Israelis like to shop, and in 2015 they got a lot more space to shop in. Construction of commercial retail shopping centers and malls grew 80 percent that year, compared to a year earlier. On the other hand, office space construction was down 9.3 percent over the year before. In 2014, 393,000 square meters of shopping space were built, compared to 707,000 in 2015; for offices, those numbers were 371,500 vs. 398,700 respectively.
The numbers were drawn from Central Bureau of Statistics figures and processed by the Kenassim organization, to be presented at an upcoming real-estate conference.
Tel Aviv, the commercial capital of the country, underwent a profound change in building in 2015. The city saw an unprecedented rise of 650 percent in the number of and space allocated to the construction of commercial/retail projects, while office space construction dropped 23 percent. Just as dramatic was the rise of commercial/retail construction in other cities, such as Nazareth and Carmiel, both in northern Israel. In 2014, commercial/retail construction in both cities amounted to 300 and 867 meters of space respectively, compared to 9,467 and 4,445 meters in 2015.
According to real estate officials, the sharp rise in commercial space construction is because of the lack of other alternative investments. While much of the land for residential construction is tied up in programs and projects for affordable housing, commercial space is relatively plentiful. Meanwhile, the construction of numerous office projects in the Tel Aviv area has resulted in a glut of office space, although office space construction was strong in the periphery, the statistics showed.
According to Eran Cohen, chairman of the Israel Real Estate Assessor’s Association, “Israel is experiencing the highest rate of natural population growth in the Western world, and the number of residents goes up by some 40,000 annually. Thus there is a large demand for property for construction of facilities to serve the needs of that growing population.”