Buy Warehouse and Industrial Property in Israel | IsraRealty

Warehouse and Industrial Spaces in Israel

Purchasing a warehouse or industrial space in Israel is currently considered by investors as one of the most stable methods for preserving and growing capital. The growth of the e-commerce sector and the need for modern logistics hubs create a deficit in high-quality spaces, which directly impacts rental yields and asset capitalization. In this article, we will break down how to select a property, what to look for when verifying documents, and which taxes apply to the transaction.

Industrial Real Estate Market: Current Trends

In recent years, the Israeli industrial real estate market has undergone a significant transformation. While simple production workshops were the main focus in the past, the emphasis has now shifted to high-tech logistics centers (Logistics 4.0). This is due to the shortage of available land in the center of the country and increasing requirements for warehouse automation.

Key factors influencing property selection:

• Ceiling Height: Modern standards require 10–12 meters for efficient rack storage.
• Floor Load Capacity: For heavy manufacturing or high-rise warehouses, this parameter is critical (from 3 to 5 tons per sq. m).
• Electrical Capacity: Industrial properties require high-power connections, which must be verified by technical documentation.
• Transportation Accessibility: Proximity to major highways (Highway 1, Highway 6) determines the liquidity of the property.

Geography of Israel's Industrial Zones

The choice of location depends on the business's operational goals or investment strategy. Israel is divided into several key industrial clusters, each with its own characteristics.

Taxes and Associated Expenses

Unlike residential real estate, where tax rates can vary based on property value and ownership of other homes, buying a warehouse or workshop in Israel is governed by simpler, yet strict, rules.

1. Purchase Tax (Mas Rechisha)

For commercial real estate, the tax rate is 6% of the transaction amount. This tax is paid within 60 days after signing the purchase agreement.

2. Municipal Tax (Arnona)

Arnona for industrial spaces is usually lower than for offices but higher than for residential units. The rate is set individually by each municipality and depends on the type of activity (warehouse, production, retail). It is important to verify the property's designated use category in municipal records in advance.

3. VAT (Ma'am)

Commercial real estate transactions are subject to VAT (currently 17%). If the buyer is a company (Osek Murshe or Ltd), VAT is generally refundable or deductible, though this requires proper accounting support.

Transaction Stages and Legal Verification

Buying an industrial property requires a deeper audit than buying an apartment. Errors at the audit stage can lead to the inability to use the premises for their intended purpose.

• Property Rights Verification (Tabu): It is necessary to ensure there are no liens, mortgages, or cautionary notes (aarat azara).
• Engineering and Construction Audit: Verification of the property's actual state against approved plans (Heter Bniya). Illegal extensions can lead to heavy fines.
• Environmental Standards: For production spaces, it is important to verify the absence of soil contamination and compliance with Ministry of Environmental Protection regulations.
• Purchase Agreement: Regulates the payment schedule, transfer dates, and the responsibilities of both parties.

Frequently Asked Questions

Conclusion

Buying industrial real estate in Israel is a strategic step that requires a detailed market analysis and consideration of legal nuances. Choosing the right location, such as Ashdod or Shoham, combined with a thorough verification of permits in the Tabu and municipality, guarantees stable rental income and asset appreciation in the long term. The IsraRealty team is ready to be your partner in finding and securing the best properties in the commercial sector.

Disclaimer: This material is for informational purposes only and does not constitute legal or financial advice. Tax parameters and zoning rules are subject to change. It is recommended to consult with a specialist before proceeding with a transaction.

Last updated: 2026-03-28