Jerusalem is a holy city, which explains in part why it is so much in demand. It is also a beautiful and renowned city that is holy to the world’s three major monotheistic religions. In the past 60 years it has grown to be the largest city in Israel with a population of 770,000.
This edition of Real Estate is being published on the eve of Succot. In ancient times during the Israelite and Judean periods, this was the time when the faithful went to Jerusalem to pray in the Temple.
Today, a few thousand years later, the faithful still go to Jerusalem from the four corners of the world. For some, it is an opportunity to explore the possibilities of settling in the Holy Land in general and Jerusalem in particular.
Jerusalem beckons because it is the focal point of Judaism both spiritually and practically, which is the reason why so many Jews the world over want to make it their home.
So what does Jerusalem offer newcomers? Jerusalem is not one city but
three. It is one urban entity, but there are three different communities
and they do not mix. There is the Jerusalem of the ultra Orthodox,
Jerusalem of the secular community, and Jerusalem of the Arab
Within secular Jerusalem there are differences, but these are not
cultural or communal -- they are financial. There are expensive areas
and less expensive areas. The ultra Orthodox do not want to live in a
secular neighborhood; there is no mobility between these two
In the secular neighborhood it is all a question of money. If you can
afford a house on the expensive King David Street and you want to live
there, you buy an apartment, move in and that is the end of the matter.
The most expensive part of Jerusalem is an area of one or two square
miles, with its epicenter at the King David Hotel. It is very much in
demand by overseas buyers with very deep pockets mainly because of its
proximity to the Old City and all that it signifies. Prices range from
$10,000 to $20,000 per square meter. In this area there is only a
sprinkling of local buyers because they have been outpriced.
Demand for these apartments has declined in the wake of the economic
global downturn, but with the improving economic situation, demand is
rising once more. Nevertheless, despite the fall in demand, prices have
held steady because there have been no substantial housing starts in
Out of a total population of 770,000 in Jerusalem, some 200,000 are ultra Orthodox and another 200,000 are Arabs.
The secular modern is the third segment, mainly comprised of mainstream Israelis.
These also include newcomers who are not overly affluent. This middle
Israel or mainstream element of the population numbers 350,000 to
400,000. They inhabit some 70 percent of the capital’s area.
The real estate market for this segment of the population has behaved
very much like the real estate market in the Tel Aviv metropolitan area
but with certain differences. Like the Tel Aviv metropolitan area, there
is an acute shortage of land for building purposes. Demand has outpaced
supply, thus prices have risen.
In Jerusalem, the problem of insufficient supply is aggravated by
geographical issues. In Tel Aviv, those who cannot afford the hefty
prices in the middle-class neighborhoods can migrate to any of the
satellite towns to the north, south or east of the city. Jerusalem has
no such safety valve, so pressures are somewhat higher and the upward
pressure on prices is slightly more marked. The current middle-class
alternatives are Motza and Mevaseret.
The cultural differences in Jerusalem are somewhat paralleled by the
geographical differences. Because of political circumstances, Jerusalem
is surrounded by self-contained quarters such as Gilo, Ramot and Pisgat
Although they are part of the municipal area of Jerusalem, they have
their own educational, cultural and commercial infrastructure.
Consequently, the price mechanism operates somewhat differently. Prices
in these areas are less than in the Jerusalem pre-1967 area.
According to real estate broker Alyssa Friedland of RE/MAX Vision, the real estate market in Jerusalem is alive and kicking.
“In the central and desirable neighborhoods like Rehavia, Baka and the
German Colony, prices have remained stable despite the current housing
demonstrations and protects.
Most of the protests were focused on providing housing for young
families and the pressure on the government to ease new construction
permits and allow more land to be zoned and approved for new housing.
Since land is scarce in central Jerusalem, most of the available lots to
build are in the peripheral areas of the city, such as Armon Hanatziv,
Arnona, Pisgat Ze’ev, Gilo and Har Homa,” she says. “These peripheral
areas have experienced a moderate drop in prices, since many of the
potential buyers in these areas are sitting on the fence, waiting to see
whether the changes will affect the housing prices.”
Friedland further states, “Foreign buyers are still in the market, and
we are seeing more French and Australian buyers in addition to the
Americans and the British.
Prior to the global economic crisis, they were purchasing the larger
properties for over $1.500.000. Today the trend is towards buying
smaller three- to fourroom properties in the million-dollar price range
and under. Foreign investors are also plentiful, making up about 40% of
the foreign buyer market. They are buying underpriced properties (in the
$300,000 to $600,000 range) that have good rental income, high
anticipated appreciation value, and can be easily sold when the investor
wants to liquidate. With the strong economy and stable political
situation, many foreign buyers are taking advantage of the opportunity
to get into the Israeli real estate market,” she says.
Looking into the future, she says that the forecast looks promising for real estate in Jerusalem and in Israel as a whole.
“Barring any unforeseen political unrest or terror attacks, real estate
in Israel will remain a profitable investment. With the stability of the
Israeli economy, a high demand versus supply in the housing market and
scarce land availability, there is no doubt that the real estate market
will continue to thrive.”
One of the advantages of living in Jerusalem is that it is a truly beautiful city.
It is a mountain city, which gives it crisp, cool mountain air and lovely scenery.
Thanks to the British Mandatory governor of Jerusalem in the 1920s, the
urban planning was excellent. Furthermore, there was a by-law making it
obligatory to use white Jerusalem stone for building.
Consequently, all buildings constructed in the first half of the 20th
century were made of Jerusalem stone. That by-law has since been
moderated. New houses are not necessarily made of Jerusalem stone, but
the façade still has to be clad in stone.
Jerusalem is a historical city. There are many fine historic structures
built in the second half of the 19th century and the 1920 and 1930s.
Some of these are being renovated and transformed into luxury
One example is a 150-year-old building that will be restored by the
Faire Fund as a high-end residential project. The building, which
formerly served as a library, was built in 1882 and has a fin de siècle
architectural flavor. It has stone external walls more than 50
centimeters thick, giant windows with wooden shutters and balconies with
decorative iron railings.
The three-story building is 780 square meters in size, with 157 sq. m. of terraces and balconies and has a small garden.
The renovated building, located next to a new eight-story building, is
part of a luxury compound built by the Faire Fund called Mishkenot
The capital abounds with such projects --luxury apartment buildings
built to blend in with the city’s historical architectural look.