Commercial Real Estate - Israel | Statista Market Forecast

The projected value of the Commercial Real Estate market market in Israel is expected to reach US$516.10bn in 2024.
This indicates a promising growth potential for the country's real estate sector.
Furthermore, it is anticipated that the market will exhibit a steady annual growth rate (CAGR 2024-2029) of 1.53%, resulting in a market volume of US$556.80bn by 2029.
When compared to the global market, it is noteworthy that the United States is expected to generate the highest value in the Real Estate sector, with an estimated worth of US$25.3tn in 2024.
This emphasizes the dominant position of the United States in the global Commercial Real Estate market market.
The demand for office space in Israel is surging, driven by the country's booming tech industry.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Israel has been experiencing steady growth in recent years, driven by a combination of customer preferences, market trends, local special circumstances, and underlying macroeconomic factors. Customer preferences in the Commercial Real Estate market in Israel have been shifting towards modern, well-designed and sustainable properties. Businesses are increasingly looking for office spaces that offer flexible layouts, state-of-the-art technology infrastructure, and amenities that promote employee well-being. This shift in preferences is driven by the need to attract and retain top talent, as well as the growing focus on environmental sustainability. Trends in the market indicate a growing demand for office spaces in prime locations, particularly in Tel Aviv. The city has emerged as a major tech hub, attracting both local and international companies. As a result, there has been a surge in demand for office spaces in Tel Aviv, leading to a rise in rental prices and property values. Additionally, there is a growing trend of co-working spaces, as startups and freelancers seek flexible and cost-effective working environments. Local special circumstances also contribute to the development of the Commercial Real Estate market in Israel. The country's strong innovation ecosystem, with a high concentration of tech startups and multinational corporations, has created a demand for office spaces that cater to the unique needs of these companies. Furthermore, the government's support for the tech sector through initiatives such as tax incentives and grants has attracted both domestic and foreign investors, driving further growth in the real estate market. Underlying macroeconomic factors have also played a role in the development of the Commercial Real Estate market in Israel. The country has experienced consistent economic growth, with a strong GDP and low unemployment rates. This has resulted in increased business activity and a need for more office spaces. Additionally, low interest rates and favorable financing conditions have made it easier for businesses to invest in real estate. In conclusion, the Commercial Real Estate market in Israel is experiencing growth due to customer preferences for modern and sustainable properties, trends such as the demand for prime office spaces and co-working environments, local special circumstances including the strong innovation ecosystem, and underlying macroeconomic factors such as economic growth and favorable financing conditions.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.