Israel's real estate market is at an inflection point, compelling property owners and investors to re-evaluate their portfolio strategies. A new Knesset legislation, which expands the possibility of adding a reinforced safe room (MAMAD) of up to 15 square meters with a full capital gains tax exemption, is more than mere regulatory relief; it is a catalyst reshaping the economics of residential properties.
Previously, the hefty levy acted as a significant financial barrier, rendering many such projects unfeasible and preventing property owners from making this critical upgrade. Its removal creates a clear opportunity to generate substantial economic value in direct response to shifting market demands and a new security reality.
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Ramat Gan residents in a shelter during an Iranian missile barrage
(Photo: Shaul Golan)
On-the-ground data reveals a clear and crystallizing reality: the rental price gap between protected and non-protected properties has become a sharp economic indicator. An average gap of approximately NIS 3,000 per month for protected apartments in Tel Aviv is no longer a statistical detail but a distinct premium reflecting the market's willingness to price for risk and peace of mind.
Similar gaps, ranging from NIS 1,700 to NIS 2,500 in other central cities, demonstrate how security has become a core component in rental pricing. Demographics are the key driver here; families with children, a primary target audience in the rental market, are now almost automatically filtering out apartments without proper protection, dramatically shrinking the potential tenant pool for exposed properties. This trend, which is only expected to intensify, is effectively creating a two-tiered market.
This trend is even more acute in the sales market, a barometer for long-term investor sentiment. The fact that approximately 60% of second-hand property transactions in the second quarter of 2025 involved protected apartments signals a profound perceptual shift. Buyers are no longer just purchasing "four walls" but a comprehensive housing solution with built-in risk management.
Consequently, properties without security features suffer from significantly lower liquidity, evidenced by reports of apartments "sitting on the shelf." Real estate agents now openly admit their preference for marketing protected properties, understanding they will sell faster and attract more serious buyers. From an asset management perspective, extended time on the market translates directly into higher holding costs, lost potential income and even difficulties in securing optimal bank valuations.
Ortech Defence Systems CEO Ran Naor Photo: Goren WitkindContrary to common belief, the necessary adaptation does not necessarily require massive capital investment. Modular and effective solutions exist, such as retrofitting internal rooms into protected spaces through dedicated reinforcements and fortification of openings, including doors and windows, as part of a Home Front Command-approved system. These solutions, which are often quicker to implement, allow for property enhancement at a relatively low cost compared to constructing a full MAMAD, while achieving a significant protective and perceptual impact.
Crucially, such a retrofitted room maintains its original function—whether as a quiet home office, a bedroom, a safe playroom for children or a study—thereby preserving and even enhancing its functional value within the property.
The bottom line is that the decision to secure a property has transcended the security discourse to become a rational economic imperative. A property owner who fails to act now is not only forfeiting potential returns but is also exposing their portfolio to risks of illiquidity, value depreciation and non-compliance with the new market standard.
The current legislation has created a unique window of opportunity to align with market demands while leveraging government incentives. Ignoring this trend is not just a missed opportunity; it is a strategic error in modern asset management. This is the necessary step to ensure your property will not just survive, but thrive in tomorrow's competitive market.
- The author is the CEO of Ortech Defence Systems.