This is the definitive guide to buying commercial real estate in Israel.

If you are trying to navigate the Israeli market—specifically for offices, retail spaces, industrial warehouses, or land—you have likely hit a wall.

The problem?

Most information is in Hebrew. The listings are fragmented. And the regulations are completely different from the US or Europe.

But here is the truth:

Despite the bureaucracy, Israeli commercial real estate can offer solid yields and capital appreciation if you know how to navigate the “Maze.”

In this guide, I am going to break down everything.

I will cover how to find listings in English, the exact step-by-step purchasing process, the tax implications (which are massive), and the legal traps you need to avoid.

Let’s dive right in.

Chapter 1: The “English Listing” Problem (And How to Fix It)

One of the most common questions from foreign investors is: “Is there a website in English with commercial real estate listings?”

The short answer is: Yes, but they are limited.

The vast majority of the Israeli market operates on Hebrew platforms. When you search for “Commercial Real Estate Israel” in English, you usually find generic agency landing pages, not dynamic databases.

Here is the strategy to find actual inventory:

1. The “Big Two” (With a Hack)

The two most powerful platforms in Israel are Yad2 and Madlan. They are in Hebrew.

• The Hack: Do not ignore them. Use the Google Translate extension in your browser. While the interface is Hebrew, the data (prices per square meter, yield, photos) is universal. This is where 90% of the market lives.

2. The English-Friendly Portals

There are specific sites that cater to Anglos, though their inventory is smaller:

• Janglo: This is a community-based board. It is excellent for smaller commercial rentals or sales in Jerusalem and Beit Shemesh, but less robust for high-end Tel Aviv office towers.
• International Brokerage Sites: Firms like CBRE Israel or Cushman & Wakefield often have English portals for high-level institutional assets (entire floors, logistics centers).

3. The “Pocket Listing” Reality

In Israel, the best commercial deals—especially off-market “skeleton” shells or high-yield retail—never hit a website. They circulate via WhatsApp groups of commercial brokers.

• Pro Tip: You cannot rely solely on browsing. You must register with a commercial broker who specializes in your target city (e.g., Tel Aviv, Ra’anana, Jerusalem).

Chapter 2: The Step-by-Step Purchasing Process

Buying commercial property here is not like buying an apartment. The zoning laws are stricter, and the financing is tighter.

Here is the exact roadmap.

Step 1: Assemble Your Team First

Do not sign anything or even make a serious offer without two people:

1. A Commercial Real Estate Lawyer: Do not use a family friend who does divorces. You need a specialist who understands Taba (Land Registry), zoning, and tax structures.
2. A Mortgage Broker (Yoe’tz Mashkantaot): Commercial financing is complex (more on this later).

Step 2: Due Diligence (The “Pre-Check”)

Before you negotiate price, you must validate the asset.

• Zoning (Tab’a): Does the city allow the business you want to run? You cannot simply open a restaurant in an office building. You need to check the Heter Le’Shimush Horeg (Non-conforming use permit) if the activity doesn’t match the zone.
• Building Rights: Are there unused building rights attached to the roof or ground floor? This is where the hidden value lies.
• Licensing: Does the property have a valid Tofes 4 (occupancy permit)?

Step 3: The Negotiation & “Zichron Devarim”

WARNING: You may be asked to sign a Zichron Devarim (Memorandum of Understanding). Do not do it. In Israel, this is a legally binding contract. If you sign it on a napkin and then discover a tax lien on the property, you might still be forced to buy it or pay a penalty. Go straight to a formal contract drafted by your lawyer.

Step 4: Signing and Warning Note

Once the contract is signed, you pay the first installment (usually held in trust). Your lawyer will immediately file a He’arat Azhara (Warning Note) in the Land Registry. This prevents the seller from selling the property to someone else while you finish the payments.

Chapter 3: Critical Concepts (The “Gotchas”)

To succeed, you need to speak the language of the market. These three concepts kill deals every day.

1. Protected Tenants (D’mei Mafteach)

In older commercial buildings (especially in Tel Aviv and Haifa), you may see a property listed well below market value.

• The Catch: It might be occupied by a “Protected Tenant.” Under old laws, these tenants cannot be evicted and pay negligible rent. Unless you are a sophisticated developer waiting for them to pass away, avoid these properties.

2. State Land vs. Private Land

• Private Land (Tabu): You own the land forever. This is the gold standard.
• Israel Land Authority (Minhal): You are technically leasing the land from the state (usually for 49 or 98 years). This is common. However, you must check if the “Capitalization Fee” (Hivun) has been paid. If not, you could be hit with a massive fee upon transfer.

3. Betterment Tax (Hetel Hashbacha)

This is not a sales tax; it is a “success” tax payable to the local municipality. If the city re-zoned the area (e.g., allowed you to build 10 floors instead of 5) during the time the seller owned it, the city wants a cut of that value increase.

• Who pays? Technically the seller, but they often try to roll this onto the buyer in commercial deals. Your lawyer must check this liability before negotiation.

Chapter 4: Taxes and Financing

This is the part that affects your ROI (Return on Investment).

The Commercial Purchase Tax

Unlike residential real estate, which has tiered tax brackets (and exemptions for single-home owners), commercial real estate is treated as a business asset.

• The Rate: You will typically pay a flat Purchase Tax (Mas Rechisha) of 6% on the entire value of the property. (Note: Rates can fluctuate based on temporary government orders, so verify the current exact percentage).

VAT (Value Added Tax)

• The Rule: Commercial property transactions are subject to VAT (currently 17%).
• The Strategy: If you buy as a business (or open a registered business file), you can usually claim this VAT back. If you buy as a private individual without a business file, the VAT is a sunk cost. This is why many investors open a “Company” (Chaveira) or a file with the VAT authority before purchasing.

Financing (Mortgages)

Banks view commercial assets as higher risk than residential homes.

• LTV (Loan to Value): Expect to put down 40% to 50% equity. Banks rarely finance more than 50-60% of a commercial deal.
• The Loan: The bank will analyze the cash flow of the property (existing rent) to justify the loan, not just your personal income.

Chapter 5: Structuring the Purchase

Should you buy as yourself or a company?

Buying as an Individual

• Pros: Simpler, less administrative overhead.
• Cons: You possess personal liability. You are taxed at your marginal income tax rate on the rental income (which can be high).

Buying as a Company (Chaveira Ba’am)

• Pros: Limited liability. Corporate tax rates on profits (often lower than high-bracket personal income tax). Ability to deduct expenses (management fees, renovations) easily.
• Cons: High setup costs and annual accounting fees.

Buying via a Trust or LLC

Foreign investors often use Trusts or foreign LLCs to hold Israeli assets for succession planning. This requires specialized legal structuring to ensure double-taxation treaties between Israel and your home country (like the US or UK) are utilized correctly.

Summary Checklist for Investors

1. Define the Asset: Office, Retail, or Industrial?
2. Translate the Market: Use Hebrew sites with translation tools.
3. Hire a Shark: Get a lawyer who specializes in commercial deals.
4. Verify the Zoning: ensure the Tab’a matches your business plan.
5. Check for Debts: Ensure no municipal debts or betterment taxes are hiding.
6. Structure the Entity: Decide if you are buying as a person or a company for VAT purposes.
7. Register: Complete the transfer in the Land Registry (Tabu).

Buying commercial real estate in Israel is a high-barrier, high-reward game. By following this protocol, you move from “outsider” to “sophisticated investor.”