Priced out of the market?

For those who can’t afford million-dollar properties, and for whom living in haredi or Arab neighborhoods is not an option, real-estate opportunities are becoming scarce

By JOHN BENZAQUEN
Jerusalem Real Estate521 (photo credit: Marc Israel Sellem)
Jerusalem Real Estate521
(photo credit: Marc Israel Sellem)
Historically Passover was when Jews from all over came to Jerusalem to pray at the Temple, and they continue to come today, even though the Temple no longer exists.
Many people find Passover in Jerusalem to be an uplifting spiritual experience. During this time of year, Jerusalem is bursting at the seams with people from all over the world.
Some of those who come from the Diaspora may decide to settle in the city and buy a property. Besides being a holy city with vast spiritual and religious appeal, it is beautiful and historic.
The capital is Israel’s largest urban entity, with a population of nearly 800,000. From a real-estate perspective, it is one of the most expensive cities in the country, and the price barrier is gradually pushing the younger generation out to seek, if not greener pastures, then at least cheaper ones.
But what can Jerusalem offer newcomers by way of real estate? According to Benny Loval, the manager and proprietor of the city’s Anglo- Saxon Real Estate concessionaire, the capital “is a mosaic of architectural styles and neighborhoods, and it is very much in demand among very wealthy overseas buyers.”
For instance, he tells In Jerusalem, “there is a ‘millionaires’ triangle’ 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, but also because it is centrally located.”
In this area, he explains, prices range from $10,000 to $20,000 per square meter. As such, “there is only a sprinkling of local buyers, because they have been outpriced. Demand for these apartments has declined in the wake of the global economic downturn, but with the improving economic situation, demand is rising once more.
Nevertheless, despite the fall in demand, prices have held steady because the affluent land owners are in no hurry to sell if the price is not to their liking.”
Discussing the architectural styles, he points out that “when the British set up the government of the Mandate of Palestine in 1921, one of the first things they did was to draft an excellent urban plan for Jerusalem. They also passed a bylaw that made the use of stone for building purposes obligatory.”
As a result, most buildings constructed after the first half of the 20th century are made of stone, though the law was suspended between 1949 and 1967.
There were also many fine structures built in the second half of the 19th century and the early 20th, and some of these are being renovated and transformed into luxury apartments.
REAL ESTATE in the city falls into three basic categories: the aforementioned upscale properties that draw affluent overseas buyers, the more moderately priced areas open to those who are not as wealthy, and the exclusive neighborhoods in east Jerusalem and the haredi (ultra-Orthodox) areas.
While the first category tends to be off-limits to most of the public due to monetary considerations, the last is unappealing to many due to cultural differences.
Out of the city’s total population, around 200,000 people are haredi, and another 200,000 are Arab. Generally speaking, the remaining 400,000 or so residents who do not fall into one of these two categories avoid the haredi neighborhoods and east Jerusalem, respectively.
Aside from those among them who can afford to live in the so-called “millionaires’ triangle,” these mainstream Israelis – including newcomers who are less affluent – inhabit some 60 percent of the capital’s area.
The real-estate market for this segment of the population has behaved much like the real-estate market in the Tel Aviv metropolitan area, but with certain differences. As in the Tel Aviv area, there is an acute shortage of land for building purposes; as a result, demand has outpaced supply, and prices have risen.
Aggravating the problem of insufficient supply in Jerusalem is the area’s geography. 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 the upward pressure on prices is slightly more marked. The current suburban alternatives for the middle class are Motza and Mevaseret to the west of the city, Tzur Hadassah in the south, and Efrat, Ma’aleh Adumim and Givat Ze’ev to the east and north (however, these last suburbs are beyond the Green Line, making them unacceptable for some Jerusalemites).
Because of the high prices, younger residents, especially newlywed couples, find it difficult to buy apartments and are often obliged to build their nests elsewhere.
The capital’s geography, topography, and political and cultural differences have also made for self-contained neighborhoods such as Gilo, Ramot and Pisgat Ze’ev. Although they are part of the municipal area of Jerusalem, they have their own educational, cultural and commercial infrastructure. In these areas, prices are somewhat lower than in pre-1967 western Jerusalem. •