Foreign investors are stepping up purchases of commercial property in the nation's capital as the country's economic indicators stabilize and in anticipation of property value increases of as much as 40 percent from the city's future light rail system.
"We have seen a 50% increase in commercial property sales executed through our Jerusalem office and bought by foreign investors compared with last year," said Benny Loval, general manager of Anglo-Saxon Jerusalem. "From the beginning of the year, Anglo-Saxon Jerusalem closed commercial property sales deals, which added up to a total value of $20 million."
Loval added that, whether before or after the war in the North, foreign investors were seeing the potential of the Israeli property market within an economy that stable enough to make a long-term investment beyond one into the residential property market.
Anglo-Saxon Jerusalem, over the recent year, closed eight commercial property deals, while a number of were still pending. Commercial property deals to foreign investors included the sale of three floors of an office building for $4.9m., which was rented out to government offices at an annual yield of 8% on investment, while another deal involved the sale of seven floors for office usage for $7.5m., generating a 8.5% yield on investment.
Similarly Alyssa Friedland , co-owner of RE/MAX Vision and RE/MAX Capital in Jerusalem, confirmed the rise in requests by foreign residents for commercial property in the city.
"Once the light rail in Jerusalem is installed, properties could appreciate between 30 and 40%," she said. "In light of this potential in the market, demand by foreign residents, mainly US residents, for buying underpriced and run-down commercial property in downtown Jerusalem has been rising gradually, although the current yield of between 5 and 8% is not as good as they can get in the US."
Friedland added that as the real estate market in the US was coming down, however, US investors were starting to look elsewhere for places to put their money.
The light rail, scheduled to be completed in 2009, will run from the northern neighborhood of Pisgat Zeev through the city center to Sderot Herzl and up to the western neighborhoods of the capital.
Overall, Loval said this has been a record year for property deals by foreign buyers across the country generating $1.1 billion from sales, of which $150m. were in Jerusalem, according to data compiled by Anglo-Saxon.
According to the latest data, foreign residents invested about $338m. into real estate and apartments in the third quarter of 2006.