Key Takeaways
- Madad is the Construction Input Index, published monthly by Israel's Central Bureau of Statistics, tracking the costs of materials and labor in residential construction.
- Off-plan apartment contracts customarily link unpaid balances to the Madad, so the buyer's deferred payments rise with construction inflation during the build.
- On a 20/80 contract with delivery in 3 to 5 years, Madad linkage can add 5 to 15 percent to the buyer's total nominal cost depending on the inflation environment.
- Some developers offer a Madad cap (typically 3 percent annual) or partial Madad protection; these are negotiable and worth requesting at contract stage.
Short Answer
Madad is the Construction Input Index, Israel's official measure of residential construction-cost inflation, published monthly by the Central Bureau of Statistics. Off-plan apartment contracts customarily link the buyer's unpaid balance to the Madad, so the deferred installments rise with the index between contract signing and delivery. On a typical 20/80 plan with delivery in 3 to 5 years, Madad linkage adds materially to the buyer's total cost. The mechanism is standard in Israeli off-plan, not negotiable away in most contracts, but the cap and base date are negotiable.
Full Definition
The Madad Tashomot HaBniya (Construction Input Index) is published monthly by the Israel Central Bureau of Statistics (Lishkat HaMerkazit LeStatistika). The index tracks input costs to residential construction: structural materials (concrete, steel, blocks), finishing materials (tiles, plumbing, glass), and labor at the wage rates Israeli builders pay site workers, technicians, and supervisors. The index is rebased periodically; the current base is typically the 12-month rolling reference. Off-plan apartment contracts in Israel customarily link the buyer's unpaid balance to changes in the Madad from a defined contract base date forward. As the Madad rises, each subsequent installment the buyer owes is recomputed to apply the cumulative index increase. The mechanism is one-directional in practice: if the Madad falls (rare in Israel's inflationary environment), most contracts do not reduce the buyer's payments correspondingly. Bank of Israel publishes Madad data alongside CPI; foreign buyers can review the 12-month trailing index movement before signing to estimate exposure.
Why It Matters for Foreign Buyers
Madad linkage is the largest source of cost surprise for foreign off-plan buyers. On a ₪5 million purchase with 20 percent paid at signing and 80 percent due at delivery in 4 years, a Madad increase of 3 percent annually compounds to approximately a 12.5 percent increase on the deferred ₪4 million balance, or ₪500,000 of additional cost not anticipated at contract. Three negotiation levers worth requesting at contract stage. First, request a Madad cap (typically 3 percent annual). Some developers grant this; some do not. Always ask. Second, negotiate the Madad base date: the earlier the base, the less index uplift the buyer pays. Third, structure the payment schedule to front-load payments through milestones rather than back-load to delivery; every shekel paid earlier is one shekel that escapes Madad indexation. Israeli counsel will calibrate these levers per contract, and the variance is meaningful on luxury price points.
Related Reading
Sources and References
Reviewed by Hershtik & Adoram, May 2026. This glossary entry is informational and does not constitute legal or tax advice for any specific transaction. Israeli real estate law evolves; verify current rules with qualified Israeli counsel before relying on any specific figure or rule.