The year 2025 was a direct continuation of the complex year of 2024, perhaps one of the most challenging years the Israeli real estate market has experienced in recent decades.
The clearest lesson is that urban renewal is neither a luxury nor a privilege, but rather an existential necessity.
Anyone who still views urban renewal as merely a real estate project is denying reality. In the Israeli reality, where the threat of missiles has become routine, living in old buildings constitutes a genuine danger.
Urban renewal is necessary for Israel
This year was not complex because of a single dramatic event, but rather due to an accumulation of processes: the effects of a war that entered its second year, prolonged economic uncertainty, an interest rate environment that remains strongly felt, and a system grappling with overload and structural challenges.
Those who predicted a "recovery year" quickly discovered that, given the complex security situation, this did not align with reality. This was a year of slowdown, of reassessment, and above all, of filtering. Not every developer ended the year in the same position they entered it.
The Swords of Iron War, which erupted at the end of 2023, was not a "passing event" for the real estate market. Even today, more than two years since the outbreak of the war, its impact is evident across nearly every layer of the industry: from delays in timelines to shortages of professional manpower to shifts in the perspectives of buyers and developers alike. Anyone who thinks the current security reality is a passing phenomenon is mistaken. The situation will only intensify and worsen over the years, and the buildings are not getting any younger.
One of the defining characteristics of the past year was the slowdown in activity. Transactions stalled, projects were delayed, and buyers became cautious, carefully examining every decision in depth. Developers were required to exercise greater precision in planning, financing, and project selection.
Those who operated cautiously, with a deep understanding of the terrain, the human fabric, and the regulatory environment, continued to generate momentum. Those who did not lost out.
Nevertheless, in recent months, urban renewal has clearly strengthened, remaining one of the main engines of activity. More and more local authorities have come to understand that the path to residents' security and to improving urban quality of life lies in renewing existing structures, rather than in outward expansion.
Another significant development was the shift in discourse, fewer conversations about "quick profits" and more discussion of responsibility, sustainability, and long-term adaptation to the needs of residents and cities. The public has become more involved, asking questions and demanding transparency; in my view, this is a healthy trend for the industry.
Ultimately, 2025 was a test year. A year in which it became clear who knows how to operate even under complex conditions, who understands that real estate is a long-term game, and who is capable of seeing beyond the momentary noise.
A clear line emerged between responsible development and speculative development. Those who employed realistic planning and deep familiarity with the terrain continued to advance. Those who relied on perpetual tailwinds discovered that the wind can shift direction.
Looking ahead to 2026, the real estate market is not expected to experience a sharp breakthrough but rather a gradual stabilization. Those seeking a sharp surge or a dramatic "comeback" will likely be disappointed.
If we see a continued return to full normalcy in the economy and greater regulatory certainty, the industry will be able to resume more stable and balanced activity, grounded in proper planning, professionalism, and patience.
The author is the CEO of Yanov Construction and Development Ltd.