Mall giants Azrieli and Melisron target residential real estate

Israeli income-producing real estate giants Azrieli Group and Melisron have diversified into residential real estate through major acquisitions, moving beyond their traditional focus on shopping malls and offices. First-half 2026 results show increased apartment sales, but net profits fell for both companies due to lower revaluation gains and higher expenses. Analysts note the shift is driven by eroding yields in commercial and office properties, but caution it is too early to assess long-term profitability. The diversification marks a strategic pivot for these mall-focused firms as they seek growth in the housing market.

Israeli income-producing real estate giants Azrieli Group and Melisron have diversified into residential real estate through major acquisitions, moving beyond their traditional focus on shopping malls and offices. Azrieli acquired 67% of ZMH Hammerman in 2025 for NIS 635 million, while Melisron merged with Aviv Development in 2024 at a company valuation of about NIS 1.2 billion. First-half 2026 results show increased apartment sales: Melisron sold 166 apartments, nearly triple the prior year, driven by the 'Aviv in the Sky' project in Herzliya marketed with Gwyneth Paltrow. Azrieli's ZMH Hammerman sold 127 apartments (54 in Azrieli's share) for NIS 254.9 million, a jump from 52 apartments in the corresponding period. However, both companies saw net profit declines: Melisron's net profit fell 33% to NIS 289 million, and Azrieli's net profit dropped from NIS 320 million to NIS 155 million, mainly due to lower real estate revaluation profits and higher expenses. Analysts say the shift stems from eroding yields in commercial and office properties, but caution it is too early to assess long-term profitability.