Dun & Bradstreet: Israeli Building Management Fees to Rise 8%-12% This Year

Fees at prestigious residential high-rises are about 400% higher than at standard buildings.

Israel's building management and maintenance industry generates turnover of about NIS 2 billion a year and is expected to grow between 4% and 5% annually, according to Dun & Bradstreet. The financial information company sees management fees rising 8% to 12% this year because of higher electricity and water prices, greater manpower costs and higher VAT.

Meanwhile, management fees at prestigious residential high-rises are about 400% higher than at standard buildings. While at ordinary buildings residents pay NIS 2 to NIS 3 per square meter, or about NIS 200 to NIS 300 per month, at prestigious buildings management fees range from NIS 6 to NIS 16 per square meter. At these buildings, fees can amount to thousands of shekels a month, especially for a large apartment.

Thus, for example, according to Israel's building management association, at the Meier Tower going up on the corner of Rothschild Boulevard and Allenby Street in Tel Aviv, monthly management fees are expected at NIS 17 per square meter. For the smallest unit in the building, 205 square meters, the tenant will pay NIS 3,500, while in the most expensive unit, 1,500 square meters, the tenant will pay NIS 25,500.

Another example is the Marina Heights vacation-apartments project in Herzliya, where management fees stand at NIS 16 per square meter, putting the average monthly fee at NIS 1,500 to NIS 3,000. Another example is the Leonardo City Tower in Ramat Gan, where monthly management fees range from NIS 850 for a two-room apartment to NIS 4,000 for penthouses.

According to D&B, about half the industry's annual turnover goes to the seven leading companies, which manage about 30% of the square meters in managed buildings. According to D&B, about 20% of cooperative buildings employ management companies – about 40,000 buildings. Most other cooperatives  work with representatives of building’s tenants.

Maintenance and management companies provide services including cleaning and gardening. Prestigious buildings offer additional amenities such as a swimming pool, a fitness room and 24-hour security guards. These raise maintenance fees by hundreds of shekels a month.

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