Real Estate

All about TAMA 38

Weizman before  Weizman after

American Israel has been in the TAMA 38 business for the past six years. We spoke to Aryeh Deverret of American Israel Corp for some more insight into the project and American Israel’s involvement.

What is TAMA 38?
TAMA 38 is a government program established to strengthen old apartment buildings against earthquakes. The program has two main goals: to make buildings safer, therefore preventing the devastating damage and loss of life that can be caused by an earthquake; and to address the housing shortage in many popular cities in Israel.

Israel lies along a fault in the earth’s crust, making it particularly vulnerable to earthquakes. This summer, in fact, we experienced several small tremors, felt mainly in the north. By implementing TAMA 38, property owners can protect buildings and their inhabitants against the potentially dangerous effects of an earthquake, as well as expand their properties by adding additional floors—thus filling the housing void in high-demand areas.

Who are the winners and losers in TAMA?
In a TAMA project, everyone wins. The residents benefit from a strengthened and upgraded building at no cost to them. A TAMA project renovation makes the building bigger, stronger, better-looking, more accessible and generally worth at least 30% more than its pre-renovation value. Municipalities benefit from the urban renewal and from the fees and taxes generated by new apartments. They also don’t need to pay TAMA developers, but they must ensure there is enough infrastructure in the TAMA neighborhoods. Developers benefit by earning substantial returns from the new apartments they build in TAMA projects. This means they can offer significant financial remuneration to investors who lend them financing for construction.

What is AIC’s role in TAMA 38?
American Israel Corp (AIC) is both a finance company and a developer. Our finance division supplies construction loans to third-party TAMA developers. To date, we have completed five project loans, and we currently have 26 projects being financed, with five different developers. We also develop our own TAMA projects: We have nine projects under development, and more coming. Most of our TAMA projects are in the Gush Dan (Tel Aviv) region, which has been much more progressive with TAMA projects than Jerusalem has (so far!).

How big is the TAMA market?
There are lots of stats available about TAMA, but by our estimate, there are about 250,000 apartment buildings in Israel that qualify for TAMA renovation. I estimate that about 80,000 of those buildings will actually undergo a TAMA renovation. There are about 20+ larger TAMA developers, like us, who have 10 or more buildings in their portfolio, and dozens of smaller developers working on two or three projects. About 900 buildings have completed TAMA renovations so far. There are probably another 1,000 in construction and 2,000+ in various planning stages. Even if there were 100 TAMA developers who completed 10 projects per year, at least 75+ years of TAMA development would lie ahead. The market is huge, proven and rewarding.

Should someone invest in a TAMA project?
TAMA projects generally pay investors a significant double-digit annual return. There is very little risk in a TAMA project, making them excellent investments.

Would it be better to buy another apartment or invest in a TAMA project?
If you live in Israel, it’s always a good idea to try to own the home you live in. I also encourage all Jews living abroad to consider investing in Israel. However, if you already own a home, or you live abroad and you want the best real-estate-based financial investment in Israel, then you should consider investing in a TAMA project versus buying a property.

Owning an apartment in Israel is a hassle. Between maintenance, managing renters and taxes, you’ll be lucky to earn 2–4% per year. That’s not a great financial investment. When you invest in a TAMA project, however, you will generally earn 4–5 times more, with no hassles, no maintenance, no management and minimal taxes—and you will be helping strengthen old, unsafe buildings and build new apartments for Israeli families. I always recommend to consider investing in TAMA projects. Earn a good return—and then one day use all of that extra profit to buy your dream home in Israel.

What can go wrong in a TAMA project? What are the risks?
As you probably know, one of the biggest frustrations with all real estate projects in Israel are delays. It can take a long time to sign up a TAMA project and get a building permit. However, once construction begins on a TAMA project, it generally moves along quickly, because the people living in the building during the construction phase will be inconvenienced and will demand that the project be finished on time.

One “uncontrollable” risk for TAMA projects is apartment price reductions. However, that is generally a risk for the developer, not the investors. Investors in our projects earn a preferred fixed rate return that is paid out first.

Another potential risk is the developer himself. Yes—that would be us, or the other developers that we fund. What if something happens to the developer during the course of the project—a financial situation, or G-d forbid, an illness or even death? Things happens to people. But those “things” doesn’t affect our projects. We have a very tight system of checks and controls to protect our projects and our investors and ensure that every project continues to completion.

What is the future of TAMA in Israel?
TAMA projects are going to change the face of Israel; they already are. By now, every Israeli has probably seen or heard about a TAMA project. Wherever you go, more and more TAMA project signs are popping up. Back in the 50s, tens of thousands of apartment buildings were erected quickly to accommodate the mass immigration at that time. Now our generation has the privilege of rebuilding these buildings, making Israel into a modern, vibrant and earthquake-safe place…and earning significant returns at the same time.

What new innovations do you bring to TAMA?
 Periodically, we have investors who want to partner with us on a project. Depending on the size of their investment, we can offer a partnership program that includes training in becoming a TAMA developer. So their gain is twofold: they earn a very nice return and develop a new career while they’re at it.


For more information about TAMA 38 projects contact Aryeh Deverett at 053 831 0270 or visit their website at

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