment to pick back up, and he said he’s getting questions from developers about raising money on TASE.

“People who weren’t interested before now are,” he said.

Likewise, he predicted Israeli investors would return in force come 2018 and 2019. “Israeli investors are careful and look for certainty, but they’re also opportunistic,” he said.

So far this year, Yoel Goldman’s All Year Management raised $58.3 million in a private bond offering to Israeli institutional investors. Israeli investors also picked up a Williamsburg loft building at 475 Kent Avenue for $56 million. [CO]E.B. Solomont