Foreigner's guide to property market: Is anyone home?

While many see absentee owners in J'lem as the main cause of high property prices, there are those who appreciate the valuable contribution foreign owners make.

Rehavia building 521 (photo credit: Marc Israel Sellem)
Rehavia building 521
(photo credit: Marc Israel Sellem)
Foreign buyers of apartments in Israel, who only spend a few weeks in the country every year, are sometimes criticized. Perhaps as we approach the Jewish New Year, their contribution to the Israeli economy should be re-evaluated.
The estimated number of foreign owned apartments in Jerusalem that only get used a few weeks per is anywhere from 6,000 to 10,000. These properties are often referred to as "ghost apartments."  The reasoning that has prevailed in Jerusalem in the public forum over the last couple of years about foreign owners of apartments in Jerusalem has often been critical, perpetuating the idea that vacant apartments take money out of the local merchant’s pocketbook and force local apartment renters away from the city center.
While those two points have some merit, the contribution that foreign owners make to the municipality in terms of property tax revenue is often overlooked. Mortgage Advisor, Ariel Vered, made the following observation in a recent blog post about this issue. Speaking of foreign owners, he said “In Jerusalem, for instance, a large proportion of the municipal taxes are collected from such apartments. A large portion of the city's population reports little to no income and enjoys up to a 90 percent discount on the municipal taxes. Foreign residents enjoy no such exemptions, they pay the full amount.” 
The counter points about the foreign owner’s contributions to the Israeli economy have some strong merit as well. Without their investment, many of these apartments in the center of Jerusalem may not have been purchased at all, which certainly would not be good for the municipality or the quality of life of Jerusalem’s full time residents.
Finding middle ground   
In 2009, Jerusalem Mayor Nir Barkat began to speak publicly about soliciting the help of foreign owners by asking them to consider renting out their apartments to students and soldiers during the times they are not in Israel. While in theory, this sounded like a great solution to the dilemma, the suggestion was met with much skepticism. 
After all, many of these foreign owned apartments were in luxury settings with very expensive furnishings and the idea of owners renting them out to students, soldiers and young families, didn’t seem like it would be very well accepted. What started with a letter writing campaign by the Mayor in 2009, culminated in a program that was launched shortly before Pessah this year, which provides foreign owners with a list of seven different companies approved by the municipality, who will provide Property Management services for the owners.  
The program, which the Municipality has named “Turn on all the lights in Jerusalem” is an ambitious undertaking and certainly will be worthwhile if taken advantage of by absentee apartment owners. The potential pool of renters has been expanded to include not just students, soldiers, and young couples, but also tourists, who would rent the empty apartments for short terms.
Will working together make a difference?

While there is no perfect solution to this particular challenge, the new program has great potential and certainly demonstrates what can be accomplished by working together, rather than by merely being critical. Trying to find solutions and working together is a great way to start the Jewish New Year.         
Lyle Plocher is the Director of Buy Property In Israel and can be reached by email at

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