Rehavia, one of the most prestigious areas in the capital, was the first neighborhood developed in Jerusalem after the British set up the Mandate, and it soon became the abode of the capital’s intellectual elite. It is here that the official residence of the prime minister is located, and it is here that those who want a quiet, pastoral neighborhood make their home.The area came into being in the 1920s when the establishment of the British Mandate in Palestine created an atmosphere of euphoria among European Jews, especially in Eastern Europe. It was essential to provide newcomers, especially middle-class families, with accommodation equivalent to that of Prague, Vienna, Budapest and Berlin.The task of developing Rehavia was entrusted to Richard Kaufman, a German Jewish architect who was well known in Central Europe. He started work in the early 1920s. At that time, Jerusalem was a small city, but Kaufman was very forward-looking and designed Rehavia as part of a large, bustling city, based on the garden cities of Central Europe.The idea was to create a quiet suburb in the area of King George Avenue, which was the commercial center of Jerusalem. It was a green area within walking distance of the center of the city. By designing narrow streets, which prevented easy access to traffic, and by allowing commerce to take place only on the neighborhood’s bordering streets (i.e., Keren Kayemet, King George, Ussishkin, and later Aza), Rehavia has maintained a tranquil, upper-class aura.Most of the area was built in the 1920s-1940s. The houses were made of sturdy stone in the Bauhaus style then popular in Central Europe. They were built of stone because Ronald Storrs, the British civil governor of Jerusalem in the 1920s, permitted only stone houses to be built.The area has been home to many famous people, the cream of intellectual and political life, such as David Ben-Gurion and Golda Meir.Currently, Rehavia is experiencing a downturn in its fortunes. It is still a very expensive area in an excellent location, but the original Rehavia, with its illustrious residents, is becoming a thing of the past. Most of the new residents are transient students with affluent parents, from Israel or abroad, who can afford the hefty rentals. A typical apartment costs from NIS 5,000 to NIS 6,500 a month. Investors, lured by the prospect of high rents, good returns on investment and good appreciation potential, are the reason most properties are snapped up when they come on the market. As a result, there is a continuing demographic trend, an increasing student population and a decreasing number of old-timers.Despite these developments, Rehavia has kept its aura of charm and exclusivity. According to Elia Gabai, a leading agent with RE/MAX Vision, Jerusalem, “Rehavia’s residents have certainly maintained that status. What we are seeing today is an interesting blend of young upper-class students and long-time residents.”Consequently, Rehavia still maintains its appeal based on the combination of a residential base of families of a high socioeconomic level and excellent location. Despite the fact that Rehavia may have seen better days, its future is more or less assured, affording many interesting investment opportunities.These days, long-term residents continue to live in Rehavia for sentimental reasons, while students are drawn to the proximity of the university and colleges in the city and the many restaurants and cafes along Rehov Aza.Rehavia is also convenient for newcomers from abroad. For them, the location is excellent. It is near the entertainment and commercial centers of the capital; and for religious families it is conveniently located near the Great Synagogue and other places of worship.“Rehavia is not just a status symbol. There is something truly enchanting about the neighborhood that is hard to describe," says Yaniv Gabai of RE/MAX Vision, who specializes in properties in Rehavia. The location and charm plus the investment value of the area when translated into dollars is something of a shock for the foreign investor. Apartments in the area range from NIS 27,000 to NIS 38,000 per square meter, depending on the property’s condition and amenities.At present, demand outstrips supply. The only way developers can obtain land for building purposes is by tearing down existing buildings and constructing new ones – not an easy thing to do, since many of the buildings are earmarked for preservation, and any new building must incorporate all or part of the existing property.RECENT REAL ESTATE TRANSACTIONS • Rehov Aza: A four-room, 91-square-meter apartment on Aza was sold for NIS 2.05 million. The apartment included two succa balconies and needed renovation.• Rehov Abarbanel: A three-room, 75-sq.m.apartment on the third floor, including three balconies, no parking or elevator, was sold for NIS 1.75m.• Rehov Ben-Maimon: A spacious three-room, 95- sq.m. renovated apartment with a balcony on the second floor and no elevator was sold for $650,000.• Rehov Ben-Maimon: A five-room, 137-sq.m. renovated garden apartment was sold for $1.3m.• Rehov Ben-Maimon: A four-room, 100-sq.m. apartment with three terraces was sold for NIS 2.3m.