Real estate has
historically been one of the best avenues of
investment in Israel, due to the country's rapid
rate of growth and relative scarcity of available
product. Investors have profited from steady
increases in value, and from returns from rentals,
which as of this writing, range from 8-10% per
year on commercial properties.
Many
commercial properties are sold while under construction, and the purchaser
pays for the acquisition in staged payments, according to the progress
of construction, the final payments executed upon physical transfer of
the property and formal registration of ownership. Buyers should receive
a bank guarantee for all payments until receiving physical possession
and registration in the land registry.
The apartment sales law requires all
developers to provide special bank guarantee for
payments received before delivery. This also applies to
none residential deals. The cost of receiving this bank
guarantee is usually born by the buyer in commercial
deals, though the law obligates the contractor to
provide the bank guarantee. The guarantee can cost up to
1% per annum against the value of each payment.
