A new cadre of Israeli investors has charged into the sophisticated New York City real estate arena, doing billions of dollars worth of deals, thanks to little-publicized recent changes in the U.S. E-2 Visa Program. On a smaller scale, they are also hunting for investments in Florida and on the West Coast.
The visa changes allow foreign investors to live in the U.S. while investing a certain amount of capital in U.S. businesses.
For example, the Obama administration changed the rules earlier this year to allow Israelis to qualify for the program. The program requires them to invest as little as $100,000 in a U.S. entity in order to receive a visa.
Real estate brokers in the U.S. and Israel say the rule changes have made the E-2 visa a favorable alternative to the older EB-5 Immigrant Investor Program, which requires an investment of $1 million. The E-2 program takes only about 90 days to close a deal; the more complicated EB-5 program takes much longer.
The E-2 program appeals to Israeli investors who like to do deals quickly. The new crop of Israeli investors is also gaining a reputation for out-bidding rivals and some times over-paying for properties, according to media reports.
Although the Israeli government has not yet formally signed off on the rule change, Israeli investors are scurrying to buy property in the U.S. Many are attracted to the condo markets in Manhattan and Brooklyn.
Names well-known in the New York and Israeli real estate investment markets include the Elad Group, Izaki Group Investments billionaire Shaya Boymelgreen, Naftali Group, Fishman Holdings, Victor Homes, Moshe Shuster and the Keystone Group.
Guelda Voien of The Real Deal Inc. reports Industry insiders say there's a "flight of capital" of Israeli money from Europe, which is currently experiencing more severe economic weakness than New York.
Many of the Israelis investing in New York real estate are executives or owners of companies from Israel's booming technology sector. They want to park some capital outside of Europe to diversify their investments.
The current group of active Israeli buyers includes the newly formed Naftali Group, which has purchased four existing properties and four development sites in recent months, including a 90,000-square-foot site in Boerum Hill, Brooklyn, where it will build an 85-unit luxury rental building.
Tel Aviv native Miki Naftali founded the firm last year after leaving his post as the CEO of Elad Properties, the New York subsidiary of the Elad Group.
Meanwhile, Fishman Holdings , a subsidiary of Tel Aviv-based telecom giant the Fishman Group, bought 950 Second Avenue, a Manhattan development site, in December. It is also in contract to sell the stalled condo project 5 Franklin Place for $44.75 million to Elad, The Real Deal Inc. reports.