Israeli Capital Seeks Home in Atlanta

By Al Shams | Business Sense 

As Jews living in the United States, we are accustomed to viewing Israel as a country seeking help and capital to promote growth. But things are changing: Israel is becoming a source of capital for the U.S. economy, particularly for real estate.

Conexx and law firm Arnall Golden Gregory held a breakfast meeting June 11 on “Atlanta’s Rise as a Deal Making Portal for Israel.” Translation: A growing number of Israeli institutions and individual investors are seeking real estate opportunities in Atlanta and the Southeast.

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Israel’s tremendous economic growth the past 15 years has dramatically increased the capital available for investment.

Israel has a total land area approximating that of New Jersey, and much of that land does not lend itself to development. Barriers to entry are high, and prices have escalated dramatically the past 10 years.

So it makes sense for Israelis to seek real estate investment opportunities outside Israel. Also, when you consider that the country is surrounded by enemies, it makes sense to diversify wealth to another part of the world.

Randall Foster, the managing director of FOCUS Investment Banking and chairman of Conexx’s Invest in Israel committee, served as the panel’s moderator.

Foster reviewed the dramatic growth of the Israeli economy; it is now second only to Silicon Valley as a hot bed for technology startups. He also mentioned the significant contribution Conexx has made to bilateral growth.

The panelists:

• Abe Schear Randall Fosteris a senior partner at AGG and practice leader of the firm’s global real estate and Israel business efforts. He has been involved with Israel on many levels for years and has traveled there more than 20 times the past 10 years.
• Mier Matana is a principal of Atlanta-based Crown Holdings Group, a real estate company creating opportunities in the Southeast in multifamily housing, retail and real estate development. He was born and educated in Israel and has experience in law, finance, real estate and investment banking.
• Norman Radow was born and educated in New York and holds a law degree from New York Law School. He has extensive experience in real estate litigation and transactions. In 1994 he formed Radco; one of its first projects was the redevelopment of the Four Seasons Hotel in Midtown. Radco has been involved in dozens of projects the past 20 years and is focusing on multifamily housing.

The panelists were in general agreement on these items:

• Many Israeli investors saw Eastern Europe as an attractive region because of its proximity to Israel (within a two-hour flight); lack of development during 50 years of Communist rule; availability of vast land at low cost; proximity to major population centers in Western Europe; large population of people eager for employment; and governments seeking economic growth.
• But that analysis proved flawed. Israeli investors did not anticipate the vast corruption, chaotic regulation and confiscatory laws that combined to render the region undesirable for large capital infusions.
• Israeli investors looked for another region favorable for investment and decided that the U.S. Southeast scored high because of U.S. adherence to the rule of law; lower levels of corruption; fewer arbitrary confiscatory rules; relatively stable governments; and title insurance, which is important for institutional investors because it reduces confusion in the sale of real estate.

Why have Israeli investors zeroed in on Atlanta?

The panelists cited the efforts of Mayor Kasim Reed and Gov. Nathan Deal to seek outside capital, especially from Israel, to a dynamic area with great growth potential.

The Southeast offers a good lifestyle and relatively low costs in a right-to-work region with good infrastructure, low taxes, and a pro-growth attitude from local and state governments. Plus, Hartsfield-Jackson Atlanta International Airport makes travel easier.

Radow, while positive about Atlanta, mentioned that the city and the metro area have some important needs that must be addressed, including water infrastructure, transportation alternatives and highway congestion.

The panelists agreed that more Israeli capital will find an inviting reception in Atlanta.

Writer’s Commentary

For more than 45 years, most of Eastern Europe lived under brutal Communist rule and suffered under harsh economic and social policies. These were once-vibrant economies that had great potential for growth with the arrival of Israeli capital.

Eastern European leaders had an opportunity to partner with one of the world’s most dynamic economies. But they were consumed with short-term gain, greed and corruption — opportunity lost. With farsighted leadership, those nations could have benefited from Israel’s success as the “Startup Nation.”

Instead, these countries now face economic and military threats from Russia. They had a 15-year window to embrace capitalism and democracy; with a strong economy they would have been in a much better position to deal with Russian imperialism. Good leadership can be so beneficial; bad leadership carries a high cost.

Al Shams is a Sandy Springs resident, a former CPA, and an investment professional with more than 35 years’ industry experience.