(photo credit: Marc Israel Sellem)
Take a walk among the streets of Jerusalem and one is blessed to see a city bustling with activity. Even in the heat of the late spring days, the cafes are filled almost to capacity and the city reflects a feeling of rapid activity and commercial growth.
Indeed, this is not just a feeling; the numbers show that Jerusalem is experiencing rapid development on all fronts. A recent study showed that resident satisfaction with the city is at an all-time high, and taking a look at the Jerusalem skyline one sees nearly countless construction cranes, evidence that Israel’s capital continues to experience a building boom.
Indeed, among the city’s fastest growing real estate sectors is the high-end luxury market, with numerous buildings catered to this demographic making their ways upwards throughout the city. Undoubtedly the large percentage of buyers in these buildings are foreigners; primarily North Americans and Europeans.
In past years, many long-time Jerusalemites resisted the building of such luxury buildings out of fear that they would drive the middle class out of the city they so loved. Critics often spoke of the fact that the purchasers of these properties were simply buying for the sake of owning with little intent of actually occupying the homes.
More recently, it has been shown that these criticisms hold little water and that foreign real estate investment deserves to be recognized as an important economic factor driving Jerusalem’s renaissance – and which should therefore be strongly encouraged.
Analyzing this from the most basic perspective of dollars and cents (or shekels and agarot) it is readily apparent that the increased presence of foreign homeowners in Jerusalem is a win-win.
It allows people to own quality homes and develop a closer attachment to Israel which will likely result in long-term residency at a later time. Luxury apartments and complexes are well maintained, and designed with considerable attention to aesthetics and landscaping that benefit the city in general.
Most notably, real estate investment translates to increased jobs and benefits parallel industries like retail, restaurants and tourism in general. These homebuyers are typically people of means who when in Israel spend generously and are essential supporters of the small businesses which are an integral part of the Jerusalem economy.
These homes provide hundreds of jobs to independent contractors like cleaners, fix-it men and security guards.
From the city’s perspective, the rise of luxury apartments represents an infusion of millions more shekels each year in terms of municipal taxes. In a city which is known to have its fair share of budgetary challenges, the addition of a new influx of tax revenue similarly needs to be lauded and encouraged.
The encouragement of foreign real estate investment must further be recognized as an essential part of strengthening the city’s overall image and financial strength.
While the critics will say that the city deserves to be owned by its long-term residents and that the foreigners are driving them out by driving up prices, this argument is wholly emotional rather than driven by fiscal reality.
Jerusalem deserves to be a cosmopolitan and international city in every sense.
While a certain degree of that identity can be sustained by tourism, and Jerusalem Mayor Nir Barkat has been a leading champion of promoting innovative tourism initiatives, short-term stays are not enough to support any city and Jerusalem is no exception.
We need to think long-term and that requires embracing foreigners as ideal investors for the city. The image of Jerusalem of a city of its residents will never change because of the remarkable history and culture which makes it so unique. But preserving the city’s future requires that we think of sustainable revenue streams that will protect Jerusalem for decades into the future and ensure the economic challenges that affect the city can be mitigated.
To truly change the image of our city for decades into the future we need to push Jerusalem as a sound investment for all types of buyers. Anything that opposes that message is contrary to the interests of the city’s residents.
The author is a real estate investment consultant and president of The Shia Getter Group.