Africa-Israel Investments Ltd. (TASE:AFIL) unit Africa-Israel Residences Ltd. (TASE:AFHS) reports that it signed 125 housing sale agreements in June amounting to NIS 254 million, not including VAT (an average of over NIS 2 million per apartment), thereby confirming reports of record housing sales just before the increase in purchase tax for housing sponsored by Minister of Finance Moshe Kahlon took effect. These sales accounted for over half of the company’s business in the second quarter of 2015, in which it signed 236 sales deals for a total of NIS 507 million, not including VAT.
Africa-Israel Residences, controlled by Africa-Israel’s Danya Cebus Ltd.(TASE: DNYA) subsidiary, adds that it signed 125 sale deals in the first quarter of the year (the same number as in June) worth NIS 292 million. The controlling shareholder in Africa-Israel is Lev Leviev. Africa-Israel Residences, managed by CEO Oren Hod, said, “The significant increase in the volume of sales was affected the timing of approval for the recent legislative initiative aimed at raising the rate of purchase tax in June 2015.” The company believes, “The sharp increase in the volume of apartment sales in this quarter is not confined to our company.”
Last month, the Ministry of Finance decided to forward the rise in purchase tax on real estate investors to June 24, thereby inspiring intense activity among investors expected to be affected by the law. Following the revision, the purchase tax will be 8% on apartments valued up to NIS 4.8 million and 10% on apartments valued at over NIS 4.8 million.
Africa Israel Residences, which develops residential projects throughout Israel under the Savionim brand name, has prospered in recent quarters as a result of the prolonged boom in demand for apartments in Israel. The company’s share price has risen 35% this year, giving it a NIS 760 million market cap.
Africa-Israel Residences says that it is publishing the figures for reasons of prudence, “in view of the publication of an offer to purchase for the shares of Danya Cebus, the parent company.” Last month, Africa Israel published an offer to purchase for Danya Cebus shares, as part of its preparations for implementation of the Concentration Law, which requires holding companies to reduce the number of levels in their ownership pyramid to two.