Companies that borrowed heavily and credit companies are the first to be hit, followed by property, industrial and service companies.
Large Israeli companies, like Lev Leviev's Africa Israel and the Fishman Group, have in recent years expanded their global reach, including heavy investments in the US property market.
'The local real estate sector is very much impacted by the higher cost of raising money and the dependency on foreign capital to finance projects. At the same time, rising inflationary pressures are leading the central banks to raise interest rates, which in turn is lowering the profitability of investments by real estate companies,' said Asaf Ravkai, CPA, a partner at B.D.O Ziv Haft accountants.
It is a familiar picture. Ravkai added that banks financing property projects were making it harder to borrow, while the capital markets, one of the main sources of finance for real estate companies, were not functioning properly.
'The emergence of a global economic crisis, mostly in the US, is now having an impact on the Israeli capital market. The value of assets in the hands of the general public is reduced and the number of big winners in the stock market is shrinking,' said Yossi Gordon, director-general of the Contractors and Builders Association.
He reckons that the luxury property market will feel the effects first. 'Fewer people will be able to buy apartments in luxury towers,' he said.
Yehuda Raveh, founder and senior partner of Yehuda Raveh & Co. Law Offices, which specializes in real estate development and construction, warned that American investors affected by the financial crisis and the expected economic slowdown would not be rushing to invest abroad.
'We can expect a significant slowdown in property deals by US investors in Israel. Buyers are poised to fiercely negotiate prices and conditions,' he said.
Separately, the Israel Manufacturers Association published a survey on Wednesday showing that more than 75 percent of Israeli industrialists believe that a financial crisis like the one in the US could also break out in the country.
