Moving on up

Foreign buyers are purchasing in the high end of the market and more modest apartments.

By JOHN BENZAQUEN
Baka neighborhood Jerusalem 521 (photo credit: Ariel Jerozolimsk)
Baka neighborhood Jerusalem 521
(photo credit: Ariel Jerozolimsk)
During the time of the Second Temple, Jews from all over the country congregated in Jerusalem during Passover; according to legend, the city tripled its population. Today, Jews from all over the world congregate in Jerusalem during the holiday, and though the population far from triples, the city is crowded with a Babel of foreign tongues.
Some of those who come for Passover buy a second home, and indeed foreign buyers constitute a substantial percentage of those buying real estate in the capital.
The expensive segment of the market is the one most affected by foreign buyers. This does not mean that all foreign buyers are wealthy individuals; many of them buy modest apartments like the locals do. These latter purchases are important, but foreign buyers are not predominant in that market and therefore do not control it.
In the expensive segment of the real estate market, however – prices of $15,000 per square meter and above – the foreign buyers are a very important element because they amount to approximately 50 percent of buyers.
Fifteen to 20 years ago, the high end of Jerusalem’s real estate market centered in the area around the King David Hotel. It was and is one of the city’s most prestigious areas, combining tourism with world-class hotels such as the King David, the Inbal and the David Citadel. It is also has expensive shops, antiques, silver, fashion and art, among other things.
The residential area includes the King David Gardens, King David Crown and King David Residence. The King David Gardens has magnificent views of the Old City, and the King David Crown was built on the ruins of the YMCA Stadium, once the leading sporting grounds in the city.
Another high-end block of apartments is the Waldorf Astoria Jerusalem Hotel, which is under construction where King David Street meets Agron Street and the Mamilla Mall. Boasting unparalleled amenities and fabulous views of the Old City and Independence Park, it will have 223 rooms on 10 floors, two full-service spas and two fine restaurants. Adjacent to the hotel there is a residential wing with 30 luxury apartments. This wing is situated within the shell of the magnificent Palace Hotel, built in the ’30s with a magnificent façade.
In the vicinity of the King David Hotel, there is also the David’s Village complex.
Wealthy families have always inhabited this area of the capital, where they built magnificent houses, some of which have been converted into offices or apartment buildings that fetch premium prices.
Prices in this area can reach up to $20,000 per square meter, depending on the floor size and, above all, the view.
Apartments in the King David Gardens complex fetch high prices because they have unobstructed views of the Old City.
Recently a 120-sq.m. duplex property in the King David Gardens complex sold for $2.5 million, while a rooftop, fourroom apartment in David’s Village sold for $1.75m.
Besides this area, which is saturated with super-expensive dwellings, the center of the city is also attracting developers. One of the most striking is the elegant glass-and-steel edifice known as the Jerusalem Tower.
“Currently expensive real-estate properties are scattered all over Jerusalem,” Moshe Babani, sales manager at the Anglo-Saxon realestate brokerage in the capital, tells In Jerusalem. “We have the classic area, which is bounded by Keren Kayemet Leyisrael Street, the old train station, the old city hall and the Old City walls, and then you have various new developments in downtown Jerusalem, such as the Minrav project, Jerusalem of Gold, the Africa Israel Project on Harav Kook Street, and the Lev Rehavia project.”
Babani relates that “recently we sold a 90-sq.m. apartment in the Lev Rehavia project at $8,200 per square meter, or $740,000, to an Italian buyer. We also sold a three-room, 130-sq.m. apartment in the King David Gardens for $20,000 a square meter – $2.6m. – and a three-room, 95-sq.m. apartment in the Jerusalem Towers building for over $800,000. All these purchases were made by overseas buyers.”
Demand from overseas buyers is going strong. The improving economic situation in the US and the UK has increased both interest and demand for real estate in Israel in general and Jerusalem in particular. There is also demand from Europe.
According to Nadav Lisovski, the sales manager of the B. Yair Building Corporation Ltd., “we are seeing increased demand from European buyers, especially French Jews. The economic situation in Europe is problematic, but there are other factors at play here, namely increasing anti-Semitism.”
He adds that “these buyers are not the very rich, buying multimillion- dollar properties as a second home; these are much more modest and are buying what they see as a foothold in the Jewish state, a sort of security in case things worsen.”
B. Yair is now building Mishkenot Ha’uma, a project of 660 apartments in the old Foreign Ministry compound.
Ariel Rahamim, VP sales of Yehuda Rahamim Construction Ltd., is also observing increased overseas demand these past six months.
“Since last November, we have seen rising demand from overseas customers. We have nearly completed marketing nearly all our apartments, with the exception of three penthouses, which we have kept for last. We have interested prospective buyers from the US, the UK, Russia, Germany and France. This is a very high-end project with rooftop private swimming pools for some of the penthouses, with wine cellars, etc. The price tag is for the wealthy,” he says.
“We also have a more modest 350-apartment project in Beit Hakerem, with prices in the range of 400,000 euros, and there we have seen demand from overseas French buyers,” he adds.
Because of this increase, proprietors who found it difficult to sell their properties during 2010 and 2011 are now seeing buyers emerge.
However, Isaac Levy, the co-chairman of the Ambassador realestate brokerage, says the market is still relatively small.
“It is true that demand for real estate from overseas buyers is increasing. It is also true that this includes very expensive real estate of $1.5m. and above,” he says. “But despite the fact that demand is growing, the number of these transactions is not large, because the number of those who can afford such prices, to say nothing of the maintenance fees, is not large.”
According to Levy, the really expensive real estate can be found in old, restored townhouses in Talbiyeh and the German Colony, where restored Templer or Arab houses can fetch a few million dollars.
Recently a semidetached, 360-sq.m. property in Talbiyeh in a sorry state of disrepair sold for $2.6m., while a 160-sq.m. garden apartment in the vicinity of the David Citadel Hotel sold for $2.65m.