The substantial number of Jerusalem apartments owned by non-resident foreign buyers has led to concerns about a "ghost town phenomenon." As reported by In Jerusalem, at a recent conference hosted by the Jerusalem Ethics Center, Hebrew University Prof. Shlomo Hasson claimed the comparative emptiness of inner city areas such as Rehavia, Talbiyeh, Mamilla and the German Colony has led to a reduction in the quality of municipal services. The solution, he claims, lies in the introduction of an affordable housing program similar to those in place in various European and American metropolises. He argues that a scheme of this nature, which would require a certain percentage of the properties in every new development plan to be sold at reasonable prices, would ensure that "urban dwelling is an option for all sectors of society while also recognizing the right of wealthy foreigners to invest in Jerusalem." His ethical reasoning has been called into question in various quarters. Fellow ethics expert Asher Meir, of the Business Ethics Center of Jerusalem, argues that attempting to house certain sectors of the population in specific areas is an extreme infringement on market forces. "While certain elements within the capital may wish to attract low-income Israelis to Jerusalem, particularly students and young professionals who bring unique benefits to any city, existing government programs providing incentives to these specific populations are a far more effective and ethical means of achieving this goal than demanding that such populations live in the middle of Rehavia," he argues. "This stipulation appears to reflect the personal preferences of the conference organizers more than anything else." Meir adds that the exclusivity of a certain number of a city's neighborhoods is a sign of a healthy economy. Alternatively, he proposes the introduction of zoning (the construction of apartments of varying sizes, and therefore varying values, in new developments), arguing that this scheme "requires less manipulation of market forces." According to Benny Loval, manager of the Jerusalem branches of the Anglo-Saxon real estate company, the introduction of zoning in sought-after inner-city areas would be insufficient to enable low earners to purchase apartments there. "A two-room apartment in some inner-city areas would still cost over half a million dollars," he argues. "Location amounts to a significant proportion of a property's value." Loval also acknowledges the difficulties faced by first-time Israeli buyers looking to make their home in Jerusalem. "Although it would be foolish to ignore the advantages of foreign investment for the Israeli economy, the detrimental effect of overseas money for prospective first-time Israeli buyers must also be considered." He claims that the trend is no longer limited to a few prosperous neighborhoods in the center of the city but is currently impacting "a secondary set of areas," among them Talpiot, French Hill, Ramot Eshkol and Beit Hakerem. On average, Loval says, house prices in Jerusalem have increased by 20 percent in recent years and consequently the options for young buyers are becoming consistently fewer. "If you asked me where a young Israeli can buy today... only a few outer areas such as Kiryat Hayovel, Tzur Hadassah and Pisgat Ze'ev spring to mind. "I don't underestimate the importance of foreign investment," he continues, "but I think some form of affordable housing should be implemented." Davyd Tal of real estate agency Jerusalem Homes echoes Loval's sentiments. He cites examples of the increased investment in the capital from foreign haredi buyers. "The overseas haredi market, which is one of the areas we specialize in, has increased considerably in recent years." According to Tal, wealthy haredi Americans are purchasing vacation homes in traditionally non-haredi areas in the north of the city. "There's increasing interest in areas such as Ramot Eshkol and French Hill, which are close to haredi strongholds such as Romema and Kiryat Mattersdorf, meaning that obviously prices in these areas are now rendering them out-of-bounds to many Israelis." He acknowledges, however, that some of his potential clients are hesitant at the prospect of settling in Jerusalem for other reasons. "The lack of employment opportunities and the city's strong ultra-Orthodox and Arab presences are factors influencing young, secular professionals' decisions to bypass Jerusalem," Tal says. He notes that the majority of investors, Israeli or otherwise, are religious while sellers tend to be secular. Amit Poni of New Spirit, an organization dedicated to encouraging young people to live in the capital, also acknowledges the multiplicity of factors deterring potential first-time buyers from Jerusalem. "Obviously the professional opportunities aren't as numerous as those in Tel Aviv, which is something the government is attempting to rectify," he explains. "The nature of the city's population is also unattractive to young, secular buyers." Nonetheless, Poni maintains that the price of Jerusalem properties is a major deterrent for many first-time buyers. "The crux of the matter is that Israelis can't afford to rent here, let alone buy." Their dilemma is not lost on Jerusalem's land developers, says Yossi Schecter of the Jerusalem Contractors Association. "Our members are Jerusalemites and the future of the city is a matter of concern to us," he says. According to Schecter, however, the solution lies in the development of new land rather than construction in existing neighborhoods. "Essentially the problem is that there isn't enough land for sale in Jerusalem," he argues. "Contractors would willingly purchase cheap plots on the outskirts of the city and sell apartments in new developments at reasonable prices… but expecting us to develop expensive inner-city land and sell apartments for less than their value is unrealistic." Schecter also maintains that for affordable housing developments to be worthwhile for contractors, they must be high-rise apartments blocks, the construction of which is likely to meet opposition in expensive inner-city neighborhoods as well as often being logistically unfeasible in these areas. "It is also important that the substantial gains foreign investors bring to the Israeli economy not be forgotten," he adds. Judy Cohen bought a flat in Rehavia a few years ago with her husband. "We wanted to have a foothold in the Israel as well as doing something good for the economy by investing," she says. "We didn't think about the long-term effects our investment would have on the price of apartments in Jerusalem." Martin Kurzer, who recently bought an apartment in Katamon, echoes her sentiments. "Our children were getting older and spending more time in Israel and we wanted a base for them. We were also motivated by wanting to invest in the Israeli economy. We didn't think in the long term about the effect this would have on property prices in Jerusalem," he says. According to Amit Goldstein, a real estate attorney dealing with overseas buyers, such reasoning often motivates his mainly American and British clients. "Of course Jewish foreign investors are partially motivated by self-interest, but generally they also feel very connected with the Israeli people and believe that they are aiding their country," he says. "It is also incorrect to assume that they visit on a twice-yearly basis... many of them come up to six or seven times each year and eventually make their home here permanently."

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