Itamar Deutscher, CEO of Electra, commented on the effects of the rise in input prices and the rise in interest rates on the construction market.
“In the field of residential construction, right up to this point towards the end a month May, we do not yet see a change or damage to activity, “Deutscher said.” We are in the periphery closest to Tel Aviv mainly, and if already we see that the pace of activity is increasing. Prices as of May are still rising.
“The price per square meter continues to climb. In Rishon LeZion, for example, we saw the price increase by 50% within a year and a half in the various tenders – from NIS 22,000 per square meter to NIS 30,000 per square meter today. ‘Inside the house.’ That is why linking to the construction input index gives us Compensation. In our worlds we try to live at risk reduction, and not make speculative trades. During this period, we want to work as quickly as possible with contractors and suppliers. “
Deutscher estimates that the problem is likely to come from the financing of the projects by the banks. These are approaching the credit limit imposed on them by the Bank of Israel, and as a result there is a recourse to non-bank financing bodies, such as investment funds or institutional bodies.
“The less leveraged companies are, as with us at Electra, the easier it will be for them to find financing solutions,” Deutscher said. “For more leveraged companies it will be more difficult to find the necessary resources.”