When Africa-Israel Investments and Brooklyn developer Shaya Boymelgreen announced in July that they were planning to build $1.5 billion of residential and office development near downtown Miami and on South Beach, South Floridians took notice. Not only was the plan ambitious given Miami's recent explosion of development, but it also was unusual for an Israeli company to be cited as the major source of funds for such a large venture.

The Africa-Israel plan represents the tip of the iceberg of Israeli investment and development in South Florida. Although there is no official tally of the volume of Israeli capital finding its way into South Florida real estate, private investment by Israelis — mostly in residential real estate — has increased markedly in the past five years, according to Miami-based Robert Kaplan, managing director at Holliday Fenoglio Fowler.

And that investment is not confined to South Florida. Israeli investors and developers have set their sites on Orlando, Naples, Miramar and other cities as well, according to Miami-based Miki Arbel, consul general at the consulate of Israel for Florida.

For example, the Miami-based El-Ad Group of Florida — led by Yitzhak Tshuva, controlling shareholder of the Israeli public company The Delek Group — recently bought the BellSouth Tower in Jacksonville for roughly $90 million.

There are many reasons Israelis have been pouring capital into South Florida real estate in recent years. The region is considered one of the most prized commercial real estate markets in the country, and it is convenient for Israelis. Not only is it easier to get to Miami than to California from Israel, there is a large Jewish community in South Florida, including a large contingent of ex-patriot Israelis.

There also are economic reasons for Israelis to find alternative places where they can invest and develop. “The Israel real estate industry has been stagnant for a few years,” says Morty Etgar, an Israeli CPA in Coral Gables who specializes in accounting issues related to Israeli and American investment. Large contractors are not building much in Israel because of a shortage of construction employees, many of whom have been Arabs, he says.

Today, many Arab workers are unable to get to work sites in Israel. “As a result,” says Etgar, “developers are parking their money in foreign real estate, especially in countries where profit margins are higher than in Israel and in markets they know, like Miami.”

In addition, Israeli rules on investing capital outside of Israel are less stringent today, making it easier for individuals and corporations to take money out of the country. Although Israelis had found ways to conceal their money outside of the country even before the restrictions were lifted, this change may have opened the floodgates to legal investment overseas, notes Chuck Ruddy, executive director of the America/Israel Chamber of Commerce in Coral Springs, Fla.

In addition, an Israeli tax law went into effect on Jan. 1, 2003, which in some circumstances allowed Israeli corporations to avoid paying taxes on profits from investments overseas until those profits were repatriated. This law is similar to U.S. tax law.

Now that Israelis have the freedom to invest and develop abroad, many are disinclined to develop at home in part to avoid dealing with the Israeli bureaucracy. An article that appeared in the Hebrew daily newspaper “Yediot Ahronot” last winter reported that the Bank of Israel was concerned that while residential building starts in Israel were falling, contractors and developers had invested $2 billion in foreign real estate in 2003.