Real Estate Developers Pivot to Bulk Apartment Sales Amid Market Slowdown
Real estate developers in Israel are increasingly turning to bulk apartment sales at discounts to secure cash flow. Azurim Living recently purchased 80 units in Azur for 198 million NIS, securing a 14% discount.
As the housing market experiences a slowdown, real estate transactions involving bulk purchases of residential units at below-market prices are becoming increasingly common. These deals allow one company to exit a project and secure vital cash flow, while another company, confident in the project's potential, steps in to acquire the assets at a discount and potentially update pricing.
Bulk Purchases Surge in the Housing Market
In recent days, Abu Family Residences, controlled by chairman Tzachi Abu, acquired 50 residential units from Azurim in the N Weizmann project in Netanya for approximately 120 million NIS (including VAT). The transaction comprises 42 four-room apartments and 8 five-room apartments, scheduled for delivery in the coming months.
Meanwhile, Azurim Living purchased 80 apartments in the town of Azur from contractor Tzvi Tzarfati and Sons for about 198 million NIS including VAT. The deal includes 17 three-room apartments and 63 four-room apartments. According to the company's exchange filing, an independent external appraiser estimated the fair value of the acquired units at approximately 231 million NIS, translating to a discount of about 14% or 33 million NIS.
Financial Impact and Rental Yields
Out of the 80 units acquired, 60 are already rented out. Annual rental income from the project is expected to reach about 7.1 million NIS, reflecting a rental yield of roughly 3.6% on the consideration. This acquisition adds to three other purchases of income-producing properties executed by the REIT during 2026, totaling 167 units and about 415 million NIS.
For Tzvi Tzarfati and Sons, the transaction is expected to yield a pre-tax profit of approximately 47.2 million NIS, averaging about 590,000 NIS per residential unit. The expected net cash flow after tax for the company stands at roughly 155.5 million NIS. The project features two 22-story towers with 280 units, with a third tower planned later as part of urban renewal.
"The transaction is an example of the importance of prudent business management during a period when the real estate market is facing significant challenges," explained Moshe Tzarfati, CEO of Tzvi Tzarfati and Sons. "This is an excellent deal for the fund, featuring new and high-quality apartments in a high-demand central town," added Eran Anavim, CEO of Azurim Living.
