Aura stock jumps after report: "This is the best time to buy an apartment"
Since the beginning of the year, Aura has sold 436 apartment units, and this month another 284 purchase requests were signed as part of the "Hever" campaign. Owner and CEO Yaakov Atarchi: "I think it is attractive to take a mortgage now, and in a weak market, you can get a better price."
Aura's stock is jumping after the real estate company published its reports and provided data on apartment sales. The company, controlled and managed by Yaakov Atarchi, recorded a 36.9% growth in revenue in the second quarter, to approximately 560 million shekels. Of that revenue, income from apartment sales was about 413 million shekels, with the remainder coming from construction services. Gross profit amounted to 122 million shekels, a rate of 21.8% of revenue, compared to 26.2% in the corresponding quarter. Net profit attributable to shareholders decreased by 23.8% to 48.4 million shekels.
Aura has sold 436 apartment units since the beginning of the year, and this month another 284 new purchase requests were signed as part of the "Hever" campaign, bringing the total number of transactions to 720. According to the company, this indicates its resilience and ability to sell even in a challenging period. In the first half of the year, revenue amounted to 1.05 billion shekels (a 26.3% growth), operating profit decreased by 5.2% to 226 million shekels, and profit attributable to shareholders decreased by 34.6% to 105 million shekels.
In a conversation with Globes, Atarchi said that the reports were excellent and that Aura sold 720 apartments "in a market that everyone says is weak." Although, according to him, it is no secret that the last year and a half have been relatively weak—mainly in Tel Aviv and Gush Dan—he estimates that the market is shifting:
"People who sat on the fence and rented apartments saw that the rent price rose dramatically. At the same time, the interest rate is starting to fall, and the equilibrium point is approaching a situation where it is worth taking a mortgage and buying an apartment. I think it is attractive to take a mortgage now, and in a weak market, you can get a better price—for buyers, this is the best time to buy."
He adds that "our role is to sell apartments both when the market is good and when it is not. When the market is less good, we compromise; Aura is strong enough to earn a little less. We did a campaign for the security forces—the best population and the one that deserves it the most—and they bought apartments in Ofakim, Hadera, Ramat Gan, Kiryat Ono, and Ramat HaSharon. You have to meet people halfway and show flexibility. The public that buys today will make money; from next year, I estimate that prices will start to rise again."
Atarchi notes that the discounts for the security forces were around 10%–11%. "We will earn a little less, but it's a win-win," he says. Regarding investors in the real estate market, he notes that "in the last two years they are buying less, but they will return when the market returns."
"Our transactions are real"
In a conference call with investors, Atarchi stated that "the market is definitely not dead" and highlighted the success of the "Hever" campaign: "The market is alive. People are coming in droves, buying apartments, and are satisfied." Addressing concerns about the annual target of 1,200 apartments, Atarchi said: "Friends, we reached 720, and we estimate that we will finish the third quarter between 750 and 800. I will surprise you, and there is a good chance that we will meet the forecast, which no one imagined."
He also analyzed the rental market: "In the last year and a half, the market has been a bit weak. People bought fewer apartments, so they rented instead. The rental market rose dramatically, by my estimate, over 15%... Of course, there is a preference for new apartments with a MAMAD (protected space). As soon as the rent rises and the interest rate falls, people unequivocally start to prefer buying a new apartment and paying a mortgage over renting, because the apartment remains yours. You will not see in Aura all kinds of gimmicks; I don't believe in this nonsense. Our transactions are real."
Atarchi added that projects are progressing at a good pace and that the market has adjusted to foreign workers, who provide higher quality and faster output. He warned that due to project delays by various developers and low land marketing by the Israel Land Authority (ILA), prices will rise in the near future. "ILA marketed a very small amount of land this year, and when developers have frozen construction, large demands will be created in a year or two. A shortage is going to be created; I see it in all the periphery cities."
Finally, Atarchi discussed new directions for the company: "The company is constantly looking for additional avenues. Assisted living is something we will definitely check as a complement to the residential market. You won't find us in adventures. The long-term rental sector will enjoy a revival, and in my opinion, REIT funds will succeed in the next year or two. It's a good market, but not for us."
